The Orissa High Court has directed the Steel Authority of India Ltd (SAIL) to pay Rs 13.5 crore towards sales tax.
A division bench of the high court comprising justice Sushanta Chaterjee and justice Ratnakar Das on Tuesday dismissed the writ filed by SAIL challenging the constitutional validity and legislative competence of Orissa legislature to enact Section 13 AA of the Orissa Sales Tax Act.
Since SAIL had failed to deduct tax at source in accordance with the Section 13 AA, the sales tax officer, Rourkela had initiated penalty proceedings against SAIL.
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Thereafter, SAIL had filed the petition before the court contending that state legislature was not competent to enact such a law.
The reason given by SAIL was that the payments might include sums towards sales under central sales tax act which was prohibited under Article 286 of the Constitution.
The sales tax officer had imposed penalty of Rs 27 crore.
After imposition of penalty, sail has filed two more petitions on various grounds.
In the said cases, the court had initially directed, by way of interim measure, that SAIL must pay one fourth of the penalty amount.
SAIL had challenged the said order before the Supreme Court. The apex court had remitted back the matter to the high court for fresh order.
The bench further directed that pending disposal of the two subsequent petitions SAIL had to pay the amount within four weeks.
A failure to do so would result in taking of coercive action against the company in accordance with the law to recover the penalty amount.