2021 (3) TMI 1265 - HC - VAT and Sales Tax

Validity of re-computation of sales tax payable - assessment years (AYs) starting from 1999-2000 till 2004-05 - time limitation - levy of interest - HELD THAT - There was no other basis for accepting the plea of the assessee for the AYs in question. That very basis of the orders passed by this Court has been rendered non-existent by the judgment of the Supreme Court in Bajaj Auto Ltd. 2016 (11) TMI 31 - SUPREME COURT setting aside the order dated 5th January, 2007 of this Court. The aforementioned declaration of the law by the Supreme Court is binding on all the authorities in terms of Article 141 of the Constitution - Consequently, the impugned orders that have been passed, re-computing the tax payable to give effect to the judgment of the Supreme Court, which the authorities were bound to do, cannot be termed illegal. Time Limitation - HELD THAT - The decision of the Supreme Court was rendered on 28th October, 2016, the re-computation orders having passed not very long thereafter, in December 2017, and in the absence of any specific period of limitation prescribed for re-computation, it cannot be said that the said orders are time barred. Levy of interest - HELD THAT - Since the legal position got clarified by the Supreme Court only on 28th October 2016, the Petitioner is justified in contending, on the strength of the judgment of the Supreme Court in Food Corporation of India v. State of Haryana, 2000 (2) TMI 735 - SUPREME COURT , that such interest is payable only for the period subsequent to the judgment of the Supreme Court and not prior thereto - the impugned demand notices are modified only to the extent that the interest on the differential tax amount will be payable by the Petitioner for the period subsequent to the judgment of the Supreme Court i.e. 28th October 2016, till the date of payment. The Deputy Commissioner of Sales Tax (Opposite Party No.1) will now issue fresh orders re-computing the amount payable on the basis of the modification not later than 19th April, 2021 - petition disposed off.

Summary

Issues:
1. Re-computation of sales tax payable for different assessment years by the Deputy Commissioner of Sales Tax.
2. Interpretation of the judgment of the Supreme Court in Commissioner of Commercial Taxes v. Bajaj Auto Ltd.
3. Challenge to the clarification issued by the State Government regarding surcharge under the Orissa Sales Tax Act.
4. Effect of the judgment of the High Court and subsequent reversal by the Supreme Court on re-computation orders.
5. Limitation period for re-computation orders under the Orissa Sales Tax Act.
6. Justification for the levy of interest on the differential tax amount.

Analysis:
1. The petitions questioned the re-computation of sales tax by the Deputy Commissioner for various assessment years based on the Supreme Court's judgment in Commissioner of Commercial Taxes v. Bajaj Auto Ltd. The basis of re-computation was the interpretation of the Orissa Sales Tax Act and the Orissa Entry Tax Act by the taxing authority.

2. The High Court previously held that the State Government's clarification on surcharge was misconceived, but the Supreme Court, in its judgment, reversed this decision. The subsequent orders by the High Court for subsequent assessment years were not challenged separately, leading to the current re-computation dispute.

3. The Supreme Court's judgment mandated re-computation of tax payable in accordance with its interpretation of the law, rendering the previous High Court orders obsolete. The legal principle established by the Supreme Court is binding on all authorities under Article 141 of the Constitution, justifying the re-computation orders.

4. The re-computation orders were not considered time-barred as they were issued promptly following the Supreme Court's decision. The absence of a specific limitation period for re-computation further supported the validity of the orders.

5. Regarding the levy of interest, the petitioner was deemed justified in contending that interest should be payable only from the date of the Supreme Court judgment. Citing the precedent in Food Corporation of India v. State of Haryana, the court modified the demand notices to reflect interest payable post the Supreme Court's decision.

6. The Deputy Commissioner was directed to issue fresh orders re-computing the amount payable based on the interest modification. The petitioner was barred from challenging these orders as long as they complied with the court's directions, thereby concluding the writ petitions.