BAJAJ AUTO LTD. Vs. STATE OF ORISSA

JUDGEMENT

(1.) IN these writ petitions, the modality adopted by the opp.parties in working out the surcharge U/s. 5 -A of the Orissa Sales Tax Act, 1947 (in short, "the OST Act") is under challenge basically on the allegation that the said modality contravenes the provisions of the Orissa Entry Tax Act (in short, "the OET Act) and Orissa Entry Tax Rules (in short, "the OET Rules"). Since common question of fact and law are involved in all the writ petitions, they are taken up for analogous disposal by this common order.

(2.) THE petitioners' case is that they are all registered dealers in motor vehicles under the Orissa Sales Tax Act. (in short, 'the OST Act) as well as the Central Sales Tax Act and are engaged in purchase and sale of Motor vehicles. They pay entry tax on the purchase value of the Motor vehicles, which are brought into the State of Orissa from outside as required u/s 3(3) of the OET Act and in their sales tax returns filed in obedience to Section 11 of the OST Act claim set off of the entry tax amount already paid in respect of the motor vehicles against the sales tax and surcharge payable in accordance with Section 4(1) of the OET Act and Rule 18 of the OET Rules. They allege that suddenly the concerned Sales Tax Officers, who are the assessing authorities of the petitioners, proceeded to work out the tax demand by computing the surcharge on the amount of tax payable before reduction of the entry tax amount contemplated under Section 4 of the OET Act, disregarding the provision and illustration of Rule 18 of the OET Rules which resulted in extra tax demand. The petitioners claim that on an enquiry they learnt that the above said exercise by the assessing authorities was in consequence to a letter of the Government of Orissa addressed to the Commissioner of Commercial Tax and circulated to all the Range Officers and Sales Tax Officers wherein direction has been given that surcharge under the OST Act is to be computed on the payable amount of tax demand instead of reduced sales tax amount after deduction of the entry tax. According to the petitioners, this letter of the Government is in total contrast to the Rule and the illustration given in Rule 18 of the OET Rules and the clarification letter dated 31.5.2001 issued by the Commissioner of Commercial Tax and is, therefore, untenable as an executive instruction cannot supersede a rule framed through legislation. The petitioners have, therefore, prayed for quashing the aforesaid circular letter of the State Government dated 20th November, 2001 as well as the notice issued by the concerned Sales Tax Officers to the respective petitioners making extra tax demand.

(3.) LEARNED counsel appearing for the petitioners offered their submission separately, but in essence they took the same stand. According to them, the provision of Section 4 of the OET Act provides for reduction of tax liability under the OST Act to the extent of entry tax paid under the OET Act and in notification in SRO No.149 of 2001 the Government have also notified that rate of tax in Sales Tax Act shall be subject to Section 4 of the OET Act, 1999 which are indicative of the fact that the reduction of the entry tax amount is to be given at the stage of computation of the gross sales tax liability. Indicating the illustration of Rule 18 of the OET Rules in this regard, they argued that when the government have framed the Rule and have explained the mode of computation of surcharge, the same government in Finance Department has no locus standi to clarify that surcharge is levyable on sales tax payable before the set off of the entry tax amount. They postulate that surcharge is to be computed on the amount of sales tax payable after the deduction contemplated under Section 4 of the OET Act is made and in this regard indicated a letter of clarification issued by the Commissioner of Commercial Tax on 31.5.2001 that surcharge is to be computed on the net sales tax payable after the set off of the entry tax paid in respect of the purchase value of the vehicles. To fortify their contention learned counsels relied on the cases of Prabhat Solvent Extraction Industries Pvt. Ltd. v. The State of Gujarat, (1982) 49 STC 322 (Guj.); Commissioner of Sales Tax v. Burma Shell Refineries Ltd. (1978) 41 STC 337 (Bom.); Commissioner of Sales Tax v. Bharat Petroleum Corporation Ltd. 85 STC 220 (SC); Commissioner of Sales Tax v. Jai Hind Oil Mills Co. (1977) 40 STC 60 (Bom.); Saraswati Oil Mills v. State of Gujarat (1966) 18 STC 163 (Guj); C.A. Abraham v. Income Tax Officer; 41 ITR 425 (SC).