Mahalaxmi Flour and Oil Mills and Another vs Sales Tax Officer and Others

H.L. Agrawal, C.J. and D.P. Mohapatra, J.—This application has been filed for quashing the orders passed by the Sales Tax Officer, Puri II Circle, rejecting the refund application filed u/s 14-A of the Orissa Sales Tax Act (then in force), confirmed on revision by the Commissioner.

Petitioner No. 2 had started a flour mill in the month of December, 1974 in the name and style of M/s. Mahalaxmi Flour and Oil Mills which went into production on 11th December, 1974. In course of the milling operation, the petitioners were supplied wheat from the Food Corporation of India and the District Collector, Puri. According to the industrial policy of the Government under the notification dated 11th November, 1969, the petitioners claimed that they should have been exempted from paying tax on the raw materials purchased for the industry for a period of five years. It appears that the petitioners'' suppliers, namely, the Food Corporation of India and the Collector, Puri, were subjected to sales tax for the supplies made to the petitioners and accordingly they recovered that amount from the petitioners leading to the making of the application u/s 14-A. The application was rejected in view of the decision of this Court in Rameswar Prasad v. Sales Tax Officer, Balasore Circle [1973] 32 STC 332(SC) which was based on the decision of the Supreme Court in Ashoka Marketing Ltd. Vs. State of Bihar and Another, where Section 14-A itself was held to be ultra vires. In close proximity, this Court also took similar view in the case of Orissa Cement Limited v. State of Orissa (O.J.C. No. 435 of 1972 decided on 14th March, 1973).

One of the contentions raised by Mr. Agarwala, appearing for the petitioners, was that no reasons have been communicated to the petitioners for rejecting the application, and for that purpose the case was adjourned for about more than four months to enable the Standing Counsel (C.T.) to get the original records. But since the records were not procured, the case has been heard.

It is submitted that later on the Supreme Court has taken a different view from the Ashoka Marketing Ltd. Vs. State of Bihar and Another, in Kasturi Lal Harilal Vs. State of U.P. and Others, as well as in State of Orissa Vs. Orissa Cement Ltd. and Others, . In both the decisions, the earlier judgments of this Court mentioned above have been expressly overruled and Section 14-A which had been held to be ultra vires was declared intra vires.

In that view, the matter requires reconsideration by the sales tax authorities. The writ application is accordingly allowed and the matter is remanded to the Commissioner of Sales Tax (O.P. 2) for disposing of the petitioner''s refund application afresh in the light of these developments and the changed circumstances, in accordance with law. Since the matter has remained pending in this Court for a long time, we hope that the Commissioner will dispose of the application with expedition and preferably within three months from the date of receipt of this order.

No costs.