COMMNR. OF SALES TAX, ORISSA AND ORS. versus CROWN RE-ROLLER (P) LTD. AND ORS.

Citation: [2007] 3 S.C.R. 685 · Decided: 08-03-2007 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Case Partly allowed

Judgment (excerpt)

A 
COMMNR. OF SALES TAX, ORISSA AND ORS. 
CRO\VN RE-ROLU R (P) LTD. AND ORS. 
B 
MAIU il 8, 2007 
[S.B. SINHA AND MARKANDEY KATHJ. J.IJ 
Sales Tai:: 
c 
Orissa Sales Tax Act, I Y-17 
Nu1ification dated 22. I 2. I 989-Exemption under-Basis of 
determination-Held, it is based on the value of goods sold by dealer effecting 
first point sale-Value of good5 in subsequent transactions upon which no 
D tai: was paid thus not relevant for grant ()f exemption. 
Respondent-assessee is a re-rolling mill manufacturing MS rounds and 
flats out of iron and steel scrap materials. State Government issued a 
notification d:1tcd 22.12.1989, notifying that 'Iron and Steel' would be taxable 
E at the first point of sale, in a series of sale by successive dealers, when such 
sale is effected by a dealer liable to pay sales tax under Orissa Sales Tax Act, 
1947. Prior to issuance of the said Notification the taxable event was the last 
purchase. Respondent made purchases from registered dealers of ir<>n scrap. 
He filed an application for refund of the sales tax in terms of s.14 of the 
F 
Act. The assessing officer held that the respondent has not paid any amount 
of Sales Tax on purchase of any goods which are declared u/s.14 and that it 
has purchased 'first point tax paid' Iron and Steel from registered dealers of 
Orissa who are the subsequent sellers and these sellers have not collected 
any sales tax from the respondent which is evident from the purchase bills 
G furnished by him hence the claim is not sustainable. 
Respondent filed writ petition which was allowed directing him to submit 
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fresh form. Hence these appeals. 
1 
H 
Partly allowing the appeals, the Court 
686 
COMMNR. OF SALES TAX. ORI SSA r. CROWN RE-ROLLER (P) LTD. 
687 
HELD: I. Applicability of the exemption notification dated 22.12.1989 A 
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is not in dispute. The dealers, from whom the respondent had made purchases 
of raw material are registered. Therefore the application for refund of tax, 
filed by the respondent, was maintainable. The tax was paid on the value of 
goods sold by the dealer effecting first point sale. The amC1unt of tax realized 
for the purpose of refund thus must be on the said basis. The value of the B 
goods of subsequent transactions, upon which no tax was paid, thus could not 
have been taken into consideration for the purpose of grant of exemption. If 
that be so, the respondent for the purpose of establishing its claim for refund 
t 
was required to establish : (I) what is the quantum of tax paid to the 
Department by the dealer effecting first point of sale and; and (2) whether the c 
tax paid goods have been utilized for the purpose of manufacture of its product 
by the respondent. [Paras 12 and 141 [693-B-C; 694-A-CJ 
2. The respondent had claimed the amount of refund being a sum of 
Rs.15 laes only on the basis that as the goods purchased by it are the tax paid 
once, 4% thereof should be directed to be refunded as if the actual tax paid D 
was on the price paid by it. It is not so. The exemption is to be granted on the 
basis of the price of the goods on first sale thereof. As the point of levy of tax 
was the first point of sale which being exempted from the notification, none of 
the subsequent sales thereof could be subjected to levy of sales tax. 
[Para 161 [694-E-Fl 
E 
Amrit Banaspati Co.Ltd & Anr. v. State of Punjab & Anr., [1992) 2 SCC 
411, distinguished. 
State of Bihar & Ors. v. Suprabhat Steel Ltd and Ors., (19991 1 SCC 
31, referred to. 
F 
3. The State cannot resile itself from the statutory provisions of 
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exemption made by it. In equity, the State in a situation of this nature, must 
act in letters and spirit of the Act. However, State can only refund what it 
actually collected and not any amount which it had not collected. The interest 
of justice would be subserved if an opportunity is given to the respondent to G 
produce evidence before the assessing authority for maintaining its claim of 
refund. It would also be open to the assessing authority, if any situation arises 
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therefor, to call for any record from the Rourkela Steel Plant or any other 
'dealer'. The respondent would not be entitled to any interest on the refund 
amount for the present as the quantum thereof is yet to be determined. 
H 
[Para 19[ [696-F-H; 697-A-B) 
688 
SUPREME COURT REPORTS 
[2007] ·3 S.C.R. 
A 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1215 of2007. 
B 
c 
From the Order/Judgment dated 21.11.2003 of the Hi

Excerpt shown. Read the full judgment & AI analysis in Lexace.