1991 (11) TMI 234 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of rule 36 of the Orissa Sales Tax Rules regarding adjustment of tax paid by a dealer while purchasing goods.
2. Validity of the dealer's claim for adjustment of tax paid on country liquor against the tax liability.

Analysis:
The judgment by the Orissa High Court dealt with a reference under section 24 of the Orissa Sales Tax Act, 1947, regarding the entitlement of a dealer to adjust the tax paid while purchasing goods. The Tribunal questioned whether the dealer could adjust the tax paid on liquor against the sales tax payable, as per rule 36 of the Orissa Sales Tax Rules. The petitioner, a registered dealer, had surrendered his registration certificate but later requested its return with an amendment to include country liquor. The dealer claimed adjustment of tax paid on country liquor against the tax liability for a specific period. The appellate authority allowed the claim, but the Tribunal reversed the decision, citing the absence of a provision in rule 36 for such adjustment.

The judgment analyzed the provisions of the Orissa Sales Tax Act and Rules. It highlighted that a dealer must be registered to carry on business and possess a registration certificate specifying the goods dealt with. Despite surrendering the certificate, if not canceled, it remains valid. The dealer applied for an amendment to include country liquor in the certificate, which was allowed retrospectively. The judgment referenced previous cases to establish that the dealer could be considered registered from the date of application for amendment. Rule 36 of the Rules was examined, emphasizing the provision allowing a dealer to adjust tax paid on goods purchased against admitted tax payable, subject to specific conditions.

The Court concluded that the dealer was entitled to adjust the tax paid on country liquor against the tax liability for the period in question. The judgment clarified that the dealer was deemed to be dealing in country liquor from the date of application for amendment, making him eligible for adjustment under the second proviso of rule 36. The Standing Counsel for the Sales Tax Department acknowledged this entitlement. The Court directed the Tribunal to act in accordance with their interpretation of the rule. The judgment was agreed upon by both Justices, and the reference was answered accordingly.