ANURAG STEEL INDUSTRIES Vs. STATE OF ORISSA

JUDGEMENT

(1.) SEVERAL interlinked grievances are made in this writ application. The petitioner avers that benefits promised by the State have been denied by the sales tax authorities. The petitioner calls in question the action of the sales tax authorities in refusing to issue form IB, amending the certificate of registration issued under the provisions of the Orissa Sales Tax Act, 1947 (in short, "the Act") and the Orissa Sales Tax Rules, 1947 (in short, "the Rules"). The assessments made for the assessment years 1987-88 and 1988-89 are assailed. The notification issued in exercise of the powers under section 6 of the Act [Notification No. 6289-C.T.A-36/86 (Pt-P) dated February 13, 1987] is assailed on the ground that in part it is at variance with promises held out by the State.

(2.) THE background facts as depicted by the petitioners are to the following effect. One Binod Kumar Agrawala is the proprietor of the petitioner-concerns, viz., M/s. Anurag Steel Industries and M/s. Prem Industries. He, inter alia, carries on business of processing of iron and steel materials, such as plates, sheets, ingots and slabs and manufacturing of steel trunks and suitcases in the aforesaid industrial units. With a view to avail incentives guaranteed under the Industrial Policy Resolution, 1986 of the Government of Orissa (in short, "IPR") he applied to the District Industries Centre (in short, "DIC") for registration in the year 1988. On being satisfied about correctness of the applications, the authorities permitted him to set up the industries and after commencement of the production, the DIC authorities granted permanent registration certificate authorising him to carry on the industrial activity in respect of processing slabs, ingots and plates to the tune of 3,000 metric tons per annum in respect of M/s. Anurag Steel Industries. The commercial production was started on February 15, 1988, in respect of its processing, and on June 10, 1988, for the manufacturing activity. M/s. Prem Industries was engaged in manufacturing of M.S. coil, M.S. plates, ingots, slabs and C.I. scraps by cutting, bending and sizing and started its commercial production with effect from April 4, 1988 and for the said industry the petitioner has been utilising the raw materials to the extent of 13,500 metric tons per year. After due verification the DIC, Sundargarh, granted permanent registration certificate to the petitioner on October 21, 1989. The petitioner applied for issue of certificate of registration to the sales tax authorities which was granted on March 14, 1988, and it was authorised to deal with various products. In the certificate, it was indicated that the petitioner's unit was dealing with processing activities. Originally certificate of registration was granted to M/s. Anurag Steel Industries and subsequently the certificate of registration was amended and M/s. Prem Industries was also given the authority to deal with certain products with effect from November 18, 1989, since both the industries were proprietary concerns of Sri Binod Kumar Agrawala. After it was granted certificate of registration by the sales tax authorities, the petitioner moved the DIC for issue of exemption certificate for availing concession on the purchase of the raw materials in terms of the IPR. Such certificate bearing No. 4268 dated August 30, 1988, was issued to M/s. Anurag Steel Industries, certifying that the petitioner was eligible for concession from payment of sales tax on the purchase of raw materials for a period of five years from the date of commencement of commercial production. Originally the certificate was issued for one year and subsequently the period of its validity has been extended. Subsequently on similar motion being made a certificate was issued to M/s. Prem Industries authorising purchase of spare parts and machineries and raw materials and packing materials on concessional rate of tax in terms of the IPR. There is no dispute that the DIC authorities have issued certificates to the petitioner entitling it to avail concession on the purchase of raw materials so far as the sales tax is concerned. After the exemption certificates were obtained from the DIC authorities, the petitioner applied to the Sales Tax Officer for issuing declaration forms (form IB). The forms were originally issued to the petitioner which had been utilised for the purpose they were issued. When the petitioner moved for issue of fresh forms on March 10, 1990, the Sales Tax Officer sat over the application for issue of forms. Since the petitioner's business was being affected, the petitioner issued several reminders to issue the forms; but the petitioner's prayer did not yield any result. This Court was moved for a direction to the sales tax authorities to issue the declaration forms. It was brought to the notice of this Court that an enquiry was being conducted, and the question of issue of declaration forms was to be considered after the enquiry. The writ application was withdrawn when the sales tax authorities assured that the forms will be issued. In July, 1991, certain provisions of the Act stood amended and by a new provision, i.e., section 2(ddddd), the definition of "manufacture" was given a broad base, and processing was included in the definition. Further applications were filed before the Sales Tax Officer for issue of forms as well as for amendment of the certificate of registration. Surprisingly, without notice and opportunity the Sales Tax Officer amended the certificate of registration treating the petitioner to be a trader, although no trading is undertaken by the industrial concerns of the petitioner. Such amendment was made with effect from April 1, 1990. The suo motu amendment was challenged before the Commissioner of Sales Tax who upheld the order of the Sales Tax Officer. On January 15, 1992, the petitioner received a letter from the Sales Tax Officer communicating therein that the petitioner-unit had no use of form IB, and therefore, the application filed for issue of form IB was rejected. The petitioner makes a grievance that giving an erroneous interpretation to the expression "manufacture" used in the statute and without properly examining the genuineness of the claim of concession made by the petitioner, the sales tax authorities are making assessments and have raised huge extra demand.

(3.) WE shall first deal with the powers of the Sales Tax Officer while dealing with an application for issue of form IB. At this juncture it is necessary to refer to IPR, 1986. So far as the sales tax is concerned, it is indicated in the said resolution that all new village, cottage and small industries will be exempted from sales tax on purchase of spare parts of machinery, raw materials and packing materials for a period of five years from the date of their commercial production. Products of new small-scale industries will also be exempted from sales tax for a period of five years from the date of their commercial production. By Finance Department notification dated February 13, 1987, published in the Extraordinary Orissa Gazette on February 16, 1987, an amendment was made to the notification of the Government of Orissa in the Finance Department No. 20206-CTA-14/76-P, dated the April 23, 1976, in exercise of the powers conferred by section 6 of the Act. The following entry 26-D was inserted. The said entry so far as it is relevant is extracted below :-