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TMI Blog2007 (1) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... on the allegation that the said modality contravenes the provisions of the Orissa Entry Tax Act (in short, "the OET Act) and Orissa Entry Tax Rules (in short, "the OET Rules"). Since common question of fact and law are involved in all the writ petitions, they are taken up for analogous disposal by this common order. 2. The Petitioners' case is that they are all registered dealers in motor vehicles under the Orissa Sales Tax Act. (in short, 'the OST Act') as well as the Central Sales Tax Act and are engaged in purchase and sale of Motor vehicles. They pay entry tax on the purchase value of the Motor vehicles, which are brought into the State of Orissa from outside as required under Section 3(3) of the OET Act and in their sales tax returns filed in obedience to Section 11 of the OST Act claim set off of the entry tax amount already paid in respect of the motor vehicles against the sales tax and surcharge payable in accordance with Section 4(1) of the OET Act and Rule 18 of the OET Rules. They allege that suddenly the concerned Sales Tax Officers, who are the assessing authorities of the Petitioners, proceeded to work out the tax demand by computing the surcharge on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Rule 18 of the O.E.T. Rules providing for reduction of the tax payable under the OST Act, the above provision of the OET Act and Rules have to be read harmoniously with principal Act and Rules which are the OST Act and Rules and any provisions which are inconsistent with the provisions of OST Act and Rules must be ignored. The plea of the opposite parties in essence is that assessment of surcharge under Section 5-A of the OST Act is an act preceding the process of set off contemplated under Section 4(1) of the OST Act and Rule 18 of the OET Rules. 4. Learned Counsel appearing for the Petitioners offered their submission separately, but in essence they took the same stand. According to them, the provision of Section 4 of the OET Act provides for reduction of tax liability under the OST Act to the extent of entry tax paid under the OET Act and in notification in S.R.O. No. 149 of 2001 the Government have also notified that rate of tax in Sales Tax Act shall be subject to Section 4 of the OET Act, 1999 which are indicative of the fact that the reduction of the entry tax amount is to be given at the stage of computation of the gross sales tax liability. Indicating the illustratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e OET Act, which says that reduction in tax liability as contemplated under Section 4(1) of the OET Act to a dealer will not be allowed unless the entry tax paid and the sales tax payable are shown separately on the cash-memos, bills, invoices issued by him for the sales by virtue of which such liability accrues. Regarding Rule 18 of the OET Rules and the illustration contained therein, he argued that the said Rule has to be read harmoniously with the provisions of Section 4 of the OET Act and Section 5-A of the OST Act and in case any conflict arises between the two, then the provisions of the Act would prevail under the accepted norm that a river cannot rise above the source. In support of his contention Mr. Mohanty cited cases of the Central Bank of India and Ors. v. Their Workmen etc. AIR 1960 SC 12; Collector Central Excise, Guntur v. Andhra Sugar Ltd. (1988) 73 STC 216 (SC); Organo Chemical Industries and Anr. v. Union of India and Ors. AIR 1979 SC 1803: Mary Angel and Ors. v. State of Tamil Nadu AIR 1999 SC 2245 and Directorate of Enforcement v. Deepak Mahajan AIR 1994 SC 1775. 6. From the rival submission of the learned Counsel for the parties it can be gathered that the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reading of Section 5-A of the OST Act along with Section 4 of the said Act it can be seen that Section 5-A creates a charge and imposes liability on every dealer under the OST Act to pay surcharge @ 10% on the amount of tax payable by him under the OST Act. The wordings of Section 5-A indicate in no manner that the surcharge is payable on any tax other than the tax payable under the OST Act. Similarly, a close reading of provision of Section 4(1) of the OET Act would show that it simply prescribes for reduction of the tax amount payable by the dealer to the extent of entry tax already paid for the same articles for which Sales Tax is payable. The Section does not specifically contemplate anything, which would indicate that the provisions of OET Act or Rule have to be taken into consideration while assessing the sales tax or surcharge. Learned Counsels for the Petitioners, however, expressed that despite absence of specific stipulation, provision of Section 4(1) of the O.E.T. Act and Rule 18 of the O.E.T. Rules have to be taken into consideration at the time of fixing the sales tax liability and surcharge. In support they highlighted the illustration given in Rule 18. They also reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay the sales tax when he sells goods manufactured by him out of the said raw materials. The judicial pronouncements as narrated above analysed the term 'set off', i.e., it is intended to avoid double taxation by allowing deduction of tax already paid from the amount of tax liability. The provisions made in the Rules lay down the modality of set off. It is worthwhile to mention here that O.S.T. Act and O.E.T. Act are two separate and independent legislations. While the former was legislated in 1947, the latter at a much later stage in 1999. The provision of set off has been made in the O.E.T. Act and the Rules framed thereunder, i.e., O.E.T. Rules, and not in the O.S.T. Act. So, when the O.E.T. Act and Rules were framed, the law-makers and rule-framers had taken into consideration the provisions made in the O.S.T. Act, which was an earlier statute. The principle of set off and for which amount set off would be allowed, have been provided under the O.E.T. Act and Rules. The relevant provisions of Section 4 of the O.E.T. Act (since omitted by Orissa Act 2 of 2004) and Rule 18 of the O.E.T. Rules (since omitted by the Orissa Entry Tax (Amendment) Rules, 2004) were as follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "reduction in tax liability". Sub-sections (1) and (2) of Section 4 of the O.E.T. Act provided for reduction of liability under the Orissa Sales Tax Act. 11. It is well settled that the objective of framing rules is to fill up the gaps in a statutory enactment so as to make the statutory provisions operative. Rules also clarify the provisions of an Act under which the same are framed. (A) Subordinate legislation has been fictionally called the delegation of power to fill up the details. In Khambhalia Municipality v. State of Gujarat AIR 1967 (SC) 1048, it was pointed out that the legislature may, after laying down the legislative policy, confer discretion on an administrative agency as to the execution of the policy and leave it to the agency to work out the details within the framework of the policy. Sub-rule (1) of Rule 18 of the O.E.T. Rules, in consonance with the heading of Section 4 of O.E.T. Act lays down that a motor vehicle importer's "tax liability under the Sales Tax Act shall be reduced to the extent" of Entry Tax paid. The illustration appended to Sub-rule (1) of Rule 18 of the O.E.T. Rules specifically indicates that Sales Tax payable by a dealer is Sales Tax due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct reveals no conflict or inconsistency. In fact, the letter of clarification dated 31.5.2001 issued by the Commissioner of Sales Taxes (O) is the consonance with a harmonious construction of the above said provisions under the O.S.T. Act, O.E.T. Act and O.E.T. Rules. The provisions made under Rule 18 of the O.E.T. Rules lay down the modality of making the provision of reduction of tax liability, as contemplated under Section 4 of the O.E.T. Act and commonly termed as "set off", functional or operative. That apart, Rules are to be construed to have been made for furtherance of the cause for which the statute is enacted and not for the purpose of bringing inconsistencies. The apex Court in observed that a subordinate legislation such as rules or regulations made under a statute becomes part of that statute and hence, such Rules and Regulations must be for furtherance of cause for which the statute is enacted. 15. During the course of argument, the Revenue made an attempt to find fault with the provision in Rule 18 of the O.E.T. Rules and more specifically with the illustration appended to Rule 18(1) of the O.E.T. Rules. The said Rule is not under challenge in the present applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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