KALPANA GLASS FIBRE PVT. Vs. STATE OF ORISSA

JUDGEMENT

(1.) This writ petition has been filed with a prayer to issue a writ in the nature of mandamus directing opposite parties 2 and 3 to refund Rs.8,10,516/- in favour of the petitioner within a stipulated period on the ground that opp. party no.2-Commissioner of Sales Tax, Orissa and opp. Party 3-Sales Tax Officer, Bhubaneswar-II Circle, Bhubaneswar realized the aforesaid amount of tax illegally and arbitrarily from the petitioner as per the certificate in Form VAT 605 inrespect of sales in course of inter State trade pursuant to contract with opp. Party no.4-Indian Oil Corporation Ltd., 304-Bhoi Nagar, Bhubaneswar.

(2.) The petitioner's case in a nutshell is that it is a Company registered under the provisions of the Companies Act, 1956 and it is a manufacturer supplier-contractor of canopy, cladding etc. having its factory at Sasewadi, Mumbai-Bangalore Highway, Tal. Bhor, Dist- Pune in the State of Maharashtra. The petitioner-Company was awarded with various work orders by the Indian Oil Corporation Ltd. (for short, "IOCL") for supply, fabrication and installation and Retail Visual Identity (for short, "RVI") elements at various retail outlets against limited tender No. OSO-ENG/2006-07/LT-41. As per the work order placed on the petitioner by IOCL, the petitioner is required to supply fabrication and installation of RVI elements at various retail outlets which will be subject to various terms and conditions, specifications and rate quoted by the petitioner-company and as finalized by IOCL. The work order provides for a time period for completion of work and further provides for compensation for delay. The contract further provides for service tax as per the provisions of law. Pursuant to the aforesaid contract entered into by the petitioner with IOCL, the petitioner- company supplied canopy, sales building fascia, column cladding etc. to IOCL. Against such supply, the petitioner-company has raised running account bills for 70% and 30% as per the completion stage of site invoices on IOCL and has charged Central Sales Tax at the appropriate rate i.e. 12.5% in the Commercial Invoice as required under Section 8 of the Central Sales Tax Act. IOCL for the purpose of dispatch of goods to its various retail outlets has also duly issued way bill form in the prescribed Form XXXII issued by the Sales Tax Officer which also contains the details of goods dispatched from Pune by the petitioner-company to IOCL. The goods sent by the petitioner is supported by consignment note, way bill, commercial invoice, challan and all other documents. The petitioner-company has dispatched 23 consignments pursuant to the contract relating to various work orders issued by the IOCL. The IOCL while making payment to the petitioner in respect of 23 RVI elements in various retail outlets has deducted service tax @ of 4.04 per cent (12.24 per cent x 33%) income tax @ 2.244 per cent, the works contract tax at the rate of 4% and retention at the rate of 5% while making payment of the balance bill amounts to the petitioner-company. Opp. Party no.4 has in the process deducted a sum of Rs.8,10,516/- from the petitioner even though the same is not realizable u/s. 54 of the Orissa Value Added Tax Act (for short, "OVAT Act"). Hence, the present writ petition.

(3.) Mr. Jagabandhu Sahoo, learned counsel appearing for the petitioner-company submits that the materials which are required for the purpose of RVI elements are supplied in pursuance of the contract entered with the IOCL by the petitioner-company in course of interstate sales as contemplated u/s 3 of the CST Act. As per the Explanation of Sec. 54 of the OVAT Act, the tax deducted by opp. Party no.4 is not realizable u/s. 54 of the OVAT Act. Neither the Explanation to Section 54 of the OVAT Act, nor the provisions of sub-section (5) nor any other provisions of Section 54 of the OVAT Act shall be construed as to authorize deduction of any amount of tax on the value of the property in goods transferred in the course of inter-state sales, sales outside the State or sales in the course of import. The petitioner in the present case having not transferred any property in goods in the State of Orissa pursuant to the contract with IOCL and the entire goods which are required for the purpose of RVI elements in various retail outlets having been supplied by the petitioner to IOCL under the CST Act, the petitioner does not incur any liability under the provisions of OVAT Act. The petitioner thus being not liable to pay tax under the OVAT Act does not incur any liability for obtaining registration under Section 24 of the said OVAT Act. The expression "sale" is defined under Section 2 of the OVAT Act and the note annexed to the explanation speaks in no uncertain terms that a sale or purchase shall not be deemed to have taken place inside the State, if the goods are sold in the course of inter-state trade and commerce.