2022 (2) TMI 56 - HC - VAT and Sales Tax

Liability of the Petitioner to pay Entry Tax - purchase of raw materials from National Aluminium Company Ltd. (NALCO) - Rule 3 (4) of the Orissa Entry Tax Rules 1999 (OET Rules) - HELD THAT - For more than two decades now no reply has been filed by the State of Odisha to the present petition and therefore the Court proceeds on the basis that the averments of the Petitioner No.1 remain uncontroverted by the State of Odisha. The assertion of Petitioner No.1 that it has fulfilled the requirements of the Circular dated 25th May 2000 of the ACCT and has furnished the requisite undertaking and further its assertion that since its factory is located in the Grampanchayat area and is exempted from payment of Entry Tax has remained uncontroverted and in fact accepted by NALCO. The Court directs that on the strength of the present order it will be open to the Petitioner No.1 to apply to the Opposite Party-State to seek refund of the aforementioned sum of 47, 969.26 which has been collected from it by NALCO and deposited with the Government of Odisha. Since there is no dispute that the aforementioned sum has in fact been collected from Petitioner No.1 there should be no difficulty in the refund being made to the Petitioner No.1 by the State Government on the strength of the present order - If the application for refund is made by the Petitioner No.1 to the Government of Odisha not later than 14th February 2022 it will be processed and the aforementioned sum together with whatever interest is due thereon in terms of the OET Act and Rules will be refunded to the Petitioner No.1 by the Government within a period of four weeks thereafter and in any event not later than 15th March 2022. Petition disposed off.

Summary

Issues: Liability of Petitioner to pay Entry Tax on purchase of raw materials from NALCO.

The judgment dealt with the liability of the Petitioner, a small-scale industrial unit, to pay Entry Tax on purchasing raw materials from NALCO. The Petitioner, engaged in manufacturing aluminum products, argued that as per the Orissa Entry Tax Act, 1999, Aluminum ingots used as raw material were exempt from Entry Tax on first entry in a local area outside specified zones. The Petitioner provided an undertaking to NALCO, stating its factory was not in a taxable area. Despite this, NALCO collected Entry Tax from the Petitioner. The State of Odisha did not respond to the petition, and NALCO acknowledged collecting and depositing the Entry Tax with the state.

The Court noted the uncontroverted assertions of the Petitioner regarding fulfilling requirements of the Circular and exemption from Entry Tax due to factory location. The Court directed the Petitioner to apply for a refund of the collected Entry Tax from the State of Odisha, which should be processed within four weeks of the application, with additional interest for any delays. The judgment emphasized the need for the State to refund the collected sum promptly to the Petitioner based on the Court's order.

The judgment highlighted the lack of response from the State of Odisha, leading the Court to accept the Petitioner's contentions regarding exemption from Entry Tax. NALCO's compliance with the Circular and acknowledgment of collecting and depositing the Entry Tax were crucial factors considered by the Court. The Court's decision to allow the Petitioner to seek a refund from the State, with provisions for interest in case of delays, aimed to ensure the Petitioner's rights were upheld and the collected Entry Tax was returned promptly.

In conclusion, the judgment resolved the issue of the Petitioner's liability to pay Entry Tax on raw material purchases from NALCO. It underscored the importance of adherence to tax regulations, proper documentation, and the State's responsibility to refund erroneously collected taxes. The Court's directive for a timely refund with interest in case of delays aimed to protect the Petitioner's financial interests and ensure compliance with tax laws.