1993 (9) TMI 338 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of the Sales Tax Officer to collect tax.
2. Voluntariness of the tax payment by the carrier.
3. Compliance with procedural requirements under Section 16-A of the Orissa Sales Tax Act and Rules 94-A and 94-B of the Orissa Sales Tax Rules.
4. Status of goods as "in transit."

Detailed Analysis:

1. Jurisdiction of the Sales Tax Officer to Collect Tax:
The petitioner challenged the jurisdiction of the Sales Tax Officer (STO) to collect tax from the carrier. The STO argued that Section 16-A of the Orissa Sales Tax Act, 1947, and Rules 94-A and 94-B of the Orissa Sales Tax Rules, 1947, provided the necessary jurisdiction. However, the court noted that there was no specific statement in the counter-affidavit confirming that the officer who collected the tax was empowered by the Commissioner. The court emphasized that the power to collect tax under Section 16-A and Rules 94-A and 94-B is contingent on the goods being in transit and the officer being properly empowered.

2. Voluntariness of the Tax Payment by the Carrier:
The petitioner asserted that the tax collection was unauthorized, while the Revenue claimed that the payment was voluntary, as evidenced by Annexure D. The carrier disputed this, stating that no time was granted to contact the consignee. The court noted that the relevant portion of Annexure D indicated that the carrier opted to pay the tax and penalty due to the absence of valid documents. However, the court found that there was no indication that the STO had reason to believe that there was evasion of tax, which is a prerequisite for such collection.

3. Compliance with Procedural Requirements:
For the STO to collect tax and impose penalties under Section 16-A and Section 16-C, there must be a "reason to believe" that there has been tax evasion. The court found no evidence in the counter-affidavit that the STO had such a reason. Additionally, the court highlighted that Rule 94-A requires inspection by an officer not below the rank of Assistant Sales Tax Officer and empowered by the Commissioner. The court found that the STO did not follow the required procedures, including providing notice and an opportunity to be heard.

4. Status of Goods as "In Transit":
The court examined whether the goods were "in transit" at the time of tax collection. The court defined "in transit" as the period between the dispatch and receipt of goods by the consignee. The court noted that the goods were already at the carrier's business premises and not in transit, thus questioning the applicability of Section 16-A and Rule 94-A. The court concluded that the STO's action was not justified as the goods were not in transit and the officer was not properly empowered.

Conclusion:
The court directed the petitioner to appear before the STO to present materials supporting the plea of lack of jurisdiction and unauthorized tax collection. If the STO concludes that he lacks jurisdiction or the collection was unauthorized, he must take steps to refund the tax. If a contrary conclusion is reached, the petitioner may challenge it in an appropriate forum. The writ petition was disposed of accordingly, with no costs awarded.