{"id":255392,"date":"2000-02-25T00:00:00","date_gmt":"2000-02-24T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/steel-authority-of-india-ltd-vs-state-oforissa-ors-etc-etc-on-25-february-2000"},"modified":"2015-05-31T09:16:15","modified_gmt":"2015-05-31T03:46:15","slug":"steel-authority-of-india-ltd-vs-state-oforissa-ors-etc-etc-on-25-february-2000","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/steel-authority-of-india-ltd-vs-state-oforissa-ors-etc-etc-on-25-february-2000","title":{"rendered":"Steel Authority Of India Ltd vs State Oforissa & Ors. Etc. Etc on 25 February, 2000"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Steel Authority Of India Ltd vs State Oforissa & Ors. Etc. Etc on 25 February, 2000<\/div>\n
Author: Bharucha<\/div>\n
Bench: Bharucha, J.<\/div>\n
           PETITIONER:\nSTEEL AUTHORITY OF INDIA LTD.\n\n\tVs.\n\nRESPONDENT:\nSTATE OFORISSA & ORS.  ETC.  ETC.\n\nDATE OF JUDGMENT:\t25\/02\/2000\n\nBENCH:\nBharucha, J.\n\n\n\n\nJUDGMENT:\n<\/pre>\n
BHARUCHA, J.\n<\/p>\n
      Before  it  was  held to be unconstitutional  on\t28th
\nApril,\t1993, Section 13AA of the Orissa Sales Tax Act\tread
\nthus :\n<\/p>\n
      “13-AA  :\t Deduction of tax at source from the payment
\nto works contractor –\n<\/p>\n
      0) Notwithstanding anything contained in Section 13 or
\nany  other  law\t or contract to the  contrary’,\t any  person
\nresponsible  for  paying  any  sum  to\tany  contractor\t for
\ncarrying  out any works contract in pursuance of a  contract
\nbetween the contractor and-\n<\/p>\n
      (a) Central Government or any State Government, or<\/p>\n<\/blockquote>\n
      (b) any local authority, or<\/p>\n<\/blockquote>\n
      (c)  any\tauthority or Corporation established  by  or
\nunder a statute, or<\/p>\n<\/blockquote>\n
      (d)  any Company incorporated under the Companies Act<\/a>,
\n1956  (I of 1956) including any State or Central  Government
\nundertaking, or<\/p>\n<\/blockquote>\n
      (e)  any Co-operative Society or any other Association
\nregistered  under the Societies Registration Act<\/a>.  1860, (21
\nof  1860)  shall  at the time of credit of such sum  to\t the
\naccount\t of the contractor or at the time of payment thereof
\nin  cash or by issue of a cheque or draft or any other mode.\n<\/p><\/blockquote>\n
whichever  is  earlier, deduct an amount towards  sales\t tax
\nequal  to two pcrcentum of such sum in respect of the  works
\ncontra…!:  :\n<\/p>\n
      Provided\tthat if the value of the works contract does
\nnot exceed rupee one lakh, no such deduction shall be made.\n<\/p>\n
      (2)   While  making  deduction  as  referred   to\t  in
\nsub-section  (\tI ), the deducting authority shall  grant  a
\ncertificate  to\t the contractor in the form  prescribed\t and
\nshall  send  a copy thereof to the Spies Tax Officer  within
\nwhose jurisdiction the woiks contract is executed.\n<\/p>\n
      (3)  The\tamount deducted from the Bills\tor  Invoices
\nshall  be deposited into the Government Treasury within\t one
\nweek  from the date of deduction in such form or challan  as
\nmay be prescribed.\n<\/p>\n
      (4)  Such deposit into the Treasury shall be  adjusted
\nby  the Sales Tax Officer towards the sales tax liability of
\nthe  Works  contractor and would also constitute a good\t and
\nsufficient  discharge  of  the liability  of  the  deducting
\nauthority  to  the  conuractor to the extent of\t the  amount
\ndeposited.\n<\/p>\n
      (5)  If  any  person  contravenes\t the  provisions  of
\nsub-section  (1)  or sub-section (2) or sub-section  (3)  of
\nthis Section, the Sales Tax Officer shall.  after giving him
\nan  opportunity\t of  being heard, by an\t order\tin  writing,
\nimpose on such person penalty not exceeding twice the amount
\nrequired to be<\/p>\n
      deducted\t and  deposited\t by   him  into\t  Government
\nTreasury”.\n<\/p>\n
      Section  13AA<\/a>.  as it was then read.  was struck, down
\nby  the High Court of Orissa on 28^ April.  1993 in the case
\nof  Braiendra  Mishra vs.  State<\/a> of0rissa& Ors..  [1994]  92
\nSTC  17.   The\tHigh Court held that Section  13AA<\/a>  did\t not
