SHEW BHAGABAN SHEWRATNA Vs. SALES TAX OFFICER GANJAM

JUDGEMENT

(1.) THESE two petitions are under Article 226 of the Constitution of India for quashing the orders of assessment under the provisions of the Orissa Sales Tax Act, 1947 (Orissa Act XIV of 1947). These two petitions were heard together and will be governed by this judgment of ours.

(2.) O .J.C. 234/54 :- The petitioner in this case is a registered dealer within the meaning of the said Act and has obtained a certificate of registration. The central place of business of the petitioner in oil, oil-seeds, turmeric, hemp, jute etc. is at Berhampur within the district of Ganjam. The assessment in question refers to the quarters ending on the last days of March, June and September, 1953. The petitioner being a registered dealer purchased articles mentioned in the certificate of registration from another registered dealer with the undertaking that the articles were to be re-sold in Orissa. On this position therefore both the petitioner and the selling registered dealer were exempt from paying sales tax under the provisions of section 5(2)(a)(ii) of the Act. The present petitioner however broke the undertaking and sold the goods outside the State of Orissa. The Department therefore included the sale prices of such goods which the petitioner sold outside Orissa having broken the undertaking within the taxable turnover of the petitioner. In doing so the Department relied upon the proviso to section 5(2)(a)(ii) of the Act. It would be pertinent to quote the relevant portions of section 5 of the Act.

(3.) IN the present case, however, Mr. Mohapatra has fairly never contended that these transactions are in the nature of inter-State trade or commerce inasmuch as there are absolutely no materials to come to such a conclusion. There is no mention even in the petition filed before us that these transactions were of such nature. In our view, therefore, the decision of the Supreme Court is of no assistance. The petitioner, therefore, has now to fall back upon Article 286(1) of the Constitution relying upon the position that the sales which are being taxed in the present case being outside the State of Orissa are exempt from taxation by the State authorities and are beyond the reach of the State law. This contention is fully covered and negatived by the previous decision of this Court in the case of K. S. E. Ahmed Mohinuddin v. Sales Tax Officer, Ganjam (O.J.C. No. 253 of 1954 Unreported). (Since reported at page 639 supra). In that case, on a careful analysis of the relevant provisions of the section, My Lord the Chief Justice came to the conclusion that it was not the second sale by the petitioner outside the State of Orissa which was the basis for taxation in the present case but the first sale in which the present petitioner was the purchaser from another registered dealer. It appears clear that on account of this undertaking given by the present petitioner that the articles purchased by him as a registered dealer would be sold within the State of Orissa, the seller or the registered dealer is exempt from paying sales tax and as a matter of that the present petitioner also was so exempt. But this exemption, or (more accurately) this deduction was a conditional one and it is so provided in sub-clause (ii) of clause (a) of sub-section (2) of section 5 itself that if the condition is broken, that is to say, that the registered dealer-purchaser uses the goods for purposes other than those specified in his certificate of registration, the prices of goods so utilised shall be included in the taxable turnover of the purchasing registered dealer. I am of the same opinion that there is no constitutional bar for making such a provision in the Act itself. Indeed, the scheme of the Act is such as to ordinarily levy tax on the selling dealer; but in cases of this nature where conditional deductions are allowed on the undertaking in the purchasing dealer's certificate of registration, the Legislature is completely within its jurisdiction to make a provision that on the breach of such an undertaking the purchasing dealer is liable to pay the tax on the basis of the sale which took place with the aforesaid undertaking. There is no question that the first series of sales were within the State of Orissa. Being in agreement with the view expressed by their Lordships in O.J.C. 253 of 1954, I hold that the assessment in question is in accordance with law and does not call for any interference.