The High Court
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No. 2427 of 2022 M/s. Suman Enterprises … Commissioner of Sales Tax & others -versus- … Petitioner Mr. Mukesh Agarwal & Ms.Ruchi Rajgarhia, Advocates Opposite Parties Mr. Sunil Mishra, Additional Standing Counsel (CT&GST Organisation) CORAM: JUSTICE JASWANT SINGH JUSTICE M.S. RAMAN ORDER 04.04.2022 Order No. 02. 1. This matter is taken up by virtual/physical mode. 2. Questioning the propriety of the common Order dated 17.02.2021 passed by the Commissioner of Sales Tax, Odisha (opposite party No.1) in Revision Case Nos. KAL- 111/V/2019-20 and KAL-112/E/2019-20 exercising powers under Section 79(2) of the Odisha Value Added Tax Act, 2004 (for brevity hereinafter referred to as “the OVAT Act”) and Section 18(3) of the Odisha Entry Tax Act, 1999 (for short hereinafter referred to as “the OET Act”) whereby the Orders dated 30.04.2019 of the Joint Commissioner Sales Tax, Balangir Range, Balangir-opposite party No.3 rejecting summarily the appeals being AA 16 (KA) of 2018- 19 (VAT) and AA-17 (KA) of 2018-19 (Entry Tax) vide P.T.O. // 2 // Annexures-8 and 9 respectively filed at the behest of the petitioner-assessee have been upheld, the petitioner craves for indulgence of this Court invoking provisions of Article 226 of the Constitution of India and prays to set aside the impugned orders by taking cognizance of financial constraints in making statutory deposits in terms of Section 77(4) as amended by virtue of the Odisha Value Added Tax (Amendment) Act, 2017 and Section 16(4) of the OET Act against the demands of OVAT and OET to the tune of Rs.82,61,160/- and Rs.9,60,297/- respectively pertaining to the tax periods from 01.04.2014 to 30.09.2015 under assessment for entertainment of appeals. 3. The petitioner, M/s. Suman Enterprises, dealing in cement, iron rod, tiles, bitumen, etc. unfurls the fact by way of writ petition that the assessments under Section 43 of the OVAT Act and Section 10 of the OET Act were undertaken pursuant to report submitted by the Deputy Commissioner of Commercial Tax, Koraput Division (Vigilance), Jeypore and without affording due and reasonable opportunity to the petitioner the opposite party No.2 raised huge demands which stand as follows: Tax Penalty Total OVAT Act Rs. 82,61,160.09 Rs. 1,65,22,320.18 Rs. 2,47,83,480.27 OET Act Rs. 9,60,297.22 Rs. 19,20,594.44 Rs. 28,80,891.66 3.1. The petitioner challenging the assessment orders dated 16.06.2017 passed under Section 43 of OVAT Act and Page 2 of 20 // 3 // Section 10 of the OET Act approached this Court by way of filing writ being W.P.(C) Nos.22136 of 2017 and 22138 of 2017 which came to be disposed of vide Order dated 02.01.2019. Relevant portion of Order dated 02.01.2019 in W.P.(C) No.22136 of 2017 is extracted herein below: “*** Since the petitioner has an alternative remedy of appeal before the appellate authority, this writ petition stands disposed of with a direction that if the petitioner approaches the appellate authority by filing an appeal along with an application for condonation of delay within a period of four weeks from today, the appellate authority shall take into consideration all the contentions raised by the petitioner. While considering the prayer for condonation of delay, the Appellate Authority shall also take into consideration the period of pendency of this writ petition, i.e. from 23.10.2017 till today, for approaching the wrong forum under bona fide mistake in view of Section 14 of the Limitation Act. For a period of four weeks from today, no coercive action shall be taken against the petitioner. ***” 3.2. Identical order has been passed in W.P.(C) No.22138 of 2017. 3.3. While entertaining the appeals being No.AA-16 (KA) of 2018-19 (VAT) and No.AA-17 (KA) of 2018-19 (Entry Tax), the Joint Commissioner of Sales Tax, Balangir Range, Balangir-opposite party No.3, the Appellate Authority, sought for explanation as to why the appeal would not be rejected for want of compliance of Section 77(4) of the OVAT Act and Section 10 of the OET Act. To this, the petitioner placing material particulars demonstrated Page 3 of 20 // 4 // downward trend of its business activities by placing evidence such as income-tax returns and financial statements relating to 2014-15, 2015-16, 2016-17 and 2017- 18. 3.4. The petitioner, in order to comply with the requirements for entertainment of appeals under Section 77(4) of the OVAT Act and Section 16(4) of the OET Act, required to deposit the amounts as follows: OVAT Act as amended by virtue of the OVAT (Amendment) Act, 2017 [10% of tax in dispute] OET Act [20% of tax in dispute] Total Rs. 8,26,116/- Rs. 1,92,059/- 10,18,175/- 3.5. As stated by the petitioner in its compliance to show cause notice before the Joint Commissioner of Sales Tax-opposite party No.3 it is forthcoming that material was placed before the appellate authority to the effect that the financial health of the business does not permit it to deposit the amounts. The appellate authority while rejecting the appeals, merely observing that by way of filing written submission dated 10.04.2019, the petitioner expressed inability to make deposits as per requirement of the statutes. 3.6. The orders of summary rejection of appeals being carried in revision by the petitioner before the Commissioner of Sales Page 4 of 20 // 5 // Tax-opposite party No.1, no fruitful purpose was served. The Commissioner of Sales Tax-revisional authority referring to Jindal Stainless Ltd. Vrs. State of Odisha, (2012) 54 VST 1 (Ori), held that “when the statute prescribes a mandatory pre-deposit for the appeal to be admitted; it needs to be complied with” and consequently, refused to interfere with the orders of the appellate authority. 4.
