JUDGMENT

B.N. MAHAPATRA, J. — Challenge has been made to the notices issued for less payment of tax in Form-E24 under Rule 10(6)(b) as well as demand notice in Form-E8 under Rule-16 of the Orissa Entry Tax Rules, 1999 (for short ‘OET Rules’) on the ground that both the notices have been issued directing the petitioner to pay Rs.13,33,115/- along with interest at the rate of 2% for the period from 01.01.2010 to the date of payment of the amount as directed in Form E24 without application of mind and misconstruing the above provisions of the OET Rules.

2.Petitioner’s case in a nutshell is that the petitioner is a dealer registered under Value Added Tax Act, 2004 (for short ‘VAT Act’) and Entry Tax Act, 1999 (for short ‘ET Act’). It has been regularly filing its quarterly returns as required under Sub-section (1) of Section 7 of the OET Act before the Assessing Authority disclosing nill turnover of value of goods on which entry tax is payable. In spite of the same, the Sales Tax Officer, Paradeep Circle, Paradeep, Jagatsinghpur issued notice for less payment of tax in Form E-24 under Rule 10(6)(b) followed by notice of demand in Form E-8 under Rule 16 of the OET Rules for Rs.13,33,115/- along with interest as directed in Form-E24. Hence, the present writ petition.

3.Mr. B. Panda, learned counsel for the petitioner submitted that the said notices have been issued without application of mind. The petitioner is a works contractor and in order to execute the work, it has procured machineries and construction materials from outside the State of Orissa and overseas countries on which no entry tax is leviable. The petitioner has been regularly filing its quarterly return in Form E-3 as required under Sub-section (1) of Section 7 of the OET Act. According to Mr. Panda, since the petitioner has filed quarterly return as required under Section 7(1) of the OET Act, no assessment can be made under Section 9A read with Rule 15A of the OET Rules. The impugned demand has been made ignoring the principle laid down in the judgment of this Hon’ble Court dated 18.02.2008 in W.P.(C) No.6515 of 2006 in the case of Reliance Industries Limited. Levy of entry tax on the goods imported from foreign countries is hit by Article 286(b) of the Constitution. The VAT amounting to Rs.50,55,057/- has been deducted at source from the payments made to the petitioner on account of execution of work. Therefore, further demand raised under OET Act is illegal.

4.Mr. Kar, learned counsel appearing for the Commercial Taxes Department submits that there is no illegality or infirmity in issuing the notice in Form E-24 under Rule 10(6)(b) and demand notice in Form E-8 under Rule 16 of the OET Rules. The petitioner having claimed illegal deductions from the total value of goods purchased and utilized in execution of the works contract, the Assessing Officer in exercise of power vested under Rule 10(6) (b) of the OET Rules has issued Form E-24 raising the amount due from the dealer. Consequently, notice of demand issued in Form E-8 is also valid.

5.On rival contentions of the parties, the only question that arises for consideration by this Court is as to whether in exercise of the power vested with the Assessing Officer under clause (b) of sub-rule (6) of Rule 10, the Assessing Officer can examine the correctness of various deductions claimed in the return to find out the amount of tax due from the assessee unilaterally by applying his own method of calculation.

6.To deal with the above question, it is necessary to know what is contemplated in sub-rule (6) of Rule 10, which is reproduced below :-

“(6) (a) Each and every return in relation to any tax period furnished by a dealer shall be subject to manual or system based scrutiny.

(b)If, as a result of such scrutiny, the dealer is found to have made payment of tax less than what is payable by him for the tax period, as per the return furnished, the assessing authority shall serve a notice in Form E24 upon the dealer directing him to