It did number deduct tax at source in respect of payments under items a , b and c for the reason that they were in respect of inter State sales, outside sales and import sales and, therefore, outside the purview of the Orissa Sales Tax Act.
The Commercial Tax Officer, Rourkela, did number accept this stand of the appellant and issued to it numberices to show cause why penalty proceedings should number be initiated in respect of the Assessment Years 1994 95 and 1995 96.
The appellant has entered into companytracts with parties in India and abroad for the design and engineering of plant and equipment and for the manufacture of plant, equipment, companyponents, machinery and spares which will be incorporated into the companytracts for erecting the modernised system and plant.
The numberices were challenged by the appellant by a writ petition filed in the High Court of Orissa.
The penalties, in the sum of Rs.
On the earlier writ petition the order under challenge in the appeal was passed.
At an interim stage, the authorities were permitted to proceed with the hearing on the show cause numberices but the final order thereon was made subject to the result of the writ petition.
By virtue of Entry 54 of List II of the Seventh Schedule read with Article 246 of the Constitution of India, the States are empowered to levy taxes on the sale or purchase of goods, other than newspapers.
The value thereof was Rs.
Thereafter, the High Court ordered that numbercoercive steps for recovery should be taken against the appellant.
In other words, it has entered into, inter alia, works companytracts.
78 Crores Under the terms of Section 13AA, as presently enacted, the appellant deducted sales tax at source at the rate of four per cent in respect of payments to Mukund pertaining to d and e above.
Both under Section 3 a and 6 2 of the CST.
Pursuant to the show cause numberices, the Sales Tax Officer imposed penalties upon the appellant for the Assessment Years 1994 95 and 1995 96 on the ground that the appellant should have deducted four per cent of the totality of its payments to Mukund.
Upon the petition for leave to appeal to this Court, recovery of tax and penalty was stayed pending the disposal of the appeal.
Central Sales Tax paid in Non Orissa States.
26.98 crores imposed by the order dated 11th November, 1997 for the Assessment Years 1994 95 and 1995 96, were challenged by the appellant in a fresh writ petition.
According to the appellant, the break up thereof is as follows a Supply of equipments from States outside Orissa by way of CST Sales.
532 crores.
One of such works companytractors was M s Mukund Iron and Steel Works Ltd. hereinafter called the Mukund .
The companytract between the appellant and Mukund was for the design, engineering, manufacture, supply, transportation, erection, installation, testing and companymissioning of a basic oxygen furnace plant.
