IPITATA SPONGE IRON LTD Vs. STATE OF ORISSA

JUDGEMENT

(1.) MESSRS . Ipitata Sponge Iron Ltd. , the petitioner, set up a sponge iron factory at Bileipada in the district of Keonjhar in the joint sector in collaboration with IPICOL, a Government of Orissa undertaking. It registration under section 9c of the Orissa Sales Tax Act, 1947, granted with effect from 7th March, 1983, was later converted to one under section 9 with effect from 1st April, 1986. It was also registered under section 7 (2) of the Central Sales Tax Act, 1956. On its application, it was granted a certificate of registration in form "c" prescribed under the Central Sales Tax (Registration and Turnover) Rules, 1957. The certificate which has been filed and marked as annexure 6, in clause (b) specifies the classes of goods for use in the manufacture or processing of goods for sale. The list of goods has been appended as annexure 1 thereto. As a registered dealer under the Central Sales Tax Act, it was granted declaration in form "c". Being of the opinion that the goods purchased on the strength of declarations in form "c", had been utilised for purposes other than in the process of manufacture or processing of goods for sale and goods not covered by the registration certificate had been purchased by misusing the declaration in form "c", the Sales Tax Officer, Keonjhar, initiated a proceeding under section 10a of the Central Sales Tax Act and issued notice calling upon the petitioner to explain why penalty as prescribed should not be imposed. The petitioner showed cause explaining that the refractory in respect of which "c" forms had been utilised were not included in the registration certificate due to some mistake because any sponge iron plant would require refractory for lining up the kiln. The other items were included in the registration certificate.

(2.) THE Sales Tax Officer held that goods like iron, steel, cement, weighing machines, etc. , purchased at concessional rate by utilisation of "c" forms were not utilised in the manufacture or processing of goods for sale. Therefore, the petitioner utilised the goods otherwise without reasonable excuse. Hence, it committed an offence under section 10 (d) of the Central Sales Tax Act. Refractory not having been included in the registration certificate, "c" forms were were misutilised for purchasing refractory at a concessional rate, thereby it falsely represented while purchasing refractories that those were covered by the certificate of registration. Hence, it committed an offence under section 10 (b) of the said Act. The petitioner having purchased goods worth Rs. 6,71,01,124. 83 at concessional rate, though it was not entitled to, penalty of Rs. 67,10,112 was imposed under section 10a. The order of the Sales Tax Officer imposing penalty under section 10a has been annexed as annexure 3. The petitioner carried a revision. It was contended before the revisional authority that the refractory was an essential element of the rotary kiln without which manufacture of sponge iron was not possible. Refractory would come within the expression "etc. " as mentioned against serial No. 25 of the list of goods specified in the annexure to the registration certificate. It was contended by the petitioner that cement, iron, steel, electrical goods, survey equipments, etc. , and weigh bridges were specifically specified in the certificate of registration as goods intended for use for manufacture or processing of goods for sale. Hence, the petitioner was entitled to purchase the same at a concessional rate. It was specifically contended that it has purchased cement and steel for erection of plant and machinery as well as for construction of residential buildings. For cement and steel purchased, tax was paid at the higher rate. Electrical machineries, weighing machines, computers, bricks and cement purchased essentially for carrying out manufacturing process were purchased on payment of concessional rate. Both the contentions were negatived by the revisional authority by his order which has been annexed as annexure 7. The break-up of the items in respect of which the proceeding was started is as follows :

(3.) The opposite parties in the counter-affidavit have averred that the petitioner purchased refractories at a concessional rate by misutilising "c" forms when refractories were not specified in the certificate of registration. It falsely represented to the selling dealer that refractories were included in its certificate of registration and it was entitled to purchase of the same at the concessional rate. Therefore, it committed infraction of section 10 (b ). The plea taken by the petitioner that refractories were covered by the expression "etc. " in item No. 25, was an afterthought since in its statement filed before the Sales Tax Officer, Keonjhar Circle, it clearly stated that refractories were not included in the registration certificate because of a sheer mistake and a request was made to treat refractories as a part of the registration certificate with retrospective effect. The statement has been filed as annexure A/3. Even annexure A/2 furnished by the petitioner showed that cement worth Rs. 4,98,425 out of the cement purchased for setting up of the sponge iron plant was utilised for construction of staff colonies. Similarly, steel worth Rs. 3,56,817 was used for construction of township. Several goods not having been used in the manufacture of goods there was an infraction of clause (d) of section 10. Hence, penalty was exigible. It has been strenuously urged on behalf of the opposite parties that goods which were purchased at the concessional rate not having been used for the manufacture of goods, there has been a misutilisation and penalty was exigible. 5. Section 8 of the Central Sales Tax Act prescribes the rates of tax on sales in the course of inter-State trade or commerce and so far as it is relevant for our purpose reads as under :