2022 (5) TMI 1196 - HC - VAT and Sales Tax

Exemption from Sales Tax - Whether the carpets dealt with by the Petitioner on which 1st point sales tax has been paid to the selling dealer, are exempted from sales tax at the last point of sale? - HELD THAT - The taxing provision in the OST Act is Section 5 (1) which prescribes the rate of tax. The point of levy of tax on different goods are in accordance with Section 8 of the OST Act. Therefore, the reference to entry 23 of the rate of tax for determining amenability to tax is not relevant. The schedule of taxable goods under List- C not only covers the goods notified as 1st point tax paid items but all other residual items unless the goods were notified as tax free - There is merit in the contention of the Petitioner that pile carpets are also known as carpets. In common parlance, pile carpets are also understood as carpets. The carpets entered into the books of account of the Petitioner are in fact pile carpets . In the present case, the Petitioner having already paid to the seller, the 1st point sales tax, should not be asked to pay again sales tax on the last point of sale of the same commodity. Consequently, the question framed by the Court is answered in favour of the Assessee and against the Department by holding that carpets on which 1st point sales tax has already been paid by the Petitioner to the selling dealer would not again be amenable to sales tax at the last point of sale - the corresponding orders of the ACST and STO are hereby set aside. The revision petitions are allowed.

Summary

Issues:
1. Interpretation of tax laws regarding pile carpets and sales tax liability.
2. Validity of assessment orders by Sales Tax Officer and Assistant Commissioner of Sales Tax.
3. Applicability of exemptions for goods on which 1st point sales tax has been paid.

Issue 1: Interpretation of tax laws regarding pile carpets and sales tax liability:
The judgment involves two revision petitions arising from a common order by the Orissa Sales Tax Tribunal regarding the assessment orders for the years 1992-93 and 1993-94. The key question was whether carpets dealt with by the Petitioner, on which 1st point sales tax had been paid to the selling dealer, were exempt from sales tax at the last point of sale. The Petitioner contended that the carpets purchased were indeed "pile carpets" as per relevant notifications, thus exempt from last point sales tax.

Issue 2: Validity of assessment orders by Sales Tax Officer and Assistant Commissioner of Sales Tax:
The Sales Tax Officer had rejected the Petitioner's claim for deduction based on the classification of the item sold as not falling under "pile carpets." This decision was upheld by the Assistant Commissioner of Sales Tax through ex parte orders. The Tribunal partially allowed the Petitioner's appeals, leading to the current legal challenge.

Issue 3: Applicability of exemptions for goods on which 1st point sales tax has been paid:
The Petitioner had paid 1st point sales tax to the selling dealer and claimed deductions accordingly. The Court analyzed the relevant provisions of the Orissa Sales Tax Act and determined that pile carpets, as understood in common parlance, were indeed covered by the notifications. Citing precedent and principles of unjust enrichment, the Court held that the Petitioner should not be taxed again on the same transaction where 1st point sales tax had already been paid. Consequently, the impugned orders were set aside in favor of the Petitioner, allowing the revision petitions with no costs imposed.

This detailed analysis of the judgment by the Orissa High Court showcases the legal interpretation of tax laws, the validity of assessment orders, and the application of exemptions for goods on which 1st point sales tax has been paid.