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1973 (6) TMI 65 - HC - VAT and Sales Tax
Issues Involved:
1. Whether there was a sale of gunny bags liable to payment of sales tax. Issue-wise Detailed Analysis: 1. Whether there was a sale of gunny bags liable to payment of sales tax: The common question under section 24(1) of the Orissa Sales Tax Act referred to the court was: "Whether, in the facts and circumstances of the case, it can be construed that there was a sale of gunny bags liable to payment of sales tax?" Facts and Circumstances: - The assessees, involved in the purchase and milling of paddy, were directed by the government to sell the milled rice. During assessment, the assessing officer found that the assessees did not pay tax on the alleged sale of gunny bags. - The relevant assessment years varied among the assessees, covering periods from 1964 to 1966. - The assessing officer made assessments based on an estimate representing the sale price of gunny bags and demanded extra tax. Appeals and Tribunal Findings: - The assessees contended that there was no agreement for the sale of gunny bags, the estimate was arbitrary, and there was no liability for tax on gunny bags. - The first appellate authority upheld the assessments, and the Sales Tax Tribunal also upheld the assessments, concluding that there was an implied agreement for the sale of gunny bags based on the Orissa Rice (Maximum Prices) Order of 1961 and the bills produced. Preliminary Objection: - The learned standing counsel argued that the question referred was one of pure fact and not referable. However, the court found that the question was a mixed question of fact and law, thus rejecting the preliminary objection. Legal Analysis: - The court referred to the Supreme Court's decision in Hyderabad Deccan Cigarette Factory v. The State of Andhra Pradesh, which emphasized that the burden lies on the Commercial Tax Officer to prove that a turnover is liable to tax and that the packing materials were subject to an agreement of sale. - The Tribunal inferred an agreement to sell from the Orissa Rice (Maximum Prices) Order of 1964 and a specimen bill, which showed separate charges for incidental expenses including sewing and packing. - However, the court noted that the Orissa Rice (Maximum Prices) Order of 1964 only fixed the maximum selling price inclusive of the cost of gunny bags and taxes, and did not imply a statutory contract for the sale of gunny bags. Conclusion: - The court concluded that there was no intrinsic evidence in the bill indicating that the gunny bags were separately charged for, and the Tribunal's conclusion did not flow out of the bill or the Orissa Rice (Maximum Prices) Order of 1964. - The burden of proving that there was an agreement to sell gunny bags, either express or implied, lay on the revenue, which was not discharged. - The court suggested that a further enquiry could be undertaken by the Tribunal to provide a fair opportunity to both the assessee and the department to establish their claims. Final Judgment: - The court answered the question in the negative: "On the facts and in the circumstances of the case, it cannot be construed that there was a sale of gunny bags liable to payment of sales tax." - No order as to costs of the references was made. Separate Judgment: - B.K. Ray, J., concurred with the judgment. Reference Answered Accordingly.
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