Rishabh Electricals (P) Ltd. vs The Chief Minister of Orissa and Others

P.K. Balasubramanyan, C.J.—Petitioner was assessed under the Orissa Sales Tax Act, 1947 and under the Central Sales Tax Act, 1956. Feeling aggrieved, the petitioner filed two appeals before the Additional Commissioner of Commercial Taxes: Pending those appeals, the Additional Assistant Commissioner of Sales Tax issued notice to the petitioner under Rule 50(3) of the Orissa Sales Tax Rules calling upon the petitioner to show cause why the tax demanded by the Sales Tax Officer shall not be enhanced. The petitioner objected to the said notice. The appeals filed by the petitioner were dismissed and addition was made to the tax demanded. Feeling aggrieved, the petitioner filed two second appeals before the Sales Tax Tribunal. The said appeals are pending.

Pending those appeals, the petitioner made applications praying for stay of the collection of the tax assessed. The Commissioner, of Commercial Taxes considered the plea of the petitioner and the circumstances obtaining and passed an order to the effect that if the petitioner pays a sum of Rs. 2.80 crores in two equal monthly installments by 15.1.2003 and 15.2.2003 and produces the proof of payment on the next date before the concerned Sales Tax Officer, recovery of the balance amount under the Central Sales Tax Act, would stand stayed. As regards the tax payable under the Orissa Sales Tax Act, the Commissioner ordered that if the petitioner paid a sum of Rs. 1 crore in two equal monthly installments or Rs. 50 lakhs each by 15.1.2003 and 15.2.2003 and produces the proof of payment on the next date, before the Sales Tax Officer, recovery of the balance amount would stand stayed till disposal of the second appeals. It is at this stage that the petitioner has approached this Court with the present writ petition seeking a declaration that the petitioner is entitled to get sales tax exemption under Item No. 43A of List ''A'' of List of Goods exempted from Orissa Sales Tax Act and challenging the interim orders passed by the Commissioner imposing condition for the grant of stay pending decision of the second appeals. There is also a prayer for the issue of a direction to the Sales Tax Authorities to withdraw all their letters issued to the National Aluminium Company Limited advising them to realise the Sales Tax from the petitioner in view of the stand adopted by the authorities that the petitioner is not entitled to exemption as claimed, under Item No. 43A of List ''A''. Learned counsel for the petitioner contended that even though the second appeals may be pending involving the question whether the petitioner is entitled to claim exemption under Item No. 43A of List ''A'' of the Tax Free List, since the question was of general importance and was a recurring one in respect of the petitioner and other assessees similarly situated, it would be appropriate if this Court were to decide the question whether the petitioner is entitled to get the exemption under Item No. 43A of the List. Learned counsel appearing for the Commercial Taxes Department, on the other hand submitted that the time has not come for this Court to decide this question, that the question raised is at best one of fact and law and that such a question should be left to be decided by the Tribunal. He further submitted that the petitioner was entitled only to the exemption provided under Item No. 42A of List ''A'' of the List of Goods exempted from the Orissa Sales Tax Act, and was not entitled to claim exemption under Item No. 43A of that List. Counsel contended that this was a question the answer to which would depend on the facts and the nature of the industry run by the petitioner, and whether it is Small Scale Industry or it is a Medium / Large Scale Industry. There was no reason why this Court should try to decide that question at this stage. Counsel further submitted that it cannot be said that this is a question of universal application since whether Entry 42A applies of Entry 43A applies would depend on the facts of a particular case and no question of interpretation as such was involved.

We think that it is not proper for this Court to go into the question of exemption claimed by the petitioner at this stage. The second appeals filed by the petitioner are pending before the Sales Tax Tribunal. We think that the Tribunal must be left to decide the claim of the petitioner in the light of the relevant facts and the arguments raised by the parties. We are also of the view that the position canvassed for by counsel for the petitioner that this question can be decided by this Court under Article 226 of the Constitution of India unrelated to facts, cannot be accepted. No doubt, the entry could be interpreted by this Court. But, we think that the interpretation cannot be in the vacuum and without relation to the nature of the industry run by the petitioner. We are therefore satisfied that no decision by us on the question is warranted at this stage.

Now coming to the orders or conditional stay passed by the Additional Commissioner, Annexures 10 and 11, we are not satisfied that any interference with those orders is also called for. It cannot be said that the Additional Commissioner has exercised the discretion vested in him perversely or so unreasonably as to justify our interference. The amendment to the notification issued u/s 6 of the Orissa Sales Tax Act relied on by the counsel may not carry the petitioner far and at this stage we do not think that we should deal with the arguments in that regard addressed by counsel on either side. Suffice it to say, that we are not satisfied that we would be justified in interfering with the orders Annexures 10 and 11 at this stage.

The letters issued by the authorities under the Act to the National Aluminium Company Limited, pointing out that it has the obligation to collect the taxes in view of the finding that the petitioner is not entitled to avail the exemption in terms of Item No. 43A of List ''A'' cannot also be faulted at this stage since those letters were issued only to protect the revenue and in the light of the conclusion arrived at by the Assessing Authority and the appellate authority regarding the claim made by the petitioner. Of course, if the Tribunal were to take a different view, those letters will lose their efficacy. But until then it cannot be said that the letters were issued without justification or that they were issued by the authority unreasonably.

Thus, we decline to consider the question sought to be raised by the petitioner at this stage. We leave the question raised by the petitioner to be decided by the Sales Tax tribunal in the pending Second Appeals. It will be open to the petitioner to put forward all its contentions before the Sales Tax Tribunal and we have no doubt that all the contentions raised by the petitioner would be considered and dealt with by the Sales Tax Tribunal.

Finally, learned counsel for the petitioner submitted that the petitioner - industry will be put to great hardship if the amounts had to be deposited as indicated by the Additional Commissioner in Annexures 10 and 11 orders. We have already indicated that we do not see sufficient reason to interfere with those orders. They are seen to be reasonable. But we think that in the circumstances a little more time can be given to the petitioner to comply with the condition imposed by those orders. In that view, we direct that recovery of the Sales Tax assessed under the Orissa Sales Tax. Act will stand stayed if the petitioner pays a sum of Rs. 1 crore in two equal monthly installments of Rs. 50 lakhs each by 15.2.2003 and 15.3.2003 and similarly, the demand under the Central Sales Tax Act will stand stayed pending the Second Appeals before the Tribunal, if the petitioner pays a sum of Rs. 2.80 crores in two equal monthly installments by 15.2.2003 and 15.3.2003 and produces the proof of payment as indicated by the Additional Commissioner. The orders Annexures 10 and 11 are modified only to the extent of extending the time for payment.

The writ petition is thus disposed of only with the above modification regarding the time for payment of the amounts as a condition for stay for recovery of the tax assessed until disposal of the Second Appeals.

Pradip Kumar Mohanty, J.

I agree.