1973 (3) TMI 124 - HC - VAT and Sales Tax

Summary

Issues:
1. Legislative competence to enact sections 9-B(3) and 14-A of the Orissa Sales Tax Act.
2. Entitlement of the petitioner to refund under the Act.

Analysis:

1. The judgment dealt with the legislative competence of the Orissa State Legislature in enacting sections 9-B(3) and 14-A of the Orissa Sales Tax Act. Section 9-B(3) mandated that any amount realized as tax exceeding the payable amount must be deposited in the Government treasury. Section 14-A provided for the refund of such amounts to the person from whom it was collected, not to the dealer who deposited it. The court analyzed similar provisions in other state laws and Supreme Court decisions, notably Abdul Quader & Co. v. Sales Tax Officer and Ashoka Marketing Ltd. v. State of Bihar, where analogous provisions were held unconstitutional. The court held that the Orissa legislature lacked the legislative competence to enact sections 9-B(3) and 14-A, declaring them ultra vires.

2. The petitioner had deposited sums as directed by the sales tax authorities but sought a refund, claiming they were not collected as sales tax and were not due to the State. Despite unsuccessful appeals, the petitioner filed writ applications under articles 226 and 227 of the Constitution seeking a mandamus for refund. The court, based on the analysis of legislative competence, concluded that the petitioner was entitled to a refund of the amounts deposited in compliance with the demand notice. Consequently, the court allowed the writ applications, directing the opposite parties to refund the deposited amounts. The judgment highlighted the distinction between the dealer and the person entitled to the refund under the Act, emphasizing the legislative intent behind sections 9-B(3) and 14-A.

In conclusion, the Orissa High Court held that the Orissa State Legislature lacked the legislative competence to enact sections 9-B(3) and 14-A of the Orissa Sales Tax Act. The petitioner was deemed entitled to a refund of the amounts deposited in compliance with the demand notice. The court allowed the writ applications, issuing a mandamus for the refund of the deposited sums.