1955 (7) TMI 21 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the assessment of sales tax under the Orissa Sales Tax Act, 1947.
2. Validity of the notification extending the Orissa Sales Tax Act to the merged states.
3. Determination of the place of sale and transfer of property in goods.

Issue-wise Detailed Analysis:

1. Legality of the assessment of sales tax under the Orissa Sales Tax Act, 1947:
The petitioners, dealers in lac, contended that the sales took place in Calcutta, not Orissa, and hence they should not be liable under the Orissa Sales Tax Act. The Board of Revenue had refused to state a case, leading to the petitioners filing for a writ of mandamus. The court noted that "there was no evidence of any contract of sale entered into between the parties whether inside or outside Orissa." The essence of a sale, as defined under section 2(g) of the Sales Tax Act, is "a transfer of property in goods for cash or deferred payment or other valuable consideration." The court concluded that the transactions in question did not amount to sales of goods within the meaning of the Act XIV of 1947, as the property in the goods remained with the sellers until the Calcutta firms found a buyer. The court held that the petitioners were not liable to pay any sales tax for the transactions in question.

2. Validity of the notification extending the Orissa Sales Tax Act to the merged states:
The petitioners argued that the notification extending the Orissa Sales Tax Act to the merged states was ultra vires and invalid. The court examined the relevant notifications and found that the notification dated 1st March, 1949, which fixed 31st March, 1949, as the date from which sales tax would be assessed in Gangpur State, was defective. It referred to the year ending with 31st March, 1949, as the year immediately preceding the commencement of the Act, which was incorrect. The court held that the notification was ultra vires and invalid, and consequently, the petitioners could not be held liable to sales tax for transactions of sale that took place from 1st April, 1949.

3. Determination of the place of sale and transfer of property in goods:
The court noted that the brokers in Calcutta were charging only a percentage of the sale price as their commission, indicating that the goods were not sold to the brokers. The court observed that "the brokers quoting their sales tax numbers cannot in any way be taken into account as against the petitioners." The payment of advances by the brokers did not necessarily show that the advances were paid towards the purchase price. The court referred to the case of Commissioner of Income-tax, Madras v. Mysore Chromite Ltd., where the Supreme Court held that the payment of advances did not indicate the transfer of property in goods. The court concluded that the transactions did not amount to sales of goods and that the petitioners were not liable to pay any sales tax.

Judgment:
The applications of the petitioners in S.J.C. Nos. 12, 13, 14, and 15 were allowed with costs, and the court answered the question referred to it in the negative. The court also allowed O.J.C. Nos. 35 and 36, directing the opposite parties not to proceed with the certificate cases against the petitioners for the realization of the tax. The petitioners were entitled to a refund of the tax paid as well as a refund of the court fee paid. PANIGRAHI, C.J., concurred with the judgment.