Legal Reasoning
OET Act no way envisaged making out a prima facie case for waiver of pre-deposit. The opposite parties-authorities are justified in not taking note of the case of financial hardship. Therefore, the orders of summary rejection of the appeals as upheld by the revisional authority do not warrant intervention. 6. Thus, the following question arises for consideration: Whether the revisional authority-Commissioner of Sales Tax is legally justified in sustaining the orders rejecting appeals summarily by the appellate authority-Joint Commissioner of Sales Tax for want of deposit of 10% of the amount of tax in dispute under the OVAT Act and 20% of the amount of tax under the OET Act? 7. In Jindal Stainless Ltd. Vrs. State of Odisha, (2012) 54 VST 1 (Ori) this Court delved into the question as to whether the condition precedent for pre-deposit of 20% [reduced to 10% Page 6 of 20 // 7 // vide OVAT (Amendment) Act, 2017] of tax or interest or both in dispute in addition to payment of admitted tax for entertaining an appeal as provided under Section 77(4) of the OVAT Act read with proviso to Rule 87 of the OVAT Rules is unreasonable, oppressive, violative and ultra vires of Article 14 of the Constitution of India and answered as follows: the same “25. Therefore, it becomes crystal clear that appeal is a statutory remedy and is maintainable provided that the Statute enacted by a competent Legislature provides for it. Further, there can be no quarrel that the right of appeal cannot be absolute and the Legislature can put conditions for maintaining the same. 26. For the reasons stated above, the decisions relied upon by the petitioner are of no help to the petitioner as those decisions are rendered in respect of particular facts of that case.
Arguments
Mr. Mukesh Agarwal, learned counsel for the petitioner urged that neither the appellate authority nor the revisional authority did consider material placed on record. The authorities-opposite parties ought not to have rejected the merits of the appeal at the altar of defect or deficiency. The financial stress of the business that is continuing to be prevailed should have been taken into consideration. Furthermore COVID-19 Pandemic has made the situation still worse affecting the livelihood of the proprietor. Hardship in complying with the statutory provision when pitted against merit of the case, the authorities-opposite parties are required to prefer the latter; or else the rigidity of the provision contained in the taxing statute would render alternative remedy illusory, unworkable and unwholesome. 5. Mr. Sunil Mishra, learned Additional Standing Counsel (CT&GST) stemming on the statutory provisions contained in Section 77(4) of the OVAT Act and Section 16(4) has supported the summary rejection of appeals by the appellate Page 5 of 20 // 6 // authority and consequent upholding by the revisional authority. He submitted that hardship is not to be weighed and such a factor must yield to bare requirement of the statute which admits of no ambiguity. 5.1. Arguing further, Mr. Mishra, counsel for the Revenue has submitted that the provisions of law relating to deposit of tax in dispute for entertainment of appeals do not envisage making out a prima facie case for waiver of pre-deposit. Section 77(4) of the OVAT Act and Section 16(4) of the
Decision
27. In view of the above, we are of the considered view that the provisions of Section 77(4) of the OVAT Act requiring deposit of 20% of the tax or interest or both in dispute as a precondition for entertaining an appeal against the order enumerated under Section 77(1) of the OVAT Act does not make the right of appeal illusory and such a condition is within the legislative power of the State Legislature and cannot be held to be unreasonable and violative of Article 14 of the Constitution.” Page 7 of 20 // 8 // 8. Before proceeding further in the matter it is relevant to gloss through the relevant provisions of the statutes which are reproduced hereunder: Section 77 of the OVAT Act as it stands by virtue of the Odisha Value Added Tax (Amendment) Act, 2017 (4) No appeal against any order shall be entertained by the appellate authority, is it unless accompanied by satisfactory proof of payment of admitted tax in full and ten per centum of the tax or interest or both, in dispute. (5) On admission of appeal, realization of the balance tax, interest or penalty, as the case may be, under dispute shall to be be deemed in full till stayed the disposal appeal. of Section 16 of the OET Act it (4) No appeal against an order of assessment shall be entertained by the appellate is authority, unless by accompanied satisfactory of payment of admitted tax in full and twenty per centum of the tax or interest or both, in dispute. proof (5) Subject to the provisions in sub-section contained (4), the appellate authority may, on application in that behalf filed by the dealer or person within the period as provided in sub-section (3), stay the realisation of the balance of tax, interest or penalty, as the case may be, in under dispute either part, or in full till disposal of the appeal. Page 8 of 20 // 9 // 9. The aforesaid provisions unequivocally speak that for “entertainment of appeal”, appeal under the OVAT Act is required to be accompanied by satisfactory proof of payment of admitted tax in full and ten per centum of the tax or interest or both, in dispute and that appeal under the OET Act is required to be accompanied by satisfactory proof of payment of admitted tax in full and twenty per centum of the tax or interest or both, in dispute. 