BHARAT SABAIGRASS LIMITED Vs. COLLECTOR OF COMMERCIAL TAXES

JUDGEMENT

(1.) THIS reference under section 24 of Orissa Sales Tax Act, 1947, arises in the following circumstances :- The petitioner (M/s. Bharat Sabaigrass Ltd.) is a limited company, incorporated under the Indian Companies Act, 1913, with its head office at Calcutta. The company carries on business in bamboos and and sabaigrass and supplies the above articles to Orient Paper Mills of Sambalpur, Titaghar Paper Mills and other Bengal Paper Mills. The petitioner, in spite of carrying on business for a long time, did not take steps to get itself registered under section 9 of the Orissa Sales Tax Act. The Sales Tax Office therefore having issued noticed under section 12(5) of the Act assessed the petitioner to pay a tax of Rs. 3,115-10-0 by this order dated 16th December, 1949, for the periods beginning from the quarter ending 31st December, 1947 to 30th September, 1949. He has also ordered to pay a penalty of Rs. 500 under section 12(5).

(2.) IN response to the notice under section 12(5) the petitioner took up the plea of non-liability to pay any tax and has been sticking to this peal all along. The order of the Sales Tax Officer having been confirmed by all the authorities under the Act and the Commissioner having refused to state a case and refer the matter to this Court, the petitioner filed a petition under section 24(2)(b) of the Act praying for directing the Commissioner, Northern Division, Sambalpur, to state a case. By the order dated 29th July, 1952, this Court directed the Commissioner to state a case on the following point of law :-

(3.) IN formulating the point of law we had relied upon a decision of the Allahabad High Court reported in Budh Prakash Jai Prakash v. Sales Tax Officer ([1952] 3 S.T.C. 185; A.I.R. 1952 All. 754). In the meantime the Sales Tax Officer appealed against the judgment of the Allahabad High Court and their Lordships of the Supreme Court have upheld the decision of the Allahabad High Court in dismissing the appeal. The Supreme Court decision has been reported in Sales Tax Officer v. Budh Prakash Jai Prakash ([1954] 5 S.T.C. 193; A.I.R. 1954 S.C. 459). The point before their Lordships was the same as the point before us, that is, whether a contract for sale can be the basis for taxation. Their Lordships of the Supreme Court observed that there was always a distinction between the two concepts - sale and agreement to sell - both according to Indian and English laws. In a contract for sale there is no transference of ownership while a completed sale always means a transfer of ownership. Under the Government of India Act, 1935, the Provincial Legislature derive its power to impose tax on sale of goods under Entry No. 48 in List II of Seventh Schedule - the subject running as "sale of goods and advertisements". Their Lordships observed as follows, after discussing the distinction between a sale and an agreement to sell in England and in India :-