2021 (8) TMI 399 - HC - VAT and Sales Tax

Validity of an Ordinance which levied an additional sales tax @ not exceeding to 3% of the gross turnover - Ordinance was withdrawn in 1995 - whether for the period during which the Ordinance was in force, and tax was not collected by the dealer, would it still be enforced? HELD THAT - The Court notes that although the Ordinance was in the first place introduced to levy additional sales tax, it was in force only for a period of less than one month since the Government appears to have had second thoughts and decided that it was not in the interest of common people of Odisha to levy the additional sales tax - Sales tax is an indirect tax, the burden of which is passed on to the consumer. Where additional sales tax had not been collected by the dealer during the period in question, he would be in no position to pass on the burden, if it sought to be enforced subsequently i.e. even after the Ordinance stands withdrawn. Perhaps for the said reason, the Government took a conscious decision not to enforce the collection of additional sales tax, if it had not already been collected by the dealer. This appears to be a salutary move which would be consistent with the intention of not burdening the common people of Odisha. The Court is unable to agree with the view expressed by the Tribunal that notwithstanding the clarification of the Government, the Ordinance in question was still required to be enforced for the period of its operation - the impugned order of the Tribunal and the corresponding orders of the ACST and STO seeking to enforce the Ordinance are hereby set aside - revision petition disposed off.

Summary

Issues:
Interpretation of government instructions regarding additional sales tax refund and enforcement during a specific period under the Orissa Additional Sales Tax Ordinance 1995.

Analysis:
The main issue in this case was the interpretation of government instructions regarding the refund and enforcement of additional sales tax during the period when the Orissa Additional Sales Tax Ordinance 1995 was in force. The Tribunal had dismissed the petitioner's appeal, stating that the government's instruction did not override the provisions of the Ordinance, and the levy of additional sales tax was lawful regardless of collection. However, the High Court disagreed with this interpretation.

The High Court noted that the Ordinance was in force for less than a month before being withdrawn in the interest of the common people of Odisha. The government's decision not to enforce the collection of additional sales tax if not already collected was seen as a move to avoid burdening the people. The Court emphasized that the government's instructions should bind the government itself, and it cannot claim to be exempt from following its own directives.

Based on these considerations, the High Court set aside the impugned order of the Tribunal and other corresponding orders seeking to enforce the Ordinance. The Court held that the Ordinance was not required to be enforced for the period of its operation, given the government's decision and the intention to protect the common people of Odisha from unnecessary tax burdens.

Therefore, the revision petition was disposed of in favor of the petitioner, and the orders seeking to enforce the Ordinance were set aside. The Court also allowed the parties to utilize a printout of the order available on the High Court's website due to the ongoing COVID-19 restrictions, subject to attestation by the concerned advocate as per the prescribed procedure.