1960 (7) TMI 57 - HC - VAT and Sales Tax

Summary

Issues:
1. Liability of a registered dealer to pay sales tax without obtaining a declaration in writing.
2. Validity of rule 27(2) under the Orissa Sales Tax Act.
3. Impact of a letter from the Sales Tax Department on the liability to pay tax.
4. Obligation to produce a declaration in writing under section 5(2)(a)(ii) of the Orissa Sales Tax Act.

Detailed Analysis:
1. The main issue in question (a) revolves around the liability of a registered dealer to pay sales tax even without obtaining a written declaration. The judgment clarifies that exemption under section 5(2)(a)(ii) of the Orissa Sales Tax Act is crucial for claiming exemption, regardless of whether a declaration under rule 27(2) was procured. The court emphasizes that the substantive right to exemption and the liability to pay tax stem from statutory provisions, making the declaration merely evidentiary.

2. Concerning the validity of rule 27(2) under the Orissa Sales Tax Act, the court dismisses the argument of ultra vires nature in question (b). It asserts that when the Act confers an exemption right for a sale transaction, the rule-making authority is empowered to establish the mode of proof for claiming such exemption. Therefore, rule 27(2) is deemed valid and within the rule-making authority's scope.

3. The impact of a letter from the Sales Tax Department on the liability to pay tax is discussed in question (c). The judgment highlights that the letter from the Assistant Sales Tax Officer, directing non-realization of sales tax, does not absolve the petitioner from tax liability if he is otherwise obligated to pay. The court underscores that the petitioner's failure to collect tax due to reliance on the letter does not negate his liability under the law.

4. Regarding the obligation to produce a written declaration under section 5(2)(a)(ii) of the Orissa Sales Tax Act, question (d) delves into whether such a declaration is mandatory. The court clarifies that a declaration is not always obligatory for the selling dealer, as other evidence can be presented to align the transaction with the provisions of section 5(2)(a)(ii). This flexibility allows dealers to substantiate their claim for exemption through alternative means beyond a written declaration.

In conclusion, the judgment provides a comprehensive analysis of the issues raised, affirming the legal principles governing sales tax liability, declaration requirements, and the interplay between statutory provisions and administrative communications. The court's decision underscores the importance of statutory compliance and individual responsibility in tax matters, while also acknowledging the need for clarity and evidence in establishing exemption claims.