\nprovide\t any  mechanism\t to exclude a transaction  from\t its
\npurview even if, ultimately;  the transaction was not at all
\nliable\tto  the levy of sales tax.  In other words, even  in
\nthe  case  of a pure and simple labour contract\t or  service
\ncontract  where\t the question of sale would not\t arise,\t the
\nperson\tresponsible  for making any payment to a  contractor
\nhad no option but to deduct two per cent of such sum towards
\nsales  tax.  Though a transaction which might not be a\tsale
\nat  all\t was  made  liable for levy of sales  tax.   yet  in
\nrespect of that transaction power had been conferred to make
\ndeduction  of  two per cent from the amount to be paid.\t  In
\nthe  absence of any discretion with the authority and in the
\nabsence\t of  any mechanism by which the \u00bb contractor  could
\napproach  any  authority  and obtain a\tcertificate  to\t the
\neffect\tthat  the transaction did not amount to a sale,\t the
\ndeduction  of two per cent from the amount could not but  be
\nheld to be grossly discriminatory and confiscatory in nature
\nand.   therefore, the same had to be struck down..  The High
\nCourt  added  that  by conferring  arbitral,  unbridled\t and
\nuncanalised powers on the person concerned to deduct two per
\ncent from the sum<\/p>\n
      payable  to  the\tcontractor,   irrespective  of\t the
\nquestion whether, ultimately, the transaction was liable for
\npayment\t of any sales tax at all.  could not be held to be a
\nlevy  of  tax under any valid legal provision.\tIt was\ttrue
\nthat the deduction of two per cent under Section 13AA<\/a> was to
\nbe ultimately adjusted where the transaction in question was
\nliable for levy of sales tax.  but where the transaction was
\nnot  atall liable for levy of sales tax.  there the question
\nof adjustment would not arise and.  therefore, the deduction
\nwould  be confiscatory in character and effect and it  could
\nnot  be held to be a valid provision within the\t legislative
\ncompetence   of\t the  legislature   imposing  the  tax\t and
\nauthorising  the  collection  thereof.\tA  bare\t reading  of
\nSection\t 13AA<\/a> made it explicitly clear that the amplitude of
\nthe  incidence\tof  tax had been widened so  as\t to  include
\ntransactions  which  were  outside the\tsphere\tof  taxation
\navailable to the State legislature under Entry 54 of List II
\nof  the\t Seventh Schedule to the Constitution.\tInasmuch  as
\neven  in  respect  of a purely labour  contract\t or  service
\ncharges.   Section 13AA<\/a> authorised deduction of two per cent
\nfrom  the bills of the contractor, it could not but be\theld
\nto be unconstitutional and void.\n<\/p>\n
      The  decision  of\t the  High Court  was  accepted\t and
\nSection\t 13AA<\/a>  was  replaced  on 4^ October.   1993  in\t the
\nfollowing terms, which are now under challenge.\n<\/p>\n
      ’13-AA  :\t Deduction of tax at source from the payment
\nto works contractors –\n<\/p>\n
      (1)  Notwithstanding anything contained in Section  13<\/a>
\nor  any\t other law or contract to the contrary’, any  person
\nresponsible   for   paying  any\t  sum  to   any\t  contractor
\n(hereinafter  referred to in this section as the  “deducting
\nauthority)  for\t carrying  out\t any  works  contract  which
\ninvolves  transfer of property’ in goods, in pursuance of  a
\ncontract between the contractor and –\n<\/p>\n
      (a) Central Government or any State Government or<\/p>\n<\/blockquote>\n
      (b) any local authority, or<\/p>\n<\/blockquote>\n
      (c)  any\tauthority or Corporation established  by  or
\nunder a statute, or<\/p>\n
      (d  ) any Company incorporated under the Companies Act<\/a>
\n1956(1\tof  1956) including any State or Central  Government
\nundertaking, or<\/p>\n<\/blockquote>\n
      (e)  any Co-operative Society or any other Association
\nregistered  under the Societies Registration Act<\/a>.  1860\t (21
\nof  1860).  shall, at the time of credit of such sum to\t the
\naccount\t of the contractor or at the time of payment thereof
