COMMNR. OF SALES TAX, ORISSA vs. CROWN RE-ROLLER (P) LTD.

C.A. No.-001215-001215 - 2007Supreme Court08 March 2007Bench: S.B. SINHA MARKANDEY KATJU7 pages
For Petitioner: KIRTI RENU MISHRAFor Respondent: ASHOK MATHUR
AI SummaryPartly Allowed

What did the Supreme Court hold?

The Supreme Court held that the respondent was entitled to an opportunity to produce evidence before the assessing authority regarding the legal requirements for its refund claim. The Court distinguished the present case from *Amrit Banaspati Co.Ltd. & Anr. vs. State of Punjab & Anr.*, stating that the respondent was compelled to pay tax through its purchase price when buying scrap material from subsequent sellers, despite the exemption notification. The Court acknowledged that the State cannot resile from its statutory exemption provisions and must act in letter and spirit. However, it clarified that the State can only refund what it actually collected. Therefore, the assessing authority was directed to give the respondent an opportunity to place all relevant materials and to determine the refund amount. The Court also held that the respondent would not be entitled to any interest on the refund amount for the present, as the quantum was yet to be determined. The appeals were allowed to the extent of providing this opportunity for refund determination.

What were the facts?

The respondent, Crown Re-roller (P) Ltd., a small-scale industry manufacturing M.S. rounds and flats, was eligible for sales tax exemption on raw materials under an Orissa Industrial Policy Resolution of 1986. Initially, sales tax was levied at the last point of sale. However, a notification dated 22.12.1989 shifted the taxable event to the first point of sale for 'Iron and steel' from 1.1.1990. The respondent purchased tax-paid raw materials from subsequent sellers and sought a refund of sales tax amounting to approximately Rs. 15 lacs, based on the exemption notification. The assessing officer denied the refund, stating the respondent had not paid Orissa Sales Tax on the purchases and that the sellers were subsequent dealers who did not collect sales tax from the respondent. The respondent filed a writ petition before the Orissa High Court, which was initially disposed of by directing consideration of the refund application. Subsequently, the High Court, in a second writ petition, quashed the assessing officer's order and directed the respondent to file fresh applications in the prescribed form for refund, without granting interest.

What were the issues?

1. Whether the respondent is entitled to a refund of sales tax paid on raw materials purchased from subsequent sellers, despite the shift in the taxable event to the first point of sale. - Assessee's contention: The respondent argued that it was entitled to the refund based on the 1986 Industrial Policy Resolution and the exemption notification, and that it had purchased tax-paid materials. The High Court had previously directed consideration of its refund claim. - Revenue's contention: The revenue contended that the respondent had not paid Orissa Sales Tax on the purchases, had purchased from subsequent sellers, and that the sellers had not collected sales tax from the respondent. The assessing officer found the refund claim to be incorrect and not based on documentary evidence. 2. Whether the respondent is entitled to interest on the refund amount. - Assessee's contention: The respondent sought interest on the refund amount. - Revenue's contention: The revenue did not explicitly argue against interest in the provided text, but the assessing officer's order and the High Court's subsequent order denied it.

Which sections of the Income-tax Act were involved?

Section 8,Section 14,Section 14-C

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7 CASE NO.: Appeal (civil) 1215 of 2007 PETITIONER: Commnr.of Sales Tax, Orissa & Ors RESPONDENT: Crown Re-roller (P) Ltd. & Ors. DATE OF JUDGMENT: 08/03/2007 BENCH: S.B. Sinha & Markandey Katju

JUDGMENT: J U D G M E N T (Arising out of SLP (C) No. 7300 of 2004) WITH CIVIL APPEAL NOS. 1216 /2007 @ S.L.P.(C)Nos. 14707-14708/2005 S.B. SINHA, J.

Leave granted.

Respondent herein, a company registered under the Indian Companies Act, known as M/s. Crown Re-rolling (P) Ltd., is the owner of a Re-rolling mill. It is a re-rolling mill manufacturing M.S. rounds and flats, out of iron and steel scrap materials. Indisputably, the State of Orissa made an industrial policy wherefor a resolution was adopted on 13.5.1986, pursuant whereto and in furtherance whereof, exemption was granted from payment of sales tax on raw materials sold to or purchased by a registered dealer and certified by the General Manager, District Industrial Corporation to be a small scale industry set up on or after 1.4.1986 and commencing commercial production thereafter. It is furthermore not in dispute that by reason of a notification dated 22.1

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