1977 (5) TMI 79 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the writ applications are maintainable.
2. Whether the Divisional Forest Officer could have been assessed to sales tax when the State of Orissa is the lessor (and, therefore, the seller) under the contracts.
3. Whether the levy of sales tax on the transactions covered by the contracts is legal.
4. Is the Divisional Forest Officer entitled to claim reimbursement of tax.
5. Is the petitioner entitled to any relief against the threatened action.

Issue-wise Detailed Analysis:

1. Whether the writ applications are maintainable:
The court examined whether the petitioner, not being the assessee, could challenge the sales tax assessments made against the Divisional Forest Officer. The court found support for the maintainability of the applications from the decision of the Andhra Pradesh High Court in A. M. Ansari v. Board of Revenue, Andhra Pradesh, which was upheld by the Supreme Court. The court concluded that when public authorities force the petitioner to bear the ultimate burden of tax, it is open to the petitioner to contend that the transaction is not exigible to sales tax. The court held that the petitioner has a cause of action and the writ applications are maintainable.

2. Whether the Divisional Forest Officer could have been assessed to sales tax when the State of Orissa is the lessor (and, therefore, the seller) under the contracts:
The court agreed with the petitioner that the State of Orissa, not the Divisional Forest Officer, was the seller under the contracts. The contracts were between the Governor of the State of Orissa and the company, and the royalty was payable to the Governor. The court held that the Divisional Forest Officer could not have been assessed to sales tax for the transactions under the contracts, and thus, he is not entitled to claim reimbursement.

3. Whether the levy of sales tax on the transactions covered by the contracts is legal:
The court examined whether the transactions covered by the contracts are exigible to sales tax. The court referred to previous decisions, including State of Orissa v. Divisional Forest Officer, Deogarh Division, where it was held that the Divisional Forest Officer was not a dealer under the Act. The court also referred to the Supreme Court's decision in Ansari's case, which held that the Government of Andhra Pradesh did not carry on the business of selling forest produce. The court concluded that the transactions under the contracts were not sales exigible to sales tax.

4. Is the Divisional Forest Officer entitled to claim reimbursement of tax:
Given the court's conclusion that the Divisional Forest Officer could not have been assessed to sales tax and that the transactions were not exigible to sales tax, the court held that the Divisional Forest Officer is not entitled to claim reimbursement of tax from the petitioner.

5. Is the petitioner entitled to any relief against the threatened action:
The court held that the demand for reimbursement of sales tax raised by the Divisional Forest Officer is not tenable as no sales tax is payable on the transactions. The court directed that a writ shall issue quashing the letter of demand and prohibiting the opposite parties from enforcing the demand in any manner. The petitioner was granted costs of the applications.

Conclusion:
The applications were allowed, and the petitioner was granted relief against the threatened action of stopping the extraction and despatch of bamboo from the forests. The court issued a writ quashing the letter of demand and prohibiting the opposite parties from enforcing the demand.