1994 (1) TMI 257 - HC - VAT and Sales Tax

Issues Involved:
1. Conditional stay granted by the Commissioner of Sales Tax, Orissa.
2. Assessment made by the Sales Tax Officer under rule 12(5) of the Central Sales Tax (Orissa) Rules, 1957.
3. Treatment of branch transfers as inter-State sales.
4. Diversion of goods to stock yards/B.S.O. treated as inter-State sales.
5. Transfer of stock to sister plant.
6. Non-production and/or defective production of declaration forms.
7. Financial stringency of the petitioner.
8. Early disposal of pending matters.

Issue-wise Detailed Analysis:

1. Conditional Stay Granted by the Commissioner of Sales Tax, Orissa:
The petitioner challenged the conditional stay granted by the Commissioner of Sales Tax, Orissa, which directed the payment of Rs. 45 crores during the pendency of the appeal. The Commissioner later reduced this amount to Rs. 40 crores, considering the financial stringency of the petitioner. The court noted that the Commissioner should have considered the prima facie nature of the case, balance of convenience, and potential loss and injury to either party.

2. Assessment Made by the Sales Tax Officer:
The assessment under rule 12(5) of the Central Sales Tax (Orissa) Rules, 1957, resulted in a total demand of Rs. 52,70,92,433. The petitioner argued that the assessment was incorrect and that sufficient time was not granted for the production of declaration forms. The court acknowledged that the assessment should be fair and based on all relevant facts and materials.

3. Treatment of Branch Transfers as Inter-State Sales:
The petitioner contended that the assessing officer wrongly treated branch transfers as inter-State sales. The court noted that the Tribunal had previously held similar turnovers to be taxable under section 3(a) of the Central Act. However, the court emphasized that the petitioner should be given an opportunity to produce declaration forms to avail concessional tax rates, citing the Supreme Court's decision in Sahney Steel and Press Works Ltd. v. Commercial Tax Officer.

4. Diversion of Goods to Stock Yards/B.S.O. Treated as Inter-State Sales:
The petitioner argued that the Tribunal had previously held such diversions to be non-taxable for the assessment year 1984-85. The court agreed that these transactions should be reconsidered in light of the Tribunal's earlier decision.

5. Transfer of Stock to Sister Plant:
The petitioner claimed that the transfer of stock to a sister plant was wrongly taxed. The court noted that the Tribunal had previously ruled such transfers as non-taxable and directed that this issue be reconsidered.

6. Non-Production and/or Defective Production of Declaration Forms:
The petitioner argued that sufficient time was not granted for the collection of declaration forms and that some forms were not considered by the assessing officer. The court held that the first appellate authority should consider the declaration forms produced and that adjournments should be granted based on the merits of each case.

7. Financial Stringency of the Petitioner:
The petitioner, a public sector undertaking, argued that its financial condition should be considered. The court acknowledged the financial difficulties and directed a reduced payment of Rs. 16 crores by February 28, 1994, with the balance stayed until the disposal of the appeal.

8. Early Disposal of Pending Matters:
The petitioner sought early disposal of pending matters. The court directed that reassessment proceedings, especially those pending for more than five years, be completed by the end of 1994. The court emphasized the importance of finality in legal proceedings and directed the petitioner to produce the court's order before various authorities to ensure compliance.

Conclusion:
The writ application was disposed of with specific directions for the payment of Rs. 16 crores and early disposal of pending reassessment proceedings. The court emphasized the need for fair assessment and consideration of all relevant materials and evidence.

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