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2007 (1) TMI 641 - ORISSA HIGH COURTComputation of Surcharge u/s 5-A of the Orissa Sales Tax Act, 1947 ("the OST Act") - modality contravenes the provisions of the Orissa Entry Tax Act ("the OET Act) and Orissa Entry Tax Rules ("the OET Rules") - HELD THAT:- It is well settled that the objective of framing rules is to fill up the gaps in a statutory enactment so as to make the statutory provisions operative. Rules also clarify the provisions of an Act under which the same are framed. (A) Subordinate legislation has been fictionally called the delegation of power to fill up the details. In Khambhalia Municipality v. State of Gujarat [1967 (2) TMI 111 - SUPREME COURT], it was pointed out that the legislature may, after laying down the legislative policy, confer discretion on an administrative agency as to the execution of the policy and leave it to the agency to work out the details within the framework of the policy. Sub-rule (1) of Rule 18 of the O.E.T. Rules, in consonance with the heading of Section 4 of O.E.T. Act lays down that a motor vehicle importer's "tax liability under the Sales Tax Act shall be reduced to the extent" of Entry Tax paid. The illustration appended to Sub-rule (1) of Rule 18 of the O.E.T. Rules specifically indicates that Sales Tax payable by a dealer is Sales Tax due less the amount of Entry Tax paid. The inconsistency or ambiguity, if any, between the language of Section 4 of the O.E.T. Act and Sub-rule (1) of Rule 18 of the O.E.T. Rules gets removed by the language in c, which provided that, "the Sales Tax payable on the sale of goods shall be reduced to the extent of Entry Tax paid in the manner illustrated under Sub-rule (1)." Thus, it is clear that the O.E.T. Act and O.E.T. Rules provide for set off of Entry Tax paid from the amount of Sales Tax payable by a dealer. In such view of the matter, the controversy in the present applications is confined to the question as to what constitutes "Sales Tax payable" under the O.S.T. Act. Therefore, on a plain reading of the provisions under the O.S.T. Act and the O.E.T. Act, set off has to be made by way of reduction of the Sales Tax payable to the extent of Entry Tax paid. There is no scope for the Revenue to urge that surcharge paid u/s 5-A of the O.S.T. Act has also to be taken into account in computing the dealer's tax liability under the O.S.T. Act. Such a conclusion is apparent from the provision of Section 5-A of the O.S.T. Act as it stood during the periods of assessments under the reference in the present applications. Thus, from a harmonious reading of the relevant provisions of the O.S.T. Act, O.E.T. Act and O.E.T. Rules, it is evident that "tax payable", as contemplated u/s 5-A of the O.S.T. Act, means tax payable after set off of Entry Tax from the Sales Tax assessed on a dealer. The modality adopted by the taxing authorities in computing surcharge on the gross tax assessed instead of tax payable after reduction to the extent of Entry Tax paid is not in accordance with the provisions under the O.S.T. Act, O.E.T. Act and O.E.T. Rules. The letter of clarification issued by the Government is misconceived and has no legal sanctity. In the result, therefore, the writ petitions are allowed; the impugned letter and the extra tax demand made on the Petitioners on the basis of such letter of clarification are quashed.
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