1987 (1) TMI 470 - HC - VAT and Sales Tax

Summary

Issues:
1. Assessment of tax on sales in the canteen and unserviceable materials by the assessee under the Orissa Sales Tax Act, 1947.
2. Interpretation of the liability to include sales in the workers' canteen in the gross and taxable turnovers during the year 1968-69.
3. Vires of the amendment of the Act in the Orissa Act 18 of 1974.
4. Tax liability of the petitioner on the sale of unserviceable materials.

Analysis:
1. The assessee, a registered dealer under the Orissa Sales Tax Act, was assessed for tax on sales in the canteen and unserviceable materials for the years 1968-69 and 1971-72. The Assistant Commissioner confirmed the assessment for 1968-69 on unserviceable materials but relieved the assessee from tax liability on canteen sales. However, the appeal for 1971-72 was dismissed. The Tribunal referred questions to the High Court regarding the inclusion of canteen sales in turnovers and the tax liability on unserviceable materials.

2. The Tribunal referred a question regarding the inclusion of sales in the workers' canteen in the assessee's turnovers for 1968-69. The High Court, considering precedents, held that sales in the canteen are integral to commercial activities and should be included in turnovers. The Court emphasized that persuasive decisions from other High Courts do not override binding decisions of the Court. Thus, the question was answered against the assessee.

3. The assessee challenged the vires of an amendment to the Act in the Orissa Act 18 of 1974 via a writ application. The High Court heard and disposed of this challenge along with the reference cases.

4. Regarding the tax liability on the sale of unserviceable materials, the High Court considered a Supreme Court decision favoring the assessee. However, a Division Bench of the High Court preferred a later Supreme Court decision stating that the transactions did not constitute the assessee's primary business. As the unserviceable materials were sold by the petitioner, the High Court applied the decision in favor of the assessee, resolving the issue in their favor and dismissing the writ application.

5. The High Court ordered that each party bear their own costs in the proceedings, and the judgment was concluded with the agreement of the Chief Justice.