\nin  cash or by issue of a cheque or draft or any other mode,
\nwhichever  is  earlier, deduct an amount towards  sales\t tax
\nequal  to  (four  percentum) of such sum in respect  of\t the
\nworks- contract.  if the value of the works contract exceeds
\nrupee one lakh.<\/p><\/blockquote>\n
      (2)   While  making  deduction  as  referred   to\t  in
\nsub-section  (1),  the\tdeducting authority  shall  grant  a
\ncertificate  to\t the contractor in the form  prescribed\t and
\nshall  send  a copy thereof to the Sales Tax Officer  within
\nwhose jurisdiction the works-contract is executed.\n<\/p>\n
      (‘3)  The\t amount deducted from the Bills or  Invoices
\nshall  be  deposited into a Government Treasury’ within\t one
\nweek  from the date of deduction in such form or challan  as
\nmay be prescribed.\n<\/p>\n
      (4)  Such deposit into Government Treasury’ s’.n.D  be
\nadjusted  by  the  Sales Tax Oilkor towards  the  SaJes\t Tax
\nliability of the contractor and would also constitute a good
\nand  sufficient discharge of the liability of the  deducting
\nauthority’  to\tthe contractor to the extent of\t the  amount
\ndeposited.   (5)(a)  Where, on an application being made  by
\nthe contractor in this behalf, the Commissioner is satisfied
\nthat  any  works  contract  of the  nature  referred  to  in
\nsub-section  (1) involves both transfer of property in goods
\nand  labour  or service or involves only labour\t or  service
\nand.   accordingly, justifies deduction of tax on a part  of
\nthe sum in respect of the works-contract or, as the case may
\nbe.   justifies no deduction of tax, he shall, after  giving
\nthe  contractor\t a reasonable opportunity of  being  ilcard,
\ngrant  him  such certificate as may be appropriate,  in\t the
\nmanner prescribed :\n<\/p>\n
      Provided\tthat  nothing in the said certificate  shall
\naffect\tthe  assessment\t of the sales tax liability  of\t the
\ncontractor under this Act.\n<\/p>\n
      (b)  Where  such\ta  certificate\t is  produced  by  a
\ncontractor  before  the\t deducting  authority’,\t until\tsuch
\ncertificate  is cancelled by the Commissioner, the deducting
\nauthority  shall either make no deduction of tax or make the
\ndeduction of tax as the case may be.  in accordance with the
\nsaid cetificate.\n<\/p>\n
      (6)  If  any  person  contravenes\t the  provisions  of
\nsub-section (1) or (2) or (3) or of clause (b) of sub-\n<\/p>\n
      section (5), the Sales Tax Officer shall, after giving
\nhim  an\t opportunity of being heard, by an order in  writing
\nimpose on such person penalty not exceeding twice the amount
\nrequired to be deducted and deposited by him into government
\ntreasury”.\n<\/p>\n
      The  appellant  has a steel plant at Rourkela  in\t the
\nState  of  Orissa.  A vast modernisation programme has\tbeen
\nimplemented there.  The appellant has entered into contracts
\nwith  parties  in  India  and  abroad  for  the\t design\t and
\nengineering  of plant and equipment and for the\t manufacture
\nof  plant, equipment, components, machinery and spares which
\nwill  be  incorporated into the contracts for  erecting\t the
\nmodernised system and plant.  In other words, it has entered
\ninto, inter aha, works contracts.\n<\/p>\n
      One  of such works contractors was M\/s Mukund Iron and
\nSteel  Works  Ltd.  (hereinafter called the ‘Mukund’).\t The
\ncontract  between  the\tappellant  and Mukund  was  for\t the
\ndesign,\t engineering,  manufacture, supply,  transportation,
\nerection, installation, testing and commissioning of a basic
\noxygen\tfurnace\t plant.\t  The  value thereof  was  Rs.\t 532
\ncrores.\t According to the appellant, the break-up thereof is
\nas follows:\n<\/p>\n
      “(a) Supply of equipments from States outside Rs.\t 317
\nCrores\tOrissa by way of CST Sales.  Central Sales Tax\tpaid
\nin Non-Orissa States.  Both under Section a) and 6(2) of the
\nCST.\n<\/p>\n
      (b)  Supply of equipments from other countries Rs.  16
\nCrores\toutside India on High Seas Sales basis under Section
\n5<\/a> of the CST Act<\/p>\n
      (c) Supply of Steel by SAIL Rs.  I8 Crores (d) Design.
