1971 (12) TMI 102 - HC - VAT and Sales Tax

Summary

Issues:
Tax assessment on motor vehicle transactions for the period 1st April, 1966, to 31st March, 1967. Application for rectification under rule 83 of the Orissa Sales Tax Rules. Quashing of assessment and direction for recomputation.

Analysis:

The petitioners, sub-dealers in motor vehicles, purchased jeeps and pick-ups from the main dealer without paying tax, based on declarations. The petitioners claimed ignorance of rule 93-A of the Orissa Sales Tax Rules, which led to incorrect taxation. The department, too, was unaware of the rule and taxed the petitioners incorrectly. Subsequently, a notice was issued to the main dealer for reassessment, and an order was passed against them. The petitioners sought rectification under rule 83 for the assessment year in question. The writ application aimed to quash the assessment for the period and request recomputation excluding transactions between the main dealer and the petitioners.

Rule 93-A dictates that all motor vehicles in a series of sales by successive dealers should be taxed at the first point of sale by a liable dealer. Even if the vehicles are specified in the purchasing dealer's registration, tax is applicable at the first point of sale. Dealers not involved in the initial sale can deduct the turnover from their gross turnover for tax purposes.

The court found that tax was erroneously collected from the petitioners due to a legal misunderstanding regarding the transactions between them and the main dealer. The assessment order encompassed transactions beyond those between the petitioners and the main dealer, necessitating its quashing. The court directed the Sales Tax Officer to reassess and recompute the tax, excluding the transactions in question, and ordered a refund if tax had been paid for those transactions.

In conclusion, the writ application was allowed, leading to the quashing of the assessment order and a directive for reassessment and recomputation by excluding specific transactions. The court issued a writ of certiorari to annul the order and a writ of mandamus to compel the Sales Tax Officer to conduct the reassessment. No costs were awarded in this matter.

The judgment was delivered by Misra G.K., C.J., and Acharya S., J., with the agreement of Acharya, J.