Case: M/S Steel Authority Of India Ltd Vs. Sales Tax Officer,Rourkela-I Circle&amp;Ors

A brief reference to the factual aspects will be necessary. The appellant, a Public Sector Undertaking carries on business in manufacture and sale of Iron & Steel and Chemical Fertiliser as its finished product and bi-product, surplus and rejected articles, in course of inter-state trade and commerce and export. Apart from that, the appellant-Company effects transfer of stock of goods to its branches located at various places of the country. For the assessment year 2001-02, notice was issued under Rule 12(5) of the Central Sales Tax (Orissa), Rules, 1957 (in short ‘Central Rules) for the purpose of assessment under Central Sales Tax Act, 1956 (in short the ‘Act). After examination of the books of accounts produced, an extra demand of Rs.19,25,41,763.00 was raised. The appellant-Company had disclosed net sale and transfer of goods during the year under assessment in questionThe Assessing Officer found that certain declaration forms in Form `C were not produced and, therefore, the differential tax was to be levied. With reference to Clause (a) of Section 3, it was held that the sales made under the Annual Memorandum of Understanding (M0U), which were treated as Bank transfers are in fact, sales made in course of inter-state trade and commerce and, therefore, are subject to tax. Accordingly tax was levied. Questioning correctness of the assessment made, an appeal was preferred before the Assistant Commissioner of Sales Tax, Sundergarh Range, Rourkela. During the pendency of the appeal, an application for stay was filed. The Assistant Commissioner directed payment of part of the demand. An application for revision was filed before the Commissioner, who, by order dated 28.12.2005 in Revision Case No. SU-87/05-06 directed payment of Rs.10.00 Crores. A Writ Petition was filed before the High Court pointing out that the decision of this Court in Ashok Leyland Ltd. Vs. State of Tamil Nadu & Anr. (2004 (3) SCC 1 ) had full application. A Division Bench of the High Court, by order dated 15.02.2006 directed deposit of Rs.2.00 Crores. The said order was questioned in S.L.P.(C) No.5314/2006. In the said special leave petition, several States and Union Territories were impleaded as opposite parties because it was pointed out that requisite tax under the Act had already been paid in different States and Union territories. This Court passed the following order on 31.03.2006:

Court's reasoning:
11. Even in respect of administrative orders Lord Denning, M.R. in Breen v. Amalgamated Engg. Union (1971) 1 All ER 1148, observed: "The giving of reasons is one of the fundamentals of good administration." In Alexander Machinery (Dudley) Ltd. v. Crabtree 1974 ICR 120 (NIRC) it was observed: "Failure to give reasons amounts to denial of justice." "Reasons are live links between the mind of the decision-taker to the controversy in question and the decision or conclusion arrived at." Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the "inscrutable face of the sphinx", it can, by its silence, render it virtually impossible for the courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system; reasons at least sufficient to indicate an application of mind to the matter before court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made; in other words, a speaking-out. The "inscrutable face of the sphinx" is ordinarily incongruous with a judicial or quasi-judicial performance