1955 (9) TMI 46 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of Orissa Sales Tax Authorities.
2. Levy of court-fees on appeal and revision petitions.
3. Validity of composite notice in Form VI.
4. Constitutionality of the assessment under the Orissa Sales Tax Act.
5. Levy of penalty for non-registration under the Orissa Sales Tax Act.

Detailed Analysis:

1. Jurisdiction of Orissa Sales Tax Authorities:
The petitioner argued that he was not a "dealer" as defined in the Orissa Sales Tax Act and did not have a "place of business" in Orissa. He claimed that he was merely sending goods from Orissa to places outside the state, which should exempt him from Orissa sales tax. The court examined the nature of the transactions and found that the petitioner was indeed engaged in business activities within Orissa, including collecting, storing, and processing biri leaves. The court held that there was sufficient territorial nexus between the goods sold and the State of Orissa, and thus, the Orissa Sales Tax Authorities had jurisdiction to assess the petitioner.

2. Levy of Court-Fees on Appeal and Revision Petitions:
The petitioner contended that the levy of court-fees on his memorandum of appeal and revision petitions was ultra vires. The court analyzed the relevant provisions and concluded that the taxing authorities could not be regarded as "Courts" and that the imposition of court-fees was beyond the rule-making power of the State Government. The court emphasized the distinction between a "tax" and a "fee" and found that the fees collected were merged into the Consolidated Fund of the State, thus amounting to an additional tax. Consequently, the court ruled that the petitioner was entitled to a refund of the court-fees paid.

3. Validity of Composite Notice in Form VI:
The petitioner argued that the composite notice issued in Form VI was not in conformity with the provisions of the Act. The court scrutinized the notice and found that it combined multiple requirements, which was contrary to the procedure contemplated in the Act. The court noted that the notice assumed facts without giving the petitioner an opportunity to be heard, thus short-circuiting the prescribed procedure. However, the court also acknowledged that the petitioner was examined by the Taxing Officer and had the opportunity to produce accounts, which he failed to do. The court directed the petitioner to produce his accounts before the Taxing Officer for a proper assessment.

4. Constitutionality of the Assessment under the Orissa Sales Tax Act:
The petitioner challenged the assessment based on the second proviso to section 2(g) of the Act, which was omitted by the Adaptation of Laws Order, 1950. The court held that the liability to tax under the proviso did not continue after its repeal by the Adaptation Order. The court further clarified that the liability to pay tax is incurred only after an assessment is made, and not merely by exceeding the turnover threshold. The court also noted the Supreme Court's decision in Pilibhit's case, which invalidated the proviso as ultra vires. Consequently, the court ruled that the petitioner was not liable to be taxed under the repealed proviso.

5. Levy of Penalty for Non-Registration under the Orissa Sales Tax Act:
The petitioner argued that the penalty for non-registration was unjustified as he was not a "dealer" within the meaning of the Act. The court found that the petitioner had wilfully failed to apply for registration despite being engaged in business activities within Orissa. The court emphasized that the penal provision in section 12(5) could not be invoked without a proper enquiry and satisfaction of the Taxing Officer. The court directed the Taxing Officer to reassess the petitioner's liability after giving him an opportunity to produce his accounts.

Conclusion:
The court set aside the assessment order and directed the petitioner to furnish a return of his transactions for the relevant period. The demand for recovery of tax and penalty was withdrawn, and the court-fees paid by the petitioner were ordered to be refunded. The court emphasized the need for compliance with the prescribed procedure and the proper issuance of notices.