M/S Steel Authority of
India Ltd. Vs. Sales Tax Officer, Rourkela-I Circle & Ors [2008] INSC 1084
(10 July 2008)
Judgment
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. OF 2008 (Arising out of
S.L.P. (C) No.16781 of 2006) M/s Steel Authority of India Ltd. ....Appellant
Versus Sales Tax Officer, Rourkela-I Circle & Ors. ....Respondents
1.
Dr.
ARIJIT PASAYAT, J.
1.
Leave
granted.
2.
Challenge
in this appeal is to the order passed by a Division Bench of the Orissa High
Court disposing of the writ petition without any decision on merits because in
respect of the assessment year in question, i.e. 2001-02, an order was earlier
passed by this Court on 31.03.2006.
3.
A
brief reference to the factual aspects will be necessary.
The appellant, a
Public Sector Undertaking carries on business in manufacture and sale of Iron
& Steel and Chemical Fertiliser as its finished product and bi-product,
surplus and rejected articles, in course of inter-state trade and commerce and
export. Apart from that, the appellant- Company effects transfer of stock of
goods to its branches located at various places of the country. For the assessment
year 2001-02, notice was issued under Rule 12(5) of the Central Sales Tax
(Orissa), Rules, 1957 (in short `Central Rules') for the purpose of assessment
under Central Sales Tax Act, 1956 (in short the `Act'). After examination of
the books of accounts produced, an extra demand of Rs.19,25,41,763.00 was
raised. The appellant-Company had disclosed net sale 2 and transfer of goods
during the year under assessment in question as follows:
1.
Sales
U/s 8(l)(a)(b) Rs.714,18,82,639.06
2.
Sales
U/s 8(2)(b) Rs. 10,37,23,857.45
3.
Export
Sales Rs. 10,95,977.00
4.
Branch/Stock
transfer Rs.1130,24,48,338.61 Total Rs.1854,91,50,812.12_____________________________
The Assessing Officer found that certain declaration forms in Form `C' were not
produced and, therefore, the differential tax was to be levied. With reference
to Clause (a) of Section 3, it was held that the sales made under the Annual
Memorandum of Understanding (M0U), which were treated as Bank transfers are in
fact, sales made in course of inter-state 3 trade and commerce and, therefore,
are subject to tax. Accordingly tax was levied.
Questioning
correctness of the assessment made, an appeal was preferred before the
Assistant Commissioner of Sales Tax, Sundergarh Range, Rourkela. During the
pendency of the appeal, an application for stay was filed. The Assistant
Commissioner directed payment of part of the demand. An application for
revision was filed before the Commissioner, who, by order dated 28.12.2005 in
Revision Case No. SU- 87/05-06 directed payment of Rs.10.00 Crores. A Writ
Petition was filed before the High Court pointing out that the decision Anr.
(2004 (3) SCC 1) had full application. A Division Bench of the High Court, by
order dated 15.02.2006 directed deposit of Rs.2.00 Crores. The said order was
questioned in S.L.P.(C) No.5314/2006. In the said special leave petition,
several States and Union Territories were impleaded as opposite parties because
it was pointed out that requisite tax under the Act had already been paid in
different States and Union 4 territories. This Court passed the following order
on 31.03.2006:
"Issue notice.
There shall be
interim stay in the meanwhile.
Any payment already
made in compliance of the High Court's order shall be without prejudice to the
claims involved."
A few days
thereafter, on 19.04.2006, the Assistant Commissioner disposed of the appeal
filed dismissing the same and confirming the order of assessment. A Second
Appeal was filed before the Orissa Sales Tax Tribunal (in short the Tribunal).
An application for stay was also filed. By order dated 14.08.2006, the
Commissioner directed deposit of Rs.15.00 Crores. The said order was challenged
before the High Court and, as noted above, by the impugned order, the High
Court disposed of the said petition without expressing 5 any opinion on merits
but observing that the matter was under examination by this Court.
5.
Though
various points were urged in respect of the appeal, learned counsel for the
appellant submitted that even without examination of various issues raised, by
a cryptic and practically non-reasoned order, the Assistant Commissioner has
dismissed the appeal filed.
6.
It
is submitted that a statutory appeal should not be disposed of in such a casual
manner. It is pointed out that notwithstanding the fact that tax has been paid
in several States where the articles transferred the Branches have been sold,
the State has erroneously treated the transactions to be inter-state sale and
levied tax which in essence amounts to double taxation. It is submitted that
this is nothing but an attempt to collect tax illegally. It is not legal and is
in clear violation of Article 265 of the Constitution of India, 1950 (in short
the `Constitution'). It is also pointed out that the ratio of the decision of
this Court in Ashok Leyland Limited v. Union 6 of India & Ors. (1997 (9)
SCC 10) has not been kept in view. It is submitted that an amendment to the Act
has been made and Section 19 has been introduced which reads as follows:
"19. Central
Sales Tax Appellate Authority (1) The Central Government shall constitute, by
notification in the Official Gazette, an Authority to settle inter-State
disputes falling under Section 6A read with Section 9 of this Act, to be known
as "the Central Sales Tax Appellate Authority (hereinafter referred to as
the Authority)".
(2) The Authority
shall consist of the following Members appointed by the Central.
