ULTRA TECH CEMENT LT V. COMMERCIAL TAX

WP(C)/9939/2006

AI Insights

The case involves a writ petition filed by the petitioner challenging the penalty levied by the Assistant Commissioner of Sales Tax under Section 62(7) of the Orissa Value Added Tax Act, as well as the revisional order by the Commissioner of Sales Tax. The penalties were imposed due to the petitioner's failure to revise tax returns following the issuance of credit notes, which accounted for discounts given. The petitioner argued that the penalties were unjust, citing a Supreme Court decision that supported their position. The High Court, referencing the Supreme Court's judgment, found in favor of the petitioner, quashing the penalty orders and ordering a refund of the tax paid.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 735668 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 14-08-2019
• Assessment Year: misc
• Other Referred Cases: M/s. Southern Motors v. State of Karnataka and others (2017) 3 SCC 467
• Laws Referred To: Orissa Value Added Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: S P MISHRA
• Keywords: Credit notes; Penalty; Quashing; Revisional Order; Incorrect returns
• Section: 62(7)

Judgement Text

" 17. 14.08.2019 Heard learned counsel for the parties. By way of this writ petition, the petitioner has challenged the levy of penalty by the Assistant Commissioner of Sales Tax, Sambalpur Range, Sambalpur under Section 62 (7) of the Orissa Value Added Tax Act vide order dated 10.03.2006 (Annexure-5) and the revisional order dated 19.07.2006 passed by the Commissioner of Sales Tax, Orissa vide Annexure-7 and has prayed for quashing of the same. The main ground on which the order of penalty vide Annexure-5 has been passed is that the petitioner has furnished incorrect returns as the same has not been revised consequent upon issue of credit notes taking into consideration the invoices which were prepared and the discounts given, which were either refunded or returned to the concerned dealers. The invoices were not accordingly revised nor as stated above, revised returns have been filed. Further, the revision petition filed by the petitioner before the Commissioner of Sales Tax was confirmed by order dated 19.07.2006 vide Annexure-7 wherein the Commissioner has not interfered with the order of the Assistant Commissioner passed under Annexure-5. This Court while admitting the matter on 31.07.2006 has passed the following order: “Heard learned counsel for the parties. Considering the facts and the question of law involved in this writ petition, the same is admitted for final hearing. Counter affidavit be filed within four weeks from today. Rejoinder, if any, be filed two weeks thereafter. List this matter after six weeks. In the meantime, petitioner is directed to deposit an amount of Rs.34,21,921/- (rupees thirty four lakhs twenty one thousand nine hundred twenty W.P.(C) No.9939 OF 2006 -2- one) after deducting the amount of Rs.5.00 lakhs from Rs.39,21,921/- which has already been deposited, by 15th of September 2006 without prejudice to the rights and contentions of the parties. On such payment being made by the petitioner, the attachment of its bank account shall be released and so far as the penalty of Rs.78,43,842/- is concerned, the payment of same shall remain stayed until further orders. Urgent certified copy of this order be granted on proper application.” Mr. S.P. Mishra, learned Senior Counsel appearing for the petitioner while challenging the aforesaid orders vide Annexures-5 and 7 has relied upon the decision of the Hon’ble Supreme Court in the case of M/s. Southern Motors v. State of Karnataka and others, reported in (2017) 3 SCC 467 and emphasized the observations made by the Hon’ble Supreme Court at paragraphs-3 and 40 of the said judgment. For convenience sake, the said two paragraphs read as under: “3. The foundational facts, albeit not in dispute, present the required preface. The appellant is a dealer in the motor vehicles and registered under the Act. Its version is that during the years in question i.e. 2007-2008 and 2008-2009, it raised tax invoices on the purchasers as per the policy of manufacturers of vehicles to maintain uniformity in the price thereof. After the sales were completed, credit notes were issued to the customers granting discounts, in order to meet the competition in the market and for allied reasons. Consequentially, it received/retained only the net amount, that is the amount shown in the invoice less the sum of discount disclosed in the credit note. Accordingly, the net amount, so received was reflected in his books of account and returns were filed under the Income Tax Act, 1961 et al. xxx xxx xxx 40. On an overall review of the scheme of the Act and the Rules and the underlying objectives, in particular of Sections 29 and 30 of the Act and Rule 3 of the Rules, we are of the considered opinion that the requirement of reference of the discount in the tax invoice or bill of sale to qualify it for deduction -3- has to be construed in relation to the transaction resulting in the final sale/purchase price and not limited to the original sale sans the trade discount. However, the transactions allowing discount have to be proved on the basis of contemporaneous records and the final sale price after deducting the trade discount must mandatorily be reflected in the accounts as stipulated under Rule 3(2)(c) of the Rules. The sale/purchase price has to be adjudged on a combined consideration of the tax invoice or bill of sale, as the case may be, along with the accounts reflecting the trade discount and the actual price paid. The first proviso has thus to be so read down, as above, to be in consonance with the true intendment of the legislature and to achieve as well the avowed objective of correct determination of the taxable turnover. The contrary interpretation accorded by the High Court being in defiance of logic and the established axioms of interpretation of statutes is thus unacceptable and is negated. The appeals are thus allowed in the above terms. No costs.” Taking into consideration the facts of the present case, we find that the issue involved in this writ petition is squarely covered by the aforesaid decision of the Hon’ble Supreme Court. The orders passed by the authorities vide Annexures-5 and 7 are hereby quashed and set aside. The amount of tax paid by the petitioner and also the amount paid pursuant to the order of this Court dated 31.07.2006 will be refunded within a period of four weeks from today. Accordingly, the writ petition is disposed of. Urgent certified copy of this order be granted on proper application. AKK .\u0002\u0002..........\u0002\u0002\u0002\u0002 ( K.S. Jhaveri ) Chief Justice \u0002\u0002\u0002\u0002\u0002\u0002.\u0002\u0002.. ( K.R.Mohapatra ) Judge "