Cuttack, April 14: Joint commissioner of sales tax (Sambalpur range) A.C. Nayak faces contempt proceedings for "judicial indiscipline and impropriety" while passing an assessment order raising tax and penalty amounting to Rs 7.22 crore against the Odisha Power Generation Corporation.

Orissa High Court registry will start the contempt proceedings after a division bench had quashed Nayak's assessment order.

Official records indicated that Nayak had issued the order against the corporation on May 3 last year. The corporation had claimed that it was entitled to avail itself of the concessional rate of entry tax on coal citing a high court judgment, which had ruled that "coal is a raw material for generation of electricity".

However, Nayak had held that the judgment was not binding on him as it had been challenged in the Supreme Court.

While quashing his order, the division bench of Justice Indrajit Mahanty and Justice B.N. Mohapatra stated that the petitioner (the power body) had filed a written submission relying on various statutory provisions, the Supreme Court and high court judgments in support of its contention. The assessing authority, without dealing with the records, had passed the assessment order.

"Thus the impugned order shows complete non-application of mind which ultimately amounts to judicial indiscipline and impropriety," the verdict said, while warning that if the tribunal and authorities functioning within its jurisdiction would not follow its order "that will lead to chaos".

The high court further cautioned: "Everybody would be then seeking interpreting the law according to their own whims and fancies. In such a situation, lawyers may confuse not knowing how to advise their clients. The general public would be in a dilemma as to what is the correct position of the law. As a result, the judiciary would lose its credibility."

"Therefore, the assessing authority cannot refuse to follow the high court judgment on the ground that a challenge has been made to it in the Supreme Court and the same is pending. Hence, the assessing authority is clearly guilty and committed contempt of this court and liable to be proceeded against," the verdict said.

"The registry is directed to separately initiate a contempt proceeding against A.C. Nayak, joint commissioner of sales tax, Sambalpur range," the high court had said in its order on March 30.

In its order, the division bench said: "We are shocked to notice that the learned assessing authority held that the observation of this court that "coal as a raw material for generation of electricity" is a "cursory remark" and the said judgment having been challenged in the Supreme Court which is sub-judice, the same is not a settled ratio, and therefore, the petitioner-company cannot take advantage of the said decision.