\nEngineering   and   other  sendees   Rs.   103\tCrores\t (e)
\nFabrication,   erection,   structural.\t  Rs.\t78   Crores”
\nconstruction, civil construction, etc.<\/p>\n
      Under  tho  terms\t of   Section  13AA<\/a>.   as  presently
\n‘cnacted  the appellant deducted sales tax at source at\t the
\nrate  of  four\tper cent in respect of\tpayments  to  Mukund
\npertaining  to (d) and (e) above.  It did not deduct tax  at
\nsource\tin respect of payments under items (a), (b) and\t (c)
\nfor  tile  reason that they were in respect  of\t inter-State
\nsales,\toutside\t sales\tand  import  sales  and,  therefore,
\noutside\t the  purview  of  the Orissa Sales  Tax  Act.\t The
\nCommercial Tax Officer, Rourkela.  did not accept this stand
\nof  the appellant and issued to it notices to show cause why
\npenalty\t proceedings  should not be initiated in respect  of
\nthe’ Assessment Years 1994-95 and 1995-96.  The notices were
\nchallenged  by the appellant by a writ petition filed in the
\nHigh  Court of Orissa.\tAt an interim stage, the authorities
\nwere permitted to proceed with the hearing on the show cause
\nnotices\t but the final order thereon was made subject to the
\nresult\tof  the writ petition.\tThereafter, the\t High  Court
\nordered\t that no coercive steps for recovery should be taken
\nagainst the appellant.\tPursuant, to the show cause notices,
\nthe  Sales Tax Officer imposed penalties upon the  appellant
\nfor the Assessment Years 1994-95 and 1995-96 on the<\/p>\n
      ground  that  the appellant should have deducted\tfour
\nper  cent  of the totality of its payments to  Mukund.\t The
\npenalties,  in\tthe sum of Rs.\t26.98 crores imposed by\t the
\norder  dated  11th November, 1997 for the  Assessment  Years
\n1994-95\t and 1995-96, were challenged by the appellant in  a
\nfresh writ petition.  On the earlier writ petition the order
\nunder  challenge  in  the appeal was passed.  It  held\tthat
\nSection\t 13AA<\/a> was not ultra vires the Constitution.  On\t the
\nsecond\twrit petition an order of deposit of fifty per\tcent
\nof  the\t demand\t was  made, and\t that  order  is  separately
\nchallenged.\n<\/p>\n
      Upon  the petition for leave to appeal to this  Court,
\nrecovery  of tax and penalty was stayed pending the disposal
\nof the appeal.\n<\/p>\n
      By  virtue  of  Entry  54 of List II  of\tthe  Seventh
\nSchedule read with Article 246<\/a> of the Constitution of India,
\nthe  States  are  empowered  to levy taxes on  the  sale  or
\npurchase  of goods, other than newspapers.  The Forty- sixth
\nAmendment to the Constitution introduced, inter alia, clause
\n(29A)(b)  in Article 366<\/a> of the Constitution;  as a  result,
\ntax  on the purchase or sale of goods included a tax “on the
\ntransfer  of property in goods (whether as goods or in\tsome
\nother  form) involved in the execution of a works contract”.
\nArticle\t 286(1)<\/a> of the Constitution states that no law of  a
\nState shall impose.  or authorise the imposition of a tax on
\nthe  sale  or purchase of goods where such sale or  purchase
\ntakes place outside the State or in the course of the import
\nof  goods  into, or export of goods out of the territory  of
\nIndia.\n<\/p>\n
      Article  286(2)<\/a>  authorises  Parliament\tby  law\t  to
\nformulate principles for determining when a sale or purchase
\nof  goods  takes  place\t in any of  the\t ways  mentioned  in
\nsub-Article  (1).<\/a>   Acting upon this power.  Parliament\t has
\nset  out  in Sections 3<\/a>.  4 and 5 of the Central  Sales\t Tax
\nAct<\/a>, 1956 principles for determining when a sale or purchase
\nof  goods  can\tbe  said  to take place\t in  the  course  of
\ninter-State.   trade or commerce, when a sale or purchase of
\ngoods can be said to take place outside the State and when a
\nsale  or purchase of goods can be said to take place in\t the
\ncourse of import or export.  In M\/s Gannon Dunkerlev and Co.
