JUDGMENT
A. Pasayat, J.
1. Though this writ application was listed for admission, at the request of and with the consent of the parties the same was taken up for final hearing.
2. Petitioner, a contractor, was assessed to tax under the provisions of the Orissa Sales Tax Act, 1947 (in short ‘the Act’) and the Orissa Additional Sales Tax Rules, 1975 (in short ‘the Rules’) for sums of Rs. 1,25, 882/- and Rs. 15,787/- respectively which included penalty of Rs. 40,000/-. In appeal, the Assistant Commissioner of Sales Tax, Appellate Unit, Bhubaneswar, reduced the demand to Rs. 90,679/- including the penalty of Rs. 10,000/-. The appellate order is the subject matter of challenge before the Orissa Sales Tax Tribunal. During the pendency of the second appeal, the petitioner moved for stey of realisation of tax before the Commissioner of Sale Tax. The application was disposed of by the Additional Commissioner of Sales Tax directing piyment of Rs. 75,000/-. The petitioner claims to have paid a sum of Rs. 50,182/- on different dates against the extra demand. The revisional authority held that on payment of the sum of Rs. 75,000/- by 7-(sic)-1991 the attachment made Under Section 13-A(1) of the Act shall be vacated.
3. The learned counsel for the petitioner submits that the assessment has been completed without allowing reasonable deductions for labour and service charges and after taking into account the element of tax already paid on the materials such as cement and rod supplied by the principals and used in the works contract.
The learned Standing Counsel for the Department, however, submits that in the absence of material in support of the claim for labour and service charges, statutory authorities were justified in resorting to estimates and therefore, the appellate order suffers from no infirmity warranting stay of realisation of the taxes payable on the basis of the appellate order passed by the Assistant Commissioner.
4. Considering the facts and circumstances of the case, I feel that interest of justice would be best served if the petitioner is required to pay a sum of Rs. 60,000/- against the disputed extra demand of Rs. 90,679/-. The payments to the extent of Rs. 50,182/- stated to have been made on different dates as detailed in paragraph 3.9 of the writ application shall be given credit. In other words, if the payments of Rs. 50,18?/- are given credit after verification the petitioner shall be required to pay a further sum of Rs. 9,818/- within six weeks from today.
5. The learned counsel for the petitioner submits that once time is granted for making payment against extra demand the attachment in terms of Section 13-A(1) becomes inoperative. The learned Standing Counsel for the Department submits that by mere extension of time the order of attachment does not become inoperative. For resolution of this dispute which very frequently arises, it would be necessary to refer to the second proviso to Sub-section (5) of Section 13. Clause (a) of the said proviso deals with the discretion of the specified authority to stay recovery of the amount in respect of which notice has been issued under Sub-setion (4) of Section 13 and an appeal has been presented under Sub-section (1)of Section 23. Clause (b) deals with such power when an appeal has been preferred under Clause (a) of Sub-section (3) of Section 23. Sub-section (7) (6) Section 13-A provides that no action shall be taken under the said section in respect of any amount of tax or penalty, the date of payment of which has been extended by the Commissioner under the proviso to Sub-section (4) of Section 13 or the realisation of which has been stayed by an appellate authority. It is relevant to mention here that on a reference to books published by several authors including, one published by Government of Orissa under the authority of the Commissioner of Commercial Taxes, Orissa, it is seen that no proviso to Sub-section (4) is printed. On verification it appears to be a case of inarticulate reproduction of the statute. The same appears to be outcome of a confusion emanating from the following background.
In the Act, as it originally stood, Sub-section (4) of Section 13 had three clauses and a proviso which related to all of them. By the Orissa Sales Tax (Amendment) Act, 1956 (Act 28 of 1958), Clause (c) of said Sub-section was substituted by Clauses (c) and (d), and amongst other changes, a new Section 13-A was inserted Unfortunately the authors and authorities seem to have understood that the substitution included deletion of proviso. The same is not a correct interpretation. This is apparent from Sub-section (7) of Section 13-A which was introduced by the very same amendment Act and which makes reference to the proviso to Sub-section (4) of Section 13.
6. Reference to other relevant provisions is necessary at this stage. Rule 32, Sub-rule (1) of the Orissa Sales Tax Rules, 1947 (hereinafter referred to as ‘the Orissa Rules’) provides that in respect of any amount payable by a dealer under Sub-section (4) of Section 13, a notice of demand in Form X with a direction to him to pay the amount wrthin a stipulated time shall be served. Under Sub-rule (2) where a dealer has not paid the amount of demand or has failed to produce the evidence of payment by the due date in accordance with the notice in Form X, he exposes himself to levy of penalty under Sub-section (5) of Section 13. The second proviso to Sub-rule (2) of Rule 31 provides that if collection of sum specified in notice of demand in Form X or any part thereof has been stayed in appeal or revision, penalty may be levied under aforesaid sub-section if same is not paid and proof of such payment is not produced within a fortnight after expiry of period of stay. The Explanation to Sub-rule (2) inter alia provides that where stay of collection until disposal of appeal or revision has been ordered, stay period will be deemed to have expired on the date of disposal of such appeal or revision and where the appeal or revision results in a reduction or increase in sum demanded, a revised notice of demand in Form X has to be issued and no penalty under Sub-section (5) of Section 13 is leviable under expiry of time-limit specified in revised notice. The specified authority has discretion to extend date of payment of amounts as categorised in Sub-section (4) of Section 13.
7. A conspectus of these provisions clearly indicates that the special mode of recovery provided in Section 13-A is not available to be taken where the date of payment has been extended by the specified authority. Therefore, the direction that the attachment would become inoperative after the payment is made within the extended time does not stand to reason. Resort to the special mode of recovery can only be made where there is a default by a person in discharging liability after service of notice of demand on him under Sub-section (4) or Sub-section (5) of Section 13 and/or, where he has failed to pay interest due from him under the Act. When time for making deposit has been extended, till stipulated time is over the person cannot be termed as a defaulter and special mode of recovery cannot be resorted to. Therefore, direction that notice of attachment would become inoperative only after payment is not sustainable in law. Such a direction would be contrary to the legislative intention as inferable from the provisions referred to above. When discretion to extend the date of payment of tax is exercised under powers conferred under either of the clauses of second proviso to Sub-section (5) of Section 13, same is under powers conferred under proviso to Sub-section (4) of Section 13.
8. On facts it is pleaded by learned counsel for petitioner that though there was reduction in the assessment of tax in terms of appellate order, no notice as required by Explanation to Sub-rule (2) of Rule 32 was issued and therefore, the action under Sub-section(1) of Section 13-A is untenable. Since there is no clear material in this regard, I have not delved into the factual controversy. Be that as it may, in view of the order passed above, there is no need for resolution of controversy as raised presently. Explanation to Sub-rule (2) of Rule 32 posits issue of a revised notice of demand in Form X when there is variation of quantum of assessment. As a corollary it follows that until such a revised notice of demand is issued, the question of any default in payment would not arise
9. The notice of attachment issued which is annexed as Annexure-2 to the writ application is, therefore, vacated being not sustainable in law.
The writ application and Misc. Case No. 3221 of 1991 are accordingly disposed of.