ORISSA CEMENT LIMITED Vs. STATE OF ORISSA

JUDGEMENT

(1.) THE petitioner-company is a registered dealer under the Orissa Sales Tax Act, 1947 (hereafter referred to as the "act"), and bears Registration Certificate Number RL-297. It was assessed to sales tax for the year 1969-70 under section 12 (2) of the Act. The Sales Tax Officer found that the petitioner had realised a sum of Rs. 19,702. 65 by way of sales tax on railway freight. As the taxing officer considered this to be an authorised realisation he proceeded to levy penalty of double the amount as provided under section 9-B (3) of the Act and required the company to pay a sum of Rs. 39,405. 30 on that count. The petitioner has challenged the vires of section 9-B (3) of the Act as also the imposition of penalty in the facts of the case.

(2.) IN the counter-affidavit, the levy of penalty under section 9-B (3) of the Act has been contended to be just and proper and section 9-B (3) is claimed to be intra vires the Constitution.

(3.) FOR convenience, we proceed to deal with the second question first. It is the petitioner's case that the exigibility of sales tax in regard to freight was a disputed question until the Supreme Court settled the matter in the case of Hyderabad Asbestos Cement Products Ltd. v. State of Andhra Pradesh ([1969] 24 S. T. C. 487 (S. C. ). ). The judgment in the aforesaid case was delivered on 19th February, 1969, and towards the later part of the year this decision got reported in Law Reports and gathered publicity. Not being sure of the position in law, sales tax had been charged on the freight and in due course had even been deposited into Government treasury. This was long before the question came to be raised in connection with assessment proceedings. The amendment of the Orissa Sales Tax Act is 1968 whereunder the earlier provision of section 9-B (3) of the Act was substituted by a new provision was also not very must known to the officers of the petitioner-company and, therefore, due care was not exercised so as to avoid imposition of penalty. The conduct of the petitioner is far from either being contumacious or in flagrant disregard of the statutory provisions. The collection had been made in view of the unsettled position in law and more with a view to not suffering a loss than for committing a breach of the mandate in the statute and abuse the privilege conferred under section 9-B (1) of the Act. The learned standing counsel for the department takes the stand that "sale price" has been defined in section 2 (h) of the Act and where freight is separately charged, it does not merge into sale price for the purposes of imposition of sales tax. According to the learned standing counsel, in view of this definition as also the earlier decision of the Supreme Court in the case of Tungabhadra Industries Ltd. v. Commercial Tax Officer ([1960] 11 S. T. C. 827 (S. C. ).), there was no scope for any ambiguity regarding liability for payment of sales tax in respect of freight.