SANJAY K.AGRAWAL,J. - (1.) Impugning legality, validity and correctness of the order passed by the Additional Commissioner, Commercial Tax, Raipur, whereby and whereunder the said revisional authority has affirmed the order of the assessing authority relating to assessment of entry tax for the period from 1-4-1990 to 31-3-1991 levying penalty under Section 17 (3) (b) (ii) of the M.P. General Sales Tax Act, 1958 (for short, 'the Act, 1958') and the Rules made thereunder read with Section 13 of the M.P. Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 (for short, 'the Act, 1976') and thereby affirmed the levy of penalty to the extent of ? 4,09,09,903/-.
(2.) Essential facts leading to passing of the impugned order are as under: - 2.1) The petitioner is a company incorporated and registered under the provisions of the Indian Companies Act, 1956. It is a Government company within the meaning of Section 617 of the Companies Act, 1956. It has an integrated steel plant at Bhilai where iron and steel are manufactured. For manufacture of iron and steel, various raw materials including iron ore, coking coal, lime stone etc., are used as raw materials. These goods are specified as raw materials in the registration certificate of the petitioner. 2.2) It is the case of the petitioner that in conformity with the policy to tax raw materials at a lower rate under the Sales Tax Act and also under the Act, 1976, general rate of entry tax on raw material was 7% under Section 4 of the said Act. The State Government could specify local area or areas and the goods for levy of entry tax at a rate not exceeding 10% by notification under Section 4A of the Act, 1976. The petitioner Company purchased low silica lime stone as one of its raw materials for production of steel and they were paying entry tax regularly on it on the entry of low silica lime stone into the local area of Bhilai up to December, 1990. For the month of January, 1991, tax was due on 10-2-1991, but the M.P. High Court on 6-2-1991 delivered a judgment in the case of Makers Development Service (Pvt.) Ltd. v. State Govt. of Madhya Pradesh and others, [1991] 24 VKN--289 declaring the levy of entry tax on lime stone as unconstitutional on the ground that entry tax on lime stone was a tax on royalty on mineral right and was beyond the legislative competence of the State Legislature while following the decision of Their Lordships of the Supreme Court in the matter of The India Cement Ltd. etc. etc. v. State of Tamil Nadu, [1991] 24 VKN 269 (SC) : AIR 1990 SC 85 . Likewise, the cess on mineral was declared ultra vires by the M.P. High Court in the matter of A.C.C. Ltd. v. State of M.P., [1991] 24 VKN--293 decided on 16-2-1991. Therefore, the petitioner Company in view of the decision in Makers Development Service (supra) discontinued payment of entry tax on lime stone from the month of January, 1991, though payment for the month of January, 1991 was due to be paid on 10-2-1991. Thereafter, the petitioner filed writ petition in the M.P. High Court in which interim order was granted in favour of the petitioner and attempt on the part of the State Government to get the interim order vacated remained illusory but later-on, looking to the gravity and taking into account the long life of litigation, a settlement was arrived at and a memorandum of understanding (MOU) was reduced into writing on 11th/12th February, 1993 and thereafter, the entry tax liability for the 4th quarter of the year 1990-91 was paid in the year 1993- 94 and withdrawn all its pending proceedings and tax liability for 1991-92 and 1992-93 was also paid. Pursuant to the memorandum of understanding, the State Government issued circular waiving levy of entry tax and penalty for the period from 1-4-1991 to 31-3-1994, but inadvertently, the period from 1-1- 1991 to 31-3-1991 was left to be included and that has given rise to the present dispute. 2.3) It was further pleaded that the petitioner filed returns for the quarter ending on 31-12-1990 and 31-3-1991 and only on the basis of decision of the M.P. High Court, entry tax was not paid. An explanation was offered for not paying the tax along with returns that persuaded respondent No.2 to demand tax on these goods and notices were served on 4-3-1991 and 30-7-1991 for demand of entry tax. Respondent No.2 initiated the assessment proceedings for the relevant year i.e. 1990-91 by issuing notice of assessment and the case was fixed for hearing on 23-3-1999 and in which sufficient cause was shown for not clearing the tax liability on account of the judgment of the M.P. High Court in Makers Development Service (supra), as there is an order of stay in their favour and tax was subsequently deposited based on the condition of MOU between the Government of Madhya Pradesh and Bhilai Steel Plant. 2.4) It is the further case of the petitioner that despite showing sufficient cause under Section 17 (3) (b) (ii) of the Act, 1958, penalty to the extent of ? 4,09,09,903/- was imposed holding that Section 17 (3) (b) is automatic and mandatory though the petitioner had sufficient cause for not paying balance of tax that was assessed, whereas the admitted tax as per the return had already been paid and the returns filed are late only by three days. Misconstruing and misunderstanding the provisions of the Act, 1958, the impugned order imposing penalty has been passed. On revision being filed, the revisional authority also did not properly consider the petitioner's plea that they are not liable for payment of penalty and passed the impugned order leading to impugned challenge by way of this writ petition.
(3.) The writ petition as framed and filed has been opposed by the State of Chhattisgarh/respondents No.1 to 3 averring that penalty has rightly been imposed as only interest and liability has been exempted pursuant to the MOU from 1-4-1991 to 31-3- 1994 and sufficient cause has been shown while imposing penalty and no fault can be found in it.;