1955 (3) TMI 30 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of assessment under the Orissa Sales Tax Act for a trader in hides and skins.
2. Interpretation of the proviso to section 5(2) of the Orissa Sales Tax Act.
3. Tax liability on sales of goods intended for re-sale in Orissa but sold outside the state.
4. Constitutional validity of levying tax on the purchaser under the Orissa Sales Tax Act.
5. Application of Article 286 of the Constitution to inter-connected sales transactions.

Analysis:

Issue 1:
The writ application challenges the assessment under the Orissa Sales Tax Act for a trader in hides and skins. The petitioner, a registered dealer, received tax exemption when purchasing goods from another registered dealer but was later assessed for sales tax on these purchases.

Issue 2:
The main contention revolves around the interpretation of the proviso to section 5(2) of the Orissa Sales Tax Act. The petitioner argued that the tax should not apply as the goods were ultimately sold outside Orissa. However, the court clarified that the tax was on the sale within Orissa when the petitioner purchased the goods, as per the provisions of the Act.

Issue 3:
The court examined the tax liability when goods intended for re-sale in Orissa were sold outside the state. The judgment emphasized that the tax was postponed until the goods were re-sold in Orissa, and if not, the tax became collectible from the purchasing dealer.

Issue 4:
The judgment delves into the constitutional validity of levying tax on the purchaser under the Orissa Sales Tax Act. It was established that while the Act primarily imposes tax on the seller, a special provision like the proviso in question can allow for tax collection from the purchaser in specific circumstances, which is within the legislative competence.

Issue 5:
Regarding the application of Article 286 of the Constitution to inter-connected sales transactions, the court analyzed whether the sales were in the course of inter-State trade or commerce. The argument based on Article 286(2) was deemed academic due to lack of evidence supporting the sales being inter-State transactions.

In conclusion, the petition challenging the tax assessment was dismissed, affirming the correctness of the tax imposition on purchases made in Orissa, even if the goods were later sold outside the state. The judgment clarified the legal provisions and constitutional aspects related to sales tax liability and upheld the assessment under the Orissa Sales Tax Act.