9.1. It may be noteworthy that prior to amendment, the requirement of pre-deposit in respect of the OVAT Act was in pari materia with the OET Act. However, on the date of entertainment of appeal under the OVAT Act, i.e., in the year 2019, the Odisha Value Added Tax (Amendment) Act, 2017 (Odisha Act 8 of 2017) has already been in force. In view of exposition of law as made in Indian Oil Corporation Vrs. Odisha Sales Tax Tribunal, Cuttack, 2009 (Supp.1) OLR 928 = 109 (2010) CLT 355, the petitioner and the statutory authorities are right in not disputing that the petitioner is required to deposit 10% of the tax in dispute in terms of Section 77(4) of the OVAT Act as amended in the Odisha Value Added Tax (Amendment) Act, 2017. Nonetheless, there being no amendment to sub-section (4) of Section 16 of the OET Act, the petitioner is required to deposit 20% of the tax in dispute for the purpose of entertainment of appeal. Page 9 of 20 // 10 // 9.2. This Court in Indian Oil Corporation Vrs. Odisha Sales Tax Tribunal, Cuttack, 2009 (Supp.1) OLR 928 = 109 (2010) CLT 355, made the following observations: “7. Further, there can be no quarrel to the settled legal proposition that right of appeal may not be absolute. The Legislature can put conditions for maintaining the same. In Vijay Prakash D. Mehta & Jawahar D. Mehta Vrs. Collector of Customs (Preventive), Bombay, AIR 1988 SC 2010, the Hon’ble Apex Court held as under: “Right of appeal is neither an absolute right nor an ingredient of natural justice, the principles of which must be followed in all judicial and quasi judicial adjudications. The right to appeal is a statutory right and it can be circumscribed by the conditions in the grant... If the statute gives a right to appeal upon certain conditions, it is upon fulfilment of these conditions the right becomes vested and exercisable to the appellant... The purpose of the section is to act in terrorem to make the people comply with the provisions of law.” that 8. Similar view has been reiterated by the Hon’ble Apex Court in Anant Mills Co. Ltd. Vrs. State of Gujarat, AIR 1975 SC 1234; and Shyam Kishore & Ors. Vrs. Municipal Corportation of Delhi & Anr., AIR 1992 SC 2279; Gujarat Agro Industries Co. Ltd. Vrs. Municipal Corporation of the City of Ahmedabad & Ors., AIR 1999 SC 1818. In Shyam Kishore (supra) the Hon’ble Supreme Court placed reliance upon its earlier Judgment in Nandlal Vrs. State of Haryana, AIR 1980 SC 2097, wherein it has been held that “right of appeal is a creature of statute and there is no reason why the Legislature, while granting the right, cannot impose conditions for the exercise of such right so long as the Page 10 of 20 9. // 11 // conditions are not so onerous as amount to unreasonable restrictions rendering the right almost illusory”, the Court cannot interfere. interpretation the cardinal rule of In Bengal Immunity Company Vrs. State of Bihar, AIR 1955 SC 661, the Hon’ble Supreme Court has observed that if there is any hardship, it is for the Parliament to amend the law, but the Court cannot be called upon to discard for mitigating a hardship. If the language of an Act is sufficiently clear, the Court has to give effect to it, however, inequitable or unjust the result may be. As is said, ‘dura lex sed lex’ which means ‘the law is hard but it is the law’. Even if the statutory provision causes hardship to some people, it is not for the Court to amend the law. A legal enactment must be interpreted in its plain and literal sense as that is the first principle of interpretation. 10. In Martin Burn Ltd. Vrs. The Corporation of Calcutta, AIR 1966 SC 529, the Hon’ble Supreme Court while dealing with the same issue observed as under: “A result flowing from a statutory provision is never an evil. A Court has no power to ignore that provision to relieve what it considers a distress resulting from its operation. A statute must of course be given effect to whether a Court likes the result or not.” 11. Similar view has been reiterated by the Hon’ble Supreme Court in The Commissioner of Income-tax, West Bengal-I, Calcutta Vrs. M/s. Vegetables Products Ltd., AIR 1973 SC 927. 12. It is the settled legal position that taxing statute must be construed strictly. (vide Manish Maheshwari Vrs. Assistant Commissioner of Income-tax & ors., AIR Page 11 of 20 // 12 //