\n&  Ors.\t  vs.  State of Rajasthan & Ors<\/a>., (1993) I SCC\t364.
\nthis Court has held that it is necessary to exclude from the
\nvalue  of a works contract the value of goods which are\t not
\ntaxable\t by  a State in view of Sections 3<\/a>, 4<\/a> and 5<\/a>  of\t the
\nCentral\t Sales Tax Act.\t 1956.\tThe value of goods  involved
\nin  the\t execution of a works contract has to be  dctctmincd
\nafter  making  these exclusions from the value of the  works
\ncontract.   With this bad-ground, we turn to analyse Section
\n13AA<\/a>  as it presently stands.  By reason of sub-section\t (1)
\nthereof,  the  person responsible for paying any sum to\t any
\ncontactor for carrying out any works contract which involves
\nthe  transfer  of property in goods (now.  for\tconvenience,
\nreferred  to  as the ‘owner’) is obliged to deduct,  at\t the
\ntime  of credit of that sum to the account of the contractor
\nor  payment  thereof  to him, an amount “towards  sales\t tax
\nequal  to  four per cent vfsuch sum in respect of the  works
\ncontract”,<\/p>\n
      provided\tthe  value  of the  works  contract  exceeds
\nrupees\tone lakh.  The deduction, therefore, is towards\t the
\nsales  tax  that  is  payable to the State  upon  the  works
\ncontract  and  it  is of four per cent of the value  of\t the
\nworks contract.\t Sub-section (2) requires the owner to grant
\nto  the\t contractor  a\tcertificate   in  respect  of\tsuch
\ndeduction.   By\t reason of sub-section (3), the amount\tthat
\nthe  owner  has deducted must be deposited by him  into\t the
\nGovernment  treasury  within  a week of the  deduction.\t  By
\nreason\tof sub- section (4), such deposit is required to  be
\nadjusted  by  the  Sales Tax Officer towards the  sales\t tax
\nliability  of  the  contractor and it constitutes  good\t and
\nsufficient  discharge  of the liability of the owner to\t the
\ncontractor   to\t  the  extent  of  the\t amount\t  deposited.
\nSub-section  (5)(a)  permits  the   contractor\tto  make  an
\napplication  to\t the  Commissioner of Sales Tax and  if\t the
\nCommissioner  is  satisfied thereon that any works  contract
\n“involves  both transfer of property in goods and labour  or
\nsendee\tor involves only labour or sendee and.\taccordingly,
\njustifies  deduction of tax on a part of the sum in  respect
\nofthe  works  contract or, as the case may be  justifies  no
\ndeduction  of  tax,  he shall, ……….   grant  him\tsuch
\ncertificate as may be appropriate in the manner prescribed.”
\nTo the extent of the amount mentioned in the certificate the
\nowner must, by reason of sub-section 5(b)<\/a>, make no deduction
\nof  tax.   The Commissioner is required only to see  whether
\nthe  works  contract involves transfer of property in  goods
\nand labour or service<\/p>\n
      or  only labour or sendee.  If it involves only labour
\nor  service, he must certify that no deduction of tax  shall
\nbe  made  and if it involves both transfer of  property-  in
\ngoods  and labour or service, he shall certify the deduction
\nof a part of the sum payable by the owner to the contractor.
