1987 (4) TMI 469 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the Sales Tax Officer was justified in refusing to deduct the turnover of sales tax-free to the registered purchasing dealers for computing the taxable turnover under section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act.
2. Whether the Sales Tax Officer erred in rejecting the application of the registered dealer to call for counterfoils of form No. XXXIV and summon the purchasing registered dealer to adduce evidence in support of purchases.
3. Whether the Sales Tax Officer was justified in refusing to summon the purchasing dealers to provide evidence for the deductions claimed under section 5(2)(A)(a)(ii) of the Act.
4. Whether the Sales Tax Officer failed to exercise the power vested in him to summon witnesses and compel production of documents as authorized under section 21 of the Act.

Analysis:
1. The judgment addressed a writ application by a registered dealer and one of its partners seeking to quash the assessment order for the year 1976-77 passed by the Sales Tax Officer. The issue revolved around the refusal of the Sales Tax Officer to deduct the turnover of sales tax-free to registered purchasing dealers for calculating the taxable turnover under section 5(2)(A)(a)(ii) of the Act. The dealers had purchased goods tax-free with declarations as per rule 27(2) of the Act. The Court found that for the period from April 1, 1976, to May 31, 1976, the Sales Tax Officer was justified in refusing the deduction as the required declarations were not provided by the dealer.

2. The judgment further delved into the specifics of the declaration forms required for different periods in 1976-77 and the obligations of the purchasing dealers to furnish these forms. It highlighted the evolution of form No. XXXIV and the amendments made to it during the relevant period. The Court emphasized the importance of proper documentation and the specific requirements outlined in rule 27(2) for proving deductions. It noted that the Sales Tax Officer erred in rejecting the application to call for counterfoils of form No. XXXIV and summon the purchasing dealers for evidence, especially for the period from June 1, 1976, to October 27, 1976.

3. The judgment also analyzed the requirements for the period from October 28, 1976, to March 31, 1977, when form No. XXXIV had three parts. It discussed the options available to the dealer to prove deductions during this period and criticized the Sales Tax Officer for not allowing the dealer to produce the required documentation or summon witnesses as permitted under the law. The Court highlighted the mandatory nature of the rule and the failure of the Sales Tax Officer to exercise the powers vested in him under section 21 of the Act to summon witnesses and compel document production.

4. Finally, the judgment concluded by quashing the assessment order and directing the Sales Tax Officer to reassess the dealer afresh under section 12(4) of the Act. It emphasized the importance of following the legal procedures and exercising the powers granted under the law. The Court highlighted the error of law on the face of the record regarding the Sales Tax Officer's failure to utilize the powers akin to a court trying a suit under the Code of Civil Procedure. The judgment did not award costs to any party, and both judges, Patnaik R.C. and Mohapatra S.C., concurred with the decision.