1992 (10) TMI 237 - SC - VAT and Sales Tax

Whether the levy of additional tax under the Additional Sales Tax Act as amended by the Additional Sales Tax (Amendment) Act, 1979, is a single point levy or a multi-point levy? Held that - Appeal dismissed. There being no legal or constitutional bar for a combination of single point levy and a multi-point levy and levying of additional tax, there is no infirmity or constitutional inhibition which would invalidate the impugned Validation Act. All the assessment and collection provisions under the principal Act and the Rules framed thereunder are attracted and would apply for the assessment and collection of the additional tax as well. The notification issued under section 17 of the principal Act delegating the powers of the Commissioner therefore would automatically apply in so far as the officers authorised to assess and collect are concerned. There was no need for a further delegation of power in respect of the Orissa Additional Sales Tax Act are concerned. The point raised by the learned counsel in this connection is, therefore, devoid of any merit.

Issues Involved:
1. Constitutional validity of the Orissa Additional Sales Tax (Amendment and Validation) Ordinance, 1983.
2. Constitutional validity of the Orissa Additional Sales Tax (Amendment and Validation) Act, 1983 (Act 22 of 1983).
3. Legislative competence of the State Legislature in enacting the Validation Act.
4. Impact of the Validation Act on the scheme of single-point taxation under the principal Act.
5. Validity of retrospective application of the Validation Act.
6. Compliance with the undertaking given to the Supreme Court regarding the refund of taxes collected.
7. Adequacy of the machinery for assessment and collection of additional tax under the Validation Act.

Detailed Analysis:

1. Constitutional Validity of the Orissa Additional Sales Tax (Amendment and Validation) Ordinance, 1983:
The writ petitions filed in 1983 challenged the constitutional validity of the Orissa Additional Sales Tax (Amendment and Validation) Ordinance, 1983. The ordinance was questioned on the grounds that it altered the scheme of single-point taxation under the principal Act by introducing a multi-point levy on the gross turnover. This was seen as conflicting with the original intent of the Orissa Sales Tax Act, 1947.

2. Constitutional Validity of the Orissa Additional Sales Tax (Amendment and Validation) Act, 1983 (Act 22 of 1983):
The constitutional validity of the Orissa Additional Sales Tax (Amendment and Validation) Act, 1983, which replaced the ordinance, was also challenged. The Act sought to levy additional tax on the gross turnover, overriding sections 4, 5, and 8 of the principal Act. The petitioners argued that this amounted to a multi-point tax, conflicting with the single-point tax scheme of the principal Act.

3. Legislative Competence of the State Legislature:
The court examined whether the State Legislature had the competence to enact the Validation Act as an independent taxing statute. It was held that both the principal Act and the Validation Act fell under the same legislative field of taxes on the sale or purchase of goods (entry 54, List II). The court found no legal or constitutional bar against the State Legislature adopting a multi-point levy at a different stage or through a separate enactment.

4. Impact on Single-Point Taxation Scheme:
The Validation Act introduced a multi-point levy on the gross turnover, which was a departure from the single-point levy scheme under the principal Act. The court noted that sections 4, 5, and 8 of the principal Act prohibited multi-point levy. However, the Validation Act explicitly stated that the additional tax would be levied "notwithstanding anything contained in sections 4, 5, and 8" of the principal Act. This effectively allowed for a multi-point levy, de hors the single-point scheme of the principal Act.

5. Retrospective Application:
The Validation Act was given retrospective effect from April 1, 1979. The court held that the power to legislate retrospectively and validate actions taken under statutes is ancillary to the legislative power. The retrospective amendment created a legal fiction that assessments made and taxes collected under the earlier provisions were valid under the new law. This was aimed at curing defects pointed out in the earlier judgment (Ashok Service Centre v. State of Orissa).

6. Compliance with Undertaking to Supreme Court:
During the pendency of civil appeals, the State of Orissa had given an undertaking to refund the taxes collected if the appeals were allowed. The petitioners argued that the State should honor this undertaking regardless of the Validation Act. The court held that the retrospective amendment validated the earlier assessments, and there was no violation of the undertaking. The assessments were deemed valid, and the State was not required to refund the taxes.

7. Adequacy of Machinery for Assessment and Collection:
The petitioners contended that the Validation Act lacked adequate machinery for assessment and collection of additional tax. The court found that section 3(5) of the Additional Sales Tax Act made all provisions of the principal Act applicable to the additional tax. The existing delegation of powers under the principal Act was sufficient for the assessment and collection of additional tax. Therefore, no further delegation was necessary.

Conclusion:
The Supreme Court dismissed the writ petitions and the civil appeal, upholding the constitutional validity of the Orissa Additional Sales Tax (Amendment and Validation) Act, 1983. The court found that the Validation Act was within the legislative competence of the State Legislature, did not violate the scheme of single-point taxation under the principal Act, and was validly applied retrospectively. The court also held that the State had not violated its undertaking to the Supreme Court and that the machinery for assessment and collection of additional tax was adequate.

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