OCL INDIA LTD Vs. STATE OF ORISSA

JUDGEMENT

(1.) THIS writ petition is filed by an assessee under the Orissa Sales Tax Act, 1947 (hereinafter referred to as "the Act" ). The assessee challenges the notice, annexure 8, issued to it under rule 80 of the Orissa Sales Tax Rules, 1947 (hereinafter referred to as "the Rules") read with rule 22 of the Central Sales Tax (Orissa) Rules, 1957. By that notice, the assessee was called upon to produce its books of account and all relevant documents and records in respect of the transactions of the assessee for the assessment year 1986-87 under the Central Sales Tax Act, and in respect of the claim of the assessee relating to stock transfer, during the relevant year and to show cause why its claim of stock transfer should not be disallowed and the transactions treated as sales in the course of inter-State trade and commerce. The allegations in the writ petition do not show that the assessee had filed a reply to this notice. The assessee has approached this Court invoking the jurisdiction of this Court under article 226 of the Constitution of India challenging the legality and validity of the notice and also questioning the constitutional validity of rule 80 of the Orissa Sales Tax Rules. At the hearing, the constitutional validity of rule 80 of the Rules was not seriously pursued. But, the jurisdiction of the Commissioner of Commercial Taxes to issue such a notice was seriously questioned on the basis of a challenge to the legality of the notice in the circumstances of the case.

(2.) THE assessee is an existing company under the Companies Act, 1956 engaged in the business of manufacture of cement and refractory products and having its registered office and factory at Rajgangpur in the district of Sundargarh in this State. It is a registered dealer under the Orissa Sales Tax Act and also under the Central Sales Tax Act. The assessee, in the course of its business of manufacture and sale of cement, had opened a branch at Calcutta and according to it, had appointed a number of consignment agents in the States of West Bengal and Bihar. Sales inside the State of Orissa were made on ex-works basis. According to the assessee, whenever any consumer located outside the State of Orissa placed orders directly on the company, the deliveries were effected by the assessee and the relevant sale transactions were completed on inter-State sales basis. According to the assessee, it was also making stock transfers of sizeable quantities of cement from time to time on a routine basis to its branch and consignment agents so that sufficient stock was available at all times at the branch and the locations of the consignment agents with a view to be in a position to meet the open market demand for the product. The assessee used to despatch cement to its Calcutta branch and various consignment agents at frequent intervals depending upon the availability of railway wagons. According to the assessee, the cement is moved as the goods of the assessee to the consignees. The goods are unloaded at the destination and taken delivery of by the assessee from the railways and transported to the godowns of the assessee or that of the consignment agents and entered in the relevant stock registers maintained in those places. The goods so kept in those godowns were also insured by the assessee-company. The cement is sold to various buyers from the branch or the consignment agents.

(3.) ON September 13, 1996, the Assistant Commissioner of Sales Tax issued a notice under section 16 (1) of the Act seeking to verify the stock records and other documents of the assessee relating to the stock transfers for the assessment year 1986-87. The assessee replied to the notice and requested the Assistant Commissioner of Sales Tax to specify the records and the documents which were sought to be re-examined by him. There is no clarification in that regard by the Assistant Commissioner of Sales Tax. On January 3, 1998, a notice was received by the assessee from the Commissioner of Sales Tax. That was a notice under rule 80 of the Orissa Sales Tax Rules, to suo motu enhance the turnover of the assessee for the assessment year 1986-87 by treating the alleged stock transfers as inter-State sales. As stated earlier, it is this notice that is challenged by the petitioner-assessee in this writ petition. Before proceeding further, we may refer to rule 80 of the Orissa Sales Tax Rules, 1947. The said rule reads as follows :