The Orissa High Court observed that the Interim order of the Supreme Court not “sufficient cause” for Non-Payment and thereby directed Shree Bharat Motors and other applicants to pay Balance Entry Tax with Interest.
The issue in the present matter relates to whether, pursuant to the direction of this Court the Committee having recommended not to enforce penalty for non-payment or withholding of entry tax, except in cases of suppression, the taxable persons/dealers are liable to pay interest under Section 7(5) for the period from 2010 (interim Order dated 03.02.2010 being passed by the Supreme Court in State of Odisha Vs. Reliance Industries Ltd) to 2017 (till 28.03.2017, i.e, date on which the Division Bench of Supreme Court allowed the appeals of the State of Odisha).
It was urged by counsel for the petitioner(s) that: (a) since the Hon’ble Supreme Court directed for interim protection vide Order in State of Odisha vs. Reliance Industries Ltd, there was sufficient cause for withholding tax liability to the extent of 2/3rd of tax due during the pendency of matters before the Hon’ble Supreme Court.
The Counsel further submitted that since the Supreme Court having clarified in the said Order that such deposit of 1/3rd of tax liability would be treated as “deposit”, but not “tax” filed by the State of Odisha, which was accepted by the Department as also the orders of the Court disposing of the writ, there is no occasion nor does any necessity arise for the Assessing Authority to invoke provisions of Section 7(5) of the OET Act.
The Court of Chief Justice Dr S Muralidhar and Justice Murahari Sri Raman noted that an analysis of Section 7(5) of the OET Act read with Rule 10 of the OET Rules transpires that interest is payable on tax due as discussed above, and the same is subject to fulfilment of the condition that on failure to pay the amount of tax due as per the return “without sufficient cause”
“There is no ambiguity in holding that in the presence of the expression “without sufficient cause” in sub-section (5) of Section 7 of the OET Act and the petitioners having justified by showing sufficient cause for failure to deposit amount of tax due along with the return, which cannot be treated as admitted tax in view of legal position contained in of Reliance Industries Ltd, interest under Section 7(5) of the OET Act is not chargeable on such turnover falling within the ambit of portion the said Judgment.” The Bench concluded.
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