1987 (3) TMI 485 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the assessment of Orissa sales tax on inter-State sales.
2. Appropriateness of the conditional stay granted by the Commissioner.
3. Jurisdiction of the High Court in granting stay during the pendency of an appeal.

Issue-wise Detailed Analysis:

1. Legality of the assessment of Orissa sales tax on inter-State sales:
The petitioner argued that the entire turnover comprised inter-State sales for which C forms had been supplied by Paradeep Phosphates, thus making the turnover non-taxable under Orissa sales tax. The Commissioner, while noting the petitioner's contentions, found some merit in them, yet directed the petitioner to pay Rs. 50,000 as a condition for stay. The High Court acknowledged that the petitioner's turnover was not liable to Orissa sales tax, emphasizing that "no part of the turnover of the petitioner was exigible to Orissa sales tax." This raised the question of the jurisdiction of the assessing officer in levying Orissa sales tax on inter-State sales, which had already been included in Central sales tax returns and paid in Maharashtra.

2. Appropriateness of the conditional stay granted by the Commissioner:
The Commissioner granted a partial stay, directing the petitioner to pay Rs. 50,000 out of the assessed amount of Rs. 2,29,458. The petitioner contended that this was unjust, given the Commissioner's acknowledgment of the strength of the petitioner's case. The High Court expressed that the Commissioner's decision to require a payment of Rs. 50,000 was an "illegal exercise of jurisdiction," considering the petitioner's strong prima facie case. The judgment highlighted that "if the Commissioner was satisfied that Orissa sales tax was not leviable in respect of the transaction in question, there was no bar for granting relief of stay to the extent of full amount."

3. Jurisdiction of the High Court in granting stay during the pendency of an appeal:
The High Court discussed the principles guiding the jurisdiction in the matter of granting stay of tax realization. It was noted that the Supreme Court's decisions do not preclude the High Court from exercising its discretion in granting stay in appropriate cases. The judgment stressed that refusing to exercise jurisdiction would be "tantamount to abdicating our jurisdiction under articles 226 and 227 of the Constitution of India." The High Court, therefore, decided to grant stay until the disposal of the appeal, stating that "it will be inequitable to refuse stay in such case."

Separate Judgments:
Justice S.C. Mohapatra disagreed with Justice R.C. Patnaik, emphasizing procedural issues and the necessity of detailed records for exercising the power of superintendence under Article 227. He argued that the petitioner's grievance regarding the partial stay could be addressed in the pending appeal and cited the Supreme Court's guidelines on granting stay, which caution against routine stays in tax matters. Justice Mohapatra concluded that this was not a fit case for interference and dismissed the writ application.

Justice G.B. Patnaik, resolving the difference of opinion, sided with Justice R.C. Patnaik. He acknowledged the petitioner's strong prima facie case and the Commissioner's partial agreement with the petitioner's contentions. Justice Patnaik concluded that the petitioner should benefit from the difference of opinion between the two judges and modified the Commissioner's order, granting a full stay of the entire amount under demand until the final disposal of the appeal by the Assistant Commissioner.

Conclusion:
The writ application was allowed, and the High Court granted a full stay of the tax demand until the appeal's disposal, directing the Assistant Commissioner to resolve the appeal within two months.