Government, namely:-
(a) a Chairman, who is a retired Judge of the Supreme Court, or a retired Chief
Justice of a High Court;
(b) an officer of the
Indian Legal Service who is, or is qualified to be, an Additional Secretary to
the Government of India; and (c) an officer of a State Government not below the
rank of Secretary or an officer of the Central Government not below the rank of
7 Additional Secretary, who is an expert in sales tax matter.
(2A) Notwithstanding
anything contained in sub-section (2), the Chairman or a Member holding a post
as such in the Authority for Advance Rulings appointed under clause (a) or
clause (c), as the case may be, of sub-section (2) of Section 245-0 of the
Income Tax Act, 1961 may, in addition to his being the Chairman or a Member of
that Authority, be appointed as the Chairman or a Member, as the case may be,
of the Authority under this Act.
(3) The salaries and
allowances payable to, and the terms and conditions of service of, the Chairman
and Members shall be such as may be prescribed.
(4) The Central
Government shall provide the Authority with such officers and staff as may be
necessary for the efficient exercise of the powers of the Authority under this
Act."
6. It is pointed out
that ultimately the Central Sales Tax Appellate Authority can decide the matter
after the Tribunal in 8
the concerned State
decides the matter. It is the stand of the appellant that the Forum provided
under the Statute is being rendered un-effective by the casual disposal of the
appeal.
7.
Learned
counsel for the respondent-State of Orissa, however, submitted that when the
assessee has already availed the statutory remedy, no interference is called
for.
8.
In
normal course, we would not have entertained the plea relating to the merits of
the assessment when a statutory remedy has been availed. But what shocks us is
the casual manner in which the first appellate authority has disposed of the
appeal. The appellate order covers pages 36 to 42 in the paper book. The first
page and a part of the second page deal with various data relating to the
assessment order, the assessing officer, the registration number and the details
of turnovers and the tax etc. In paragraph (2), the observations of the
assessing officer are noted and in paragraph 3, starting from pages 39 to 41,
different stands of the appellant have 9
been noted. In
paragraph 4, the conclusions of the first appellate authority are noted. They
read as follows:
"I have
carefully gone through the impugned order of assessment, averments of the
learned advocate and the materials available on record. On the first point of
dispute regarding the claim of the appellant towards refund of Tax of
Rs.14,59.122.52 collected from the bidders, before this forum also the
Appellant failed to adduce any evidences regarding refund of tax to such
bidders from whom tax was collected. In absence of such documentary evidences,
the claim of the appellant is not credible.
On the second point
of dispute regarding levy of tax on the sale turnover of Rs,1,21,03375.18 due
to non furnishing of declarations in forms. Hence, there is no interference
from this forum on the observation of the learned S.T.O., in levying tax under
Section 8 (2) (B) of the CST Act.
Lastly on the point
of rejection of the claim of the appellant towards branch transfer of goods
valued at Rs.241,87,42,357.93 from the order of assessment it is found that the
learned S.T.O. on due verification and proper examination of the material
evidences has rightly taken by the learned counsel of the appellant company and
the decisions of the different courts cited are not applicable in the present
case, the same is not considered."
9.
A
bare reading of the order shows complete non- application of mind. As rightly
pointed out by learned counsel for the appellant, this is not the way a
statutory appeal is to be disposed of. Various important questions of law were
raised. Unfortunately, even they were not dealt by the first appellate
authority.
10.
Reason
is the heartbeat of every conclusion. It introduces clarity in an order and
without the same it becomes lifeless.
(See Raj Kishore Jha
v. State of Bihar 2003 (11) SCC 519)
11.
Even
in respect of administrative orders Lord Denning, M.R. in Breen v. Amalgamated
Engg. Union (1971) 1 All ER 1148, observed: "The giving of reasons is one
of the fundamentals of good administration." In Alexander Machinery
(Dudley) Ltd. v. Crabtree 1974 ICR 120 (NIRC) it was observed: "Failure to
give reasons amounts to denial of justice." "Reasons are live links
between the mind of the decision-taker to the controversy in question and the
decision 11 or conclusion arrived at." Reasons substitute subjectivity by
objectivity. The emphasis on recording reasons is that if the decision reveals
the "inscrutable face of the sphinx", it can, by its silence, render
it virtually impossible for the courts to perform their appellate function or
exercise the power of judicial review in adjudging the validity of the
decision. Right to reason is an indispensable part of a sound judicial system;
reasons at least sufficient to indicate an application of mind to the matter
before court. Another rationale is that the affected party can know why the
decision has gone against him. One of the salutary requirements of natural
justice is spelling out reasons for the order made; in other words, a
speaking-out.
The "inscrutable
face of the sphinx" is ordinarily incongruous with a judicial or quasi-judicial
performance.
12.
Therefore,
in terms of the observations made by this Court while issuing notice on
19.10.2006, we set aside the impugned order of the Assistant Commissioner and
remit the matter to him for a fresh consideration of the appeal. Needless to
say, he has to dispose of the appeal by a reasoned order 12 dealing with all
the points of challenge highlighted by the appellant.
13.
We
make it clear that we have not expressed any opinion on the merits of the case.
14.
Considering
the fact that similar disputes are a recurring feature, the first appellate
authority would do well to dispose of the appeal within a period of six months
from the date of receipt of copy of our order.
15.
The
appeal is allowed to the aforesaid extent without any order as to costs.
...............................J.
(Dr. ARIJIT PASAYAT)
...............................J.
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