\nSub-section 5(a)<\/a> takes no account of the.  fact that even if
\na works contract involves both transfer of property in goods
\nand  labour or service.\t State sales tax may not be  payable
\nupon the entire value ascribable to the transfer of property
\nin  goods  for\tthe  reason  that it is\t in  the  course  of
\ninter-State  sales, outside sales or sales in the course  of
\nexport;\t  nor  is  such account taken elsewhere\t in  Section
\n13AA<\/a>.\n<\/p>\n
      The  form\t of the certificate which is referred to  in
\nsub-section(5)\tof Section 13AA<\/a> is to be found in Form\tXI-C
\nof  the Orissa Sales Tax Rules.\t Part I thereof is the\tform
\nfor  the application for the grant of a certificate and Part
\nII  is\tthe form of the certificate itself.  Both the  forms
\nmake  it clear that all that the Commissioner is required to
\nlook  at is whether any labour or service is involved in the
\nworks contract.\n<\/p>\n
      Under  sub-section(6)  of Section 13AA<\/a>, an  owner\t who
\nacts  contrary\tto the provisions of sub-sections (1),\t(2),
\n(3)  and (5)(b) thereof is liable to “penalty’ not exceeding
\ntwice  the  amount  required to be  deducted  and  deposited
\n……….”  The  owner,  therefore,  should  he  contravene
\nsub-section<\/p>\n
      (1),  would be liable to a penalty not exceeding twice
\nthe  amount  that  he  should\thave  deducted\tunder\tthat
\nsub-section.\n<\/p>\n
      In  Bhawani Cotton Mills Ltd.  vs.  State of Punjab  &
\nAm<\/a>-.,  (1967) 3 SCR 577, this Court said, – “If a person  is
\nnot  liable  for  payment of tax at all, at  any  time,\t the
\ncollection  of a tax from him, with possible contingency  of
\nrefund\tat  a later stage, will not make the  original\tlevy
\nvalid:\t because, if particular sales or purchase are exempt
\nfrom  taxation\taltogether,  they can never  be\t taken\tinto
\naccount,  at  any stage, for the purpose of  calculating  or
\narriving at the taxable turnover and for levying tax.”\n<\/p>\n
      There  can be no doubt, upon a plain interpretation of
\nSection\t 13AA<\/a>,\tthat  it  is enacted  for  the\tpurposes  of
\ndeduction  at source of the State sales tax that is  payable
\nby  a contractor on the value of a works contract.  For\t the
\npurposes  of  the  deduction  neither\tthe  owner  nor\t the
\nCommissioner  who  issues  to the contractor  a\t certificate
\nunder  Section 13AA(5)<\/a> is entitled to take into account\t the
\nfact  that the works contract involves transfer of  property
\nin  good^ consequent upon of an inter-State sale, an outside
\nsale  or  a  sale  in the course of import.   The  owner  is
\nrequired   by  Section\t13AA(1)<\/a>\t to  deposit   towards\t the
\ncontractor’s  liability to State sales tax four per cent  of
\nsuch  amount  as  he  credits or  pays\tto  the\t contractor,
\nregardless  of the fact that the value of the works contract
\nincludes the valuer of inter-State sales,<\/p>\n
      outside sales or sales in the course of import.  There
\nis.  in our view, therefore, no doubt that the provisions of
\nSection\t 13AA<\/a> are beyond the powers of the State legislature
\nfor  the State legislature may make no law levying sales tax
\non  inter-State sales, outside sales or sales in the  course
\nof import.\n<\/p>\n
      It  was  contended  on behalf of the  State  that\t the
\nappellant,  as owner, had no locus to challenge the validity
\nof Section 13AA<\/a>.  It was contended that the moneys that were
\ndeducted  were moneys that belonged to the contractor and it
\nwas  only  the contractor who could successfully lay such  a
\nchallenge.   The  contention  ignores\tthe  tact  that\t the
\nappellant  owner  is aggrieved and damnified by the  penalty
\nthat  lias  been imposed upon it under sub-section  (5)\t for
\ncontravention  of sub-section (1) of Section 13AA<\/a>.  It\thas.
\ntherefore,  the standing to contest the validity of  Section
\n13AA<\/a>.\n<\/p>\n
      It was then contended by learned counsel for the State
\nthat  the Preamble of the Orissa Sales Tax Act took  account
\nof  the\t fact that that statute was limited to the  sale  or
\npurchase of goods in Orissa.  Unfortunately, it would appear
\nthat  the State legislature overlooked its limitations, even
\nas  contained  in the Preamble, when enacting Section  13AA<\/a>.
