2022 (3) TMI 1251 - HC - VAT and Sales Tax

Realization of tax under Rule-94 of the Orissa Sales Tax Rules (OST Rules) - levy of tax the second time - suppression on the part of petitioner - HELD THAT - In the present case, the transporter has already admittedly paid tax at the check post under Rule 94 of the OST Rules. There is no reason why the said payment of tax should not have been given credit for while determining the tax payable by the Dealer. There is merit in the contention that the same transaction cannot by subject to sales tax twice over, one at the hands of the transporter and another at the hands of the Dealer - In that view of the matter, the enhancement of the taxable turnover of the Assessee-Dealer in the manner it has been done by the STO in the Assessment Order dated 15th November, 1995 cannot be sustained - the question is answered in the negative, i.e. in favour of the Petitioner-Assessee and against the Department by holding that the same transactions covered by the two consignment notes in question cannot be treated as suppression on the part of the Dealer and cannot be taxed twice over. Threshold monetary limit involved - Whether the rate of sales tax in respect of sale of Hosiery woolen garments is exigible to tax at the rate of 12% under Entry-103 of the taxable list or under Entry-22 of the taxable list? - HELD THAT - It is seen that the amount involved is not substantial. Consequently, leaving the question open for decision in some other appropriate case, the Court declines to answer it in the present revision petition. The revision petition is disposed of.

Summary

Issues:
1. Tax realization under Rule-94 of Orissa Sales Tax Rules from transporter and subsequent taxation on grounds of suppression by the Petitioner.
2. Exigibility of sales tax rate for sale of Hosiery woolen garments under specific entries in the taxable list.

Analysis:

*Issue 1: Tax realization under Rule-94 and subsequent taxation on grounds of suppression*
The Petitioner, a dealer in readymade garments, faced an assessment where the Sales Tax Officer (STO) enhanced taxable turnover due to alleged suppression by the Petitioner, despite tax payment by the transporter under Rule-94 at Chaksuliapada check post. The 1st Appellate Authority and the Orissa Sales Tax Tribunal upheld the STO's decision. However, the High Court, after considering arguments from both sides, held that the tax paid by the transporter should have been credited to the Petitioner during assessment. The Court emphasized that the same transaction cannot be taxed twice, once at the transporter's end and again at the dealer's end. Consequently, the enhancement of taxable turnover by the STO was deemed unsustainable and was deleted.

*Issue 2: Exigibility of sales tax rate for Hosiery woolen garments*
The Court, while addressing the second question regarding the applicable sales tax rate for Hosiery woolen garments, noted the insignificance of the amount involved in the case. As a result, the Court decided not to provide a definitive answer in the current revision petition, leaving the question open for determination in a more suitable case. The revision petition was disposed of accordingly, with the Court issuing an urgent certified copy of the order as per rules.

Therefore, the High Court's judgment favored the Petitioner by rejecting the taxation based on alleged suppression and refrained from conclusively deciding the sales tax rate issue, opting to address it in a more appropriate scenario.