Petitioner required to compensate by payment of interest as State of Odisha deprived of recovering 2/3rd tax due

Bharat Motors Ltd. Vs Sales Tax Officer (Orissa High Court)

Orissa High Court held that State of Odisha was deprived of recovering 2/3rd of tax due by virtue of interim order of the Supreme Court of India, accordingly, petitioner is required to compensate the State of Odisha by making payment towards interest in the interest of justice and equity.

Facts- The petitioner No.1-Shree Bharat Motors Ltd., public limited company, represented by Sri Jay Prakash Didwania, Managing Director of the company joined as the petitioner No.2 (petitioner) questioning the veracity of Assessment Order dated 11.11.2016 passed by the Assessing Authority (ET), Bhubaneswar-I Circle, Bhubaneswar under Section 9C of the Odisha Entry Tax Act, 1999 (“OET Act” for short) pertaining to tax periods 01.04.2013 to 31.03.2015 (Annexure-6) and issue of Notice(s) in Form E-24 prescribed under Rule 10(6)(b) of the Odisha Entry Tax Rules, 1999 (for brevity referred to as, “OET Rules”) whereby along with the quantum of deficit tax found in the returns relating to the tax periods from 01.04.2015 to 30.04.2017, the Assessing Authority raised demand(s) of interest @ 1% per month in terms of Section 7(5) vide Annexure-9 series, assailed the revised entry tax demand notice issued in Form E-8 by the Deputy Commissioner of Sales Tax, Bhubaneswar-I Circle, Bhubaneswar for the tax periods from 01.04.2008 to 31.03.2015 as upheld vide Annexure-10, i.e., Order dated 24.06.2017 passed in Revision Case No.30(E)/2017-18 by the Commissioner of Sales Tax, Odisha while disposing of revision petition filed at the behest of the petitioner u/s. 18 of said Act.

This apart, the petitioner has also assailed instructions vide Letter bearing No.9755-Rev-35/59/2017-Rev-CCT/CT, dated 23.06.2017 addressed to the field formations to undertake recovery process in view of Order dated 28th March, 2017 of the Hon’ble Supreme Court passed in State of Odisha Vrs. Reliance Industries Ltd. and Others, SLP(C) No.14454-14778/2008 pursuant to legal position as set at rest by Nine-Judge Constitution Bench decision of said Hon’ble Court in the matters of Jindal Stainless Ltd. Vrs. State of Haryana, (2017) 12 SCC 1.

Conclusion- Analysis of Section 7(5) of the OET Act read with Rule 10 of the OET Rules transpires that interest is payable on tax due as discussed above, and the same is subject to fulfilment of condition that on failure to pay the amount of tax due as per the return “without sufficient cause”.

Please become a Premium member. If you are already a Premium member, login here to access the full content.