BIHAR ALLOY STEELS LTD Vs. STATE OF ORISSA

JUDGEMENT

(1.) PETITIONER in this writ application under article 226 of the Constitution of India is a company incorporated under the Companies Act, 1956.

(2.) PETITIONER is engaged in the manufacture of alloy steel products out of iron scraps and other alloying elements by establishing at Patratu in the district of Hazaribagh in the State of Bihar an electronic arc furnace which is popularly known as a mini-steel plant. Carbon steel melting scrap is required for the manufacturing process which has to be imported from foreign countries. For the purpose of import, Central Government laid down import policy. As per the procedure, import is to be made by a Government company established for the purpose known as "metal Scrap Trading Corporation Limited" (hereinafter referred to as "government company" ). The intending consumers of carbon steel melting scrap are to make applications for allotment of imported carbon steel melting scrap to the Government company and the allotted goods would be obtained by the consumers on import.

(3.) AFTER the goods were received at Paradeep Port, petitioner-company arranged for transportation of the same to the destination in Bihar. Goods so transported are to cross a check-post at Athar Banki established by the State Government under the Orissa Sales Tax Act. Way-bill in form No. XXXII is required to be furnished under section 16-A of the Act read with rule 94 (4) (a) made thereunder in support of the transport. On 4th April, 1987, the Sales Tax Officer in-charge of the check-post before whom the way-bill was produced found it to be defective and incomplete and also found that there was evasion of tax in respect of the goods carried. He issued notice in form No. VI-B to the petitioner-company to rectify the defects and omissions or to pay an amount of Rs. 1,000 immediately failing which action would be taken under rule 94 (4) (b) of the Rules. On 7th April, 1987, the said Sales Tax Officer passed an order that opportunity was given to rectify the defects and omissions. Such opportunity was also given to pay an amount of Rs. 1,000. Despite the same, petitioner did not rectify the defects nor opted to pay the amount. The petitioner claimed before the Sales Tax Officer that the goods were sold on the high seas by way of transfer of documents of title to the goods and thus, he would not be exigible to tax. The Sales Tax Officer was not satisfied from the oral explanation submitted and the documents produced that the consignment in question is not exigible to tax under the Orissa Sales Tax Act. He, therefore, concluded that the title to the goods passed to the petitioner after the goods have passed the customs frontiers and thus, the legitimate dues to the Government have not been paid. Therefore, the petitioner was called upon to deposit the amount of Rs. 1,000 on account of M/s. Metal Scrap Trading Corporation Limited (the Government company) as demanded in the notice in form No. VI-B, failing which action as contemplated under rule 94 (4) (b) of the Orissa Sales Tax Rules would be taken. On 8th April, 1987, the Government company addressed a letter to the Commissioner of Sales Tax that the allottees were not allowed to remove the materials out of Paradeep Port without payment of sales tax. In the said letter it was claimed that sales tax is not leviable on the transactions under article 286 of the Constitution of India and section 5 (2) of the Central Sales Tax Act, 1956. When the matter was at that stage, in response to the notice in form No. VI-B, the petitioner-company explained in a letter to the Sales Tax Officer on 14th April, 1987 that there is no defect in the way-bill and the omissions shall be furnished. No importance was given to such written intimation. Despite such intimation dated 14th April, 1987, the order which had already been passed by the Sales Tax Officer on 7th April, 1987, was issued to the petitioner on 22nd April, 1987. Immediately after receipt of this order, the petitioner has filed this writ application apprehending that at each and every time when the consignments would pass through the check-post the Sales Tax Officer would detain the goods of the petitioner and exercise the power under rule 94 (4) (a) of the Rules and the goods are likely to be auctioned.