1973 (4) TMI 101 - HC - VAT and Sales Tax

Issues Involved:
1. Maintainability of writ petitions while statutory appeals are pending.
2. Withdrawal of rebate provision leading to double taxation.
3. Legality of purchase tax under the Orissa Sales Tax Act on transactions deemed to be in the course of inter-State trade.

Issue-wise Detailed Analysis:

1. Maintainability of writ petitions while statutory appeals are pending:
A preliminary objection was raised regarding the maintainability of the writ petitions on the grounds that the petitioners were already pursuing statutory remedies. The petitioners responded by withdrawing their appeals from the appropriate forums, thereby allowing the writ petitions to proceed. The court accepted this procedural change and proceeded to hear the writ petitions.

2. Withdrawal of rebate provision leading to double taxation:
The petitioners argued that the withdrawal of the rebate provision amounted to double taxation, as the same turnover of betel leaves was being taxed under both the Orissa Sales Tax Act and the Central Sales Tax Act. They contended that this situation conflicted with Article 286(1)(a) of the Constitution, which restricts state laws from imposing taxes on sales or purchases occurring outside the state or in the course of inter-State trade.

The revenue countered that the assessments were made on the transaction of purchase preceding the inter-State sale, and thus, there was no double taxation. The purchase tax under the Orissa Act was levied at the time of passing of title in the goods, while the Central Sales Tax was applicable when the goods were exported out of the state.

The court found no provision in the Orissa Act, Central Act, or the Constitution that would ban the imposition of purchase tax if the goods subjected to purchase tax were exported. The proviso to section 3-B of the Orissa Act excludes sales tax on goods liable to purchase tax but does not protect against taxation under the Central Act. Thus, the withdrawal of the rebate provision did not lead to double taxation in a manner that violated constitutional provisions.

3. Legality of purchase tax under the Orissa Sales Tax Act on transactions deemed to be in the course of inter-State trade:
The petitioners argued that the transactions were in the course of inter-State trade and commerce, as defined under section 3 of the Central Act, and thus should not be subject to purchase tax under the Orissa Act. They cited several Supreme Court judgments to support their claim.

However, the court noted that there was no material evidence showing that the petitioner was required to remove the goods from Orissa to other states under the terms of preexisting contracts. The petitioner purchased betel leaves within Orissa and subsequently exported a major portion outside the state. The court emphasized that the acquisition of betel leaves was not under contracts necessitating their movement out of Orissa.

The court referenced previous judgments, including the case of Dhirendranath Das v. State of Orissa, which established that mere factual export without contractual obligation does not constitute a sale in the course of inter-State trade. The court concluded that the petitioner's liability under the Central Act did not exempt him from the liability under section 3-B read with section 4 of the Orissa Act.

Conclusion:
The court dismissed all writ petitions, ruling that the withdrawal of the rebate provision did not lead to unconstitutional double taxation and that the purchase tax under the Orissa Act was legally imposed on transactions within the state, notwithstanding subsequent exports. Each party was directed to bear its own costs.

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