REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No. 5123  OF 2005

C.C.T. Orissa & Ors. ...Appellants

Versus

Indian Explosives Ltd.    ...Respondent

J U D G M E N T

Dr. ARIJIT PASAYAT, J

1. Challenge in this appeal is to the judgment of a Division

Bench of the Orissa High Court allowing the writ petition filed

by the respondent (hereinafter referred to as the ‘assessee’).

2. Background facts in a nutshell are as follows:

The assessee is registered as a dealer under the Orissa

Sales Tax, Act, 1947 (in short the ‘Act’) and the Orissa Sales

Tax Rules,  1947 (in short  the ‘Rules’).   For the assessment

year, 2000-2001 the assessee filed consolidated return under

Section 11 of  the Act before  the Assistant Commissioner  of

Sales Tax, Sundergarh Range, Rourkela (Assessment).  In the

said return the assessee claimed that it had purchased goods

including  Ammonium  Nitrate  which  was  specified  in  its

Certificate  of  Registration  as  being  intended  for  use  in  the

manufacture of goods for sale by furnishing declaration to that

effect in Form IV to the seller of such goods and 4% on the

value of such goods purchased by the Assessee was paid by it

as  provided  in  Entry  48  of  the  Notification  issued  under

Section  5(1)  of  the  Act.   The  claim  was  accepted  by  the

Assistant  Commissioner  of  Sales  Tax  Sundergarh  Range,

Rourkela  (Assessment).  Subsequently  the  said  authority

initiated proceedings for re assessment under Section 12(8) of

the Act.  The same was dropped, and instead a show cause

notice under Section 23(4)(a) of the Act read with Rule 80 of

the Rules was issued by the Commissioner of Sales Tax on

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14.1.2004.  Assessee challenged the said show cause notice

by  filing  the  writ  application.   With  reference  to  various

decisions of this Court it was submitted that the notice was

without jurisdiction.  It was submitted that a plain reading of

both Entry 48 of the Notification issued under Section 5(1) of

the Act and 5th Proviso to Section 5(1) to the Act shows that

the  goods  specified  in  the  Certificate  of  Registration  and

purchased by a dealer must only be used in the manufacture

of  goods  inside  the  State  of  Orissa  and  such  goods

manufactured  may  be  also  intermediate  products  used  in

further  manufacture  of  furnished  goods  for  sale  inside  or

outside the State of Orissa.

The  Revenue  filed  its  counter  affidavit.  When  the  writ

petition was taken up for  hearing,   it  was pointed out that

disputed  questions  of  fact  arise  for  decision  which  can  be

adjudicated  by  the  authorities  under  the  Act  and the  High

Court  should  not  exercise  power  under  Article  226  of  the

Constitution.   It  was also  submitted  that  the  interpretation

given by the assessee was not correct. It was pointed out that

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in the case of M/s ICI Ltd., a subsidiary of the respondent-

assessee, a Division Bench had clearly rejected a similar plea.

The High Court was of the view that the writ petition can be

entertained  even  though an alternative  remedy  is  available.

Accepting the stand of the assessee the High Court held that

the notice issued was to be quashed and accordingly quashed

the impugned notice dated 14.1.2004.

3. Learned  counsel  for  the  appellant  submitted  that  the

High  Court  ought  not  to  have  entertained  the  writ  petition

more particularly when for the assessment year 1997-98 and

1998-99  another  Division  Bench  in  Writ  Petition  Nos.  OJC

Nos. 16928 of 1998 and 1500 of 2000 had rejected the stand

of the assessee.  Though it was brought to the notice of the

High Court that such is the position, unfortunately the High

Court did not even refer to the said decision.

4. It is pointed out that in the counter affidavit filed before

the High Court, at para 9, specific reference has been made to

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the judgment dated 9.10.2001 that in the aforesaid two writ

petitions similar stand had been rejected.

5. It is pointed out that this Court in ICI India Ltd. v. State

of Orissa (2007 (10) SCR 433) has upheld the view expressed

by the High Court  in OJC Nos.16928 of  1998 and 1500 of

2000.

6. There is no appearance on behalf of respondent-assessee

when the matter was called.

7. The High Court seems to have completely lost sight of the

parameters  highlighted  by  this  Court  in  a  large  number  of

cases  relating  to  exhaustion  of  alternative  remedy.

Additionally the High Court did not even refer to the judgment

of another Division Bench for the assessment years, 1997-98

and Assessment years 1998-99 in respect of ICI India Ltd.  In

any event the High Court ought to have referred to the ratio of

the decision in the said case.  That judicial discipline has not

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been adhered to. Looked at from any angle, the High Court’s

judgment is indefensible and is set aside.

8. The respondent-assessee shall, within a period of eight

weeks from today, file its response, if any, to the show cause

notice dated 14.1.2004.  The Commissioner shall consider the

reply to the show cause notice filed, if any, and dispose of the

proceeding in accordance with law.

9. The appeal is allowed to the aforesaid extent without any

order as to costs.

..........................................J. (Dr. ARIJIT PASAYAT)

….......................................J. (C.K. THAKKER)

…………..............................J. (LOKESHWAR SINGH PANTA)

New Delhi, February 28, 2008

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