1974 (1) TMI 98 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Vires of Section 16-A of the Orissa Sales Tax Act.
2. Vires of Rule 94 of the Orissa Sales Tax Rules.
3. Jurisdiction of the Assistant Sales Tax Officer.
4. Confiscation of goods under the Orissa Sales Tax Act.
5. Comparison with Section 42 of the Madras General Sales Tax Act.

Issue-wise Detailed Analysis:

1. Vires of Section 16-A of the Orissa Sales Tax Act:
The petitioner challenged the constitutionality of Section 16-A of the Orissa Sales Tax Act, which provides for the establishment of check posts or barriers and the inspection of goods in transit. The court examined whether the section was ancillary and incidental to the taxation of sales or exceeded that limit. The court referenced the Supreme Court's decision in Check Post Officer v. K.P. Abdulla and Bros., which stated that a taxing entry confers power to legislate for matters ancillary or incidental to taxation, including provisions for preventing tax evasion. The court concluded that the provision for confiscation under Section 16-A is confined to cases of sale only, making it incidental and ancillary to taxation. Thus, the provision was deemed intra vires.

2. Vires of Rule 94 of the Orissa Sales Tax Rules:
Rule 94 of the Orissa Sales Tax Rules was also challenged. This rule outlines the detailed provisions relating to check posts and prescribes the form of the way-bill and the procedure for implementing Section 16-A. The court did not find any grounds to declare Rule 94 ultra vires, especially since the main provision (Section 16-A) was held to be intra vires.

3. Jurisdiction of the Assistant Sales Tax Officer:
The petitioner disputed the jurisdiction of the Assistant Sales Tax Officer to seize and confiscate goods and impose penalties. The court upheld the jurisdiction of the Assistant Sales Tax Officer, as provided under Section 16-A of the Act, which explicitly grants such powers to the officer in charge of the check post or barrier.

4. Confiscation of Goods under the Orissa Sales Tax Act:
The court examined the power of confiscation under Section 16-A(3) of the Orissa Sales Tax Act, which allows the officer to seize and confiscate goods not covered by a way-bill. The court emphasized that the Orissa Act clearly states that no order of confiscation shall be made in respect of goods not liable to payment of tax, thereby addressing the mischief identified by the Supreme Court in the Madras Act. The court concluded that confiscation is a powerful control over tax evasion and is incidental and ancillary to taxation.

5. Comparison with Section 42 of the Madras General Sales Tax Act:
The court compared Section 16-A of the Orissa Act with Section 42 of the Madras General Sales Tax Act, which the Supreme Court had previously found to be ultra vires. The court noted that the Orissa Act does not assume that all goods transported are sold within the state and distinguishes between "goods sold" and "goods not sold." This distinction addressed the Supreme Court's concerns in the Madras case, leading the court to uphold the Orissa provision.

Conclusion:
The court dismissed the petition, holding that Section 16-A of the Orissa Sales Tax Act and Rule 94 of the Orissa Sales Tax Rules are intra vires. The court found that the provision for confiscation is incidental and ancillary to taxation and within the legislative competence of the State. The petitioner's challenge to the vires of the statutory provisions was unsuccessful, and no costs were awarded.