Back
2007 Supreme(Ori) 226
2007 (Supp.-I) OLR — 725
THE CHIEF JUSTICE AND I. MAHANTY, J.
M/s. Balasore Alloys Limited (Formerly known as M/s. Ispat Alloys) Limited) and another...Petitioners
Versus
State of Orissa and two others...Opp.Parties
W.P.(C) Nos.11691 to 11694 and 11696 of 2003.
(Date of Judgment : 2.4.2007)
For Petitioners:M/s. A. K. Parija, S. P. Sarangi, B. C. Mohanty, P. P. Mohanty, D. K. Das & P. K. Dash
For Opp.Parties:Mr. D. Das, Addl. Govt. Advocate (for Opposite Party No.1)
Mr. S. K. Patnaik, Standing Counsel (Sales Tax)
(for Opp.Party Nos. 2 and 3)
Headnote:1. CENTRAL SALES TAX RULES, 1957 - Rule 16(1), 16(2) - Sick Industrial Companies (Special Provisions) Act, 1985 - Sec. 22 - Arrear dues - Levy of penalty - Tax liability paid by the petitioner company - Question of payment of penalty - Petitioner was entitled to protection under Sec. 22 of the S.I.C.A. as soon as its reference was duly registered after scrutiny and enquiry under Sec. 16 commenced - Imposition of penalty by the authorities ignoring the legal position under Sec. 22 of the S.I.C.A. is not a proper exercise of discretion under Rule 16(2) - Held, imposition of penalty in the present case cannot be sustained in law.
When the protection under Section 22 of SICA allows the petitioner company not to pay the demanded tax till the protection lasts, the imposition of ‘penalty’ for non-payment of the tax during that period of statutory protection is not a valid exercise of power under Rule 16 (2) of the said Rules.
(Paras - 22 to 30)
2. STATUTORY AUTHORITY - Discretionary power - Discretion is vested on a statutory authority, the same has to be exercised according to law and justice and not according to caprice and whim of the statutory authority. (Para - 25)
JUDGMENT
A. K. GANGULY, C.J. : All these five writ petitions were heard together as common questions of fact and law are involved. This judgment decides all these cases. In all these writ peti¬tions, the show cause notices dated 15.9.2003 for imposing penal¬ty under the Central Sales Tax (Orissa) Rules, 1957 and the orders dated 30.9.2003 by which penalty was imposed for non-compliance with the notices dated 15.9.2003 are challenged.
2. The main ground of challenge is that such levy of penalty is in violation of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as ‘SICA’) and also in utter disregard of an interim order dated 8.12.2003 which was passed by this Hon’ble Court in W.P.(C) No.11691/03.
3. The relevant facts of the case are discussed below :
The petitioner-company M/s. Balasore Alloys Limited, former¬ly known as Ispat Alloys Limited, is a registered company under the Companies Act. Its name has been registered as a dealer under the Orissa Sales Tax Act, 1947 (in short, ‘OST Act’) and also under the Central Sales Tax Act, 1956 (in short, ‘CST Act’). The said company was assessed under the CST Act for the assessment year 1997-98 and tax payable was assessed at Rs.1,02,73,034/-. The payment of the same was deferred for a period of 5 years in view of the provisions of the IPR, 1992 and it became payable on and from 1.3.2003.
Petitioner’s case is that its Auditors while finalizing its audited accounts for the period ending 30.9.2002 reported that it has become a sick industrial company. In view of such report, the petitioner company filed a reference application to the Board of Industrial and Financial Reconstruction (hereinafter referred to as the ‘BIFR’) for registration of its case under Section 15(1) of SICA. Thereafter on 9th May, 2003, the Registrar, BIFR inti¬mated the petitioner company that the reference received from the petitioner-company stands registered as Case No.217/03. The peti¬tioner - company intimated the Sales Tax Officer, Balasore Circle vide its communication dated 26.5.2003 that it has been regis¬tered as a sick company under Section 15 of SICA. A copy of the reference application made to the BIFR was also filed as enclo¬sure to such communication. But the Sales Tax Officer, Balasore Circle - opposite party No.3 sought to recover the arrear dues from the petitioner company by issuing an attachment order di¬recting the petitioner company to deposit an amount of Rs.2,27,68,600/- for the years 1995-96 to 1997-98 and 1999-2000 respectively within seven days.
4. Challenging the said order of attachment W.P.(C) No.6549/03 was filed by the petitioner in this court on the ground that issuance of the aforesaid attachment order is prohib¬ited in view of the provisions of Section 22 of SICA. On that writ petition, a Division Bench of this Court passed the follow¬ing order on 26.8.2003 :
“It is stated that attachment notice has been issued attaching the bank account of the petitioner for recovery of Rs.2,27,68,600/- and a sum of rupees one crore and odd has al¬ready been recovered.
This matter will be listed on Friday (29.8.2003) for order as prayed for by Mr. Ashok Mohanty.
Till further orders, no further recovery will be made from the Bank accounts of the petitioner pursuant to the impugned attachment notice.”
5. The grievance of the petitioner is that despite the said order, opposite party No.3 issued a show cause notice under Rule 16(1) of the CST (Orissa) Rules, 1957 on the petitioner company seeking to recover the arrear dues of Rs.1,02,73,034/- for the assessment year 1997-98 by 29.9.2003 failing which it was stipulated that the maximum penalty of 50% will be imposed under Rule 16(2) of the CST (Orissa) Rules, 1957. The said notice is impugned in this group of cases.
6. In answer to the said show-cause notice, the petitioner filed its reply on 29.9.2003. In the said reply it was pointed out that all ferro alloys companies in the country were going thr