\nIt  was also contended that tile deduction that was required
\nto  be\tmade under Section 13AA<\/a>(1 ) was of four per cent  of
\nthe  amount credited or paid by the owner to the contractor,
\nwhereas\t the  sales tax liability of the contractor  thereon
\nwas<\/p>\n
      outside sales or sales in the course of import.  There
\nis,  in our view, therefore, no doubt that the provisions of
\nSection\t 13AA<\/a> are beyond the powers of the State legislature
\nfor  the State legislature may make no law levying sales tax
\non  inter-State sales, outside sales or sales in the  course
\nof import.\n<\/p>\n
      It  was  contended  on behalf of the  State  that\t the
\nappellant,  as owner, had no locus to challenge the validity
\nof Section 13AA<\/a>.  It was contended that the moneys that were
\ndeducted  were moneys that belonged to the contractor and it
\nwas  only  the contractor who could successfully lay such  a
\nchallenge.   The  contention  ignores\tthe  fact  that\t the
\nappellant  owner  is aggrieved and damni^ed by\tthe  penalty
\nthat  lias  been imposed upon it under sub-section  (5)\t for
\ncontravention  of sub-section (1) of Section 13AA<\/a>.  It\thas,
\ntherefore,  the standing to contest the validity of  Section
\n13AA<\/a>.\n<\/p>\n
      It was then contended by learned counsel for the State
\nthat the Preamble of the Opssa Sales Tax Act took account of
\nthe  fact  that\t that  statute was limited to  the  sale  or
\npurchase of goods in Orissa.  Unfortunately, it would appear
\nthat  the State legislature overlooked its limitations, even
\nas  contained  in the Preamble, when enacting Section  13AA<\/a>.
\nIt  was also contended that the deduction that was  required
\nto  be\tmade under Section 13AA<\/a>(1 ) was of four per cent  of
\nthe  amount credited or paid by the owner to the contractor,
\nwhereas\t the  sales tax liability of the contractor  thereon
\nwas<\/p>\n
      eight   per   cent.   It\t was  contended\t that\tthis
\nrequirement  proceeded\ton the assumption that half  of\t the
\namount was not liable to tax being in respect of inter-State
\nsales,\toutside sales and export sales.\t No such  assumption
\nbased  on the rate of tax at any given point of time can  be
\nmade.\tSection\t 13AA<\/a> should have been precisely drafted  to
\nmake  it  clear that no tax was levied on that part  of\t the
\namount\tcredited or paid that related to inter-State  sales.
\noutside\t  sales\t and  sales  in\t  the  course\tof   import,
\nparticularly after the previous Section 13AA<\/a> had been struck
\ndown  by  the Orissa High Court for the reason that  it\t was
\ncouched\t in  terms wider than were permissible to the  State
\nlegislature  and that judgment was accepted- in the  result,
\nthe  appeal  is\t allowed and the judgment  and\torder  under
\nappeal\tis set asid^.  Section 13AA of the Orissa Sales\t Tax
\nAct, as amended with effect from 4^ October, 1993, is struck
\ndown  as  being\t beyond\t the purview  of  the  Orissa  State
\nLegislature.   Such  amount as has been collected  from\t the
\nappellant  under  the  provisions  of  Section\t13AA<\/a>   shall
\nforthwith be refunded by the State.\n<\/p>\n
      There shall be no order as to costs.\n<\/p>\n
      Civil Appeal Nos.\t 1748-1749 & 2606 of 1998 :\n<\/p>\n
      Following\t the  judgment just delivered in  C.A.\t No.
\n1750  of 1998, the appeals are allowed and the orders  under
\nappeal are .set aside-\n<\/p>\n
      Such  amount as has been collected from the  appellant
\nunder  the  provisions\tof Section 13AA<\/a> shall  forthwith  be
\nrefunded by the State.\n<\/p>\n
      No order as to costs.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Steel Authority Of India Ltd vs State Oforissa & Ors. Etc. Etc on 25 February, 2000 Author: Bharucha Bench: Bharucha, J. PETITIONER: STEEL AUTHORITY OF INDIA LTD. Vs. RESPONDENT: STATE OFORISSA & ORS. ETC. ETC. DATE OF JUDGMENT: 25\/02\/2000 BENCH: Bharucha, J. JUDGMENT: BHARUCHA, J. Before it was held to be […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-255392","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nSteel Authority Of India Ltd vs State Oforissa & Ors. Etc. 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