2007 (9) TMI 592 - HC - VAT and Sales Tax

Summary

Issues:
Tax appeal against revisional order on purchase tax computation based on royalty value.

Analysis:
The tax appeal involved a revisional order dated June 17, 1998 passed by the Commissioner of Commercial Taxes, Orissa, confirming the suo motu revisional order dated February 2, 1996 by the Assistant Commissioner of Sales Tax, Cuttack. The original assessment order dated February 28, 1995 imposed "purchase tax" on the procurement of "mohua flowers" by the appellant-Corporation based on a royalty amount payable to the State. The Assistant Commissioner initiated revisional proceedings due to under-assessment, stating that the assessment was done on royalty value rather than the purchase price, resulting in under-assessment.

During the appeal, the appellant relied on a previous judgment and a government notification appointing them as the agent for purchasing mohua flowers. The appellant argued that the royalty paid to the State should be the sole consideration for computing taxable turnover, and any payments to collectors for labor should not be part of the consideration for "purchase tax" levy.

The High Court, after considering the arguments and the previous judgment, held that the consideration for the appellant should be the royalty paid to the State for mohua flowers. Payments made to collectors for labor should not be included in the consideration for "purchase tax" levy. Consequently, the revisional order and the order in appeal were quashed, citing the previous judgment.

Therefore, the tax appeal was allowed, and the orders were quashed based on the judgment in the previous case. The court directed the issuance of an urgent certified copy of the order upon proper application.