ORISSA CEMENT LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) Orissa Cement Limited, the Plaintiff filed this Suit for recovery of Rs. 30,64,312.51 in this Court in the year 1979. According to the Plaintiff, the Central Government in exercise of its power conferred on them under Section 18(g) and 25 of the Industrial Development and Regulation Act, 1959 issued Cement Control Order, 1961 which was deposed and re-deposed in the year 1967 which was subsisting till institution of the Suit. The Rate Contract was renewed by the by the Officers of Union of India from year to year. The Plaintiff has placed the lease of renewal on record till 31st March, 1980.

(2.) In April 1973, the defendants issued a circular dated 21st April, 1973 amending the Rate Contract and added the clause in regard to payment of sales tax on freight. The amended clause reads as under:-

(3.) The amended clause was accepted by the plaintiff and the plaintiff continued to discharge the quantities of cement by rail to the defendants in accordance with the demand raised upon the plaintiff. Again on 28th July, 1976 the plaintiff received a circular dated 15th July, 1976 issued by defendants no.3 stating that the ¢ ¢â ¬ …â sales tax on railway freight on cement is not payable to the producers with effect from the date of issues of the letter. ¢ ¢â ¬ This is altered clause 8 (vi) of the rate contract. The plaintiff did not accept this amendment and supplied the materials as per the unamended clause. On 23rd November, 1978, defendant no.3 further gave a proposal to the plaintiff to say that ¢ ¢â ¬ …â sales tax on the element of freight on cement wherever legally leviable is hereby allowed in respect of cement supplies with effect from 22.8.1978. ¢ ¢â ¬ As per this term of the Rate Contract, the defendants are bound and liable to the plaintiff to pay all sales tax legally leviable in addition to the prices stipulated therein. While relying upon the judgment of the Supreme Court in the case of Hindustan Sugar Mills Ltd. vs. State of Rajasthan & Ors., Civil Appeal No. 1122 of 1976, the plaintiff has stated that the court held that sales tax is legally leviable on freight. In view of this and as per the terms and conditions of the contract, the defendants were bound to pay sales tax on freight to the plaintiff. From 1st December, 1969 till 21st August, 1978 the plaintiff raises a claim and submitted bills to the defendants for a sum of Rs. 25,67,898.95 as per Annexure 'B' annexed to the plaint. The defendants had undertaken to discharge the said liability, as such the plaintiff served a notice upon them and thereafter filed the present suit for recovery of Rs.30,64,312.51 including the above principle and interest claimed at the rate of 18% per annum from 22nd August, 1978 till 17th September, 1979, which amounted to 4,96,413.51.