2022 (4) TMI 725 - HC - VAT and Sales Tax

Validity of assessment order - sales of paper to manufacturing registered dealers against declarations in Form IA out of the paper purchased by furnishing declaration in Form 34 inside the State of Odisha - contravention of the 2nd proviso to Section 5A(a)(ii) of the Orissa Sales Tax Act, 1947 (OST Act) - non-consideration of Sections 6 and 7 read with Sections 4(1) of the OST Act - validity of orders of assessment passed under the Odisha Additional Sales Tax Act (OAST) for which no separate notice under Section 12(8) of the OST Act read with the OAST Act had been issued - validity of orders of assessment passed under the OAST Act leaving additional sales tax under Section 5(2)(A)(a)(ii) of the OST Act which did not form part of the gross turnover under the OST Act. HELD THAT - In Lloyd Electric and Engineering Ltd. 2015 (9) TMI 370 - SUPREME COURT , the question was whether the Appellant Assessee is liable to pay central sales tax @ 2% on the inter-State sales for the period 1st April, 2009 to 17th June, 2009 or @ 1 % in view of the Industrial Policy of the State? The question was answered in favour of the Assessee and it was held that the Assessee would be entitled to concessional rate of CST @ 1%. In coming to that conclusion, it was held that the State Government was bound by the policy decision taken by the Council of Ministers and duly notified by the Department concerned, namely, the Department of Industries. It was held that the State Government cannot speak into two voices . The impugned orders of the Tribunal for both years are accordingly set aside and the corresponding orders of the ACST are restored to file - Revision petition disposed off.

Issues Involved:
1. Justification of the Tribunal in treating the sales of paper to manufacturing registered dealers against declarations in Form IA as contravention of the 2nd proviso to Section 5A(a)(ii) of the Orissa Sales Tax Act, 1947 (OST Act).
2. Consideration of Sections 6 and 7 read with Sections 4(1) of the OST Act by the Tribunal.
3. Justification of the Tribunal in sustaining the orders of assessment passed under the Odisha Additional Sales Tax Act (OAST) without a separate notice under Section 12(8) of the OST Act read with the OAST Act.
4. Justification of the Tribunal in confirming the orders of assessment under the OAST Act, leaving additional sales tax under Section 5(2)(A)(a)(ii) of the OST Act, which did not form part of the gross turnover under the OST Act.

Issue-wise Detailed Analysis:

1. Justification of the Tribunal in treating the sales of paper to manufacturing registered dealers against declarations in Form IA as contravention of the 2nd proviso to Section 5A(a)(ii) of the OST Act:
The Court examined whether the Tribunal was justified in treating the sales of paper to manufacturing registered dealers against declarations in Form IA as a contravention of the 2nd proviso to Section 5A(a)(ii) of the OST Act. The Petitioner, a proprietary concern dealing in paper and stationery articles, was assessed under Section 12(4) of the OST Act for the year 1982-83. The Sales Tax Officer (STO) disallowed sales made to industrial units established under the Industrial Policy Resolutions (IPRs) and added the purchase value of the paper to the taxable turnover (TTO), levying tax and penalties. The Assistant Commissioner of Sales Tax (ACST) allowed the appeals, concluding no contravention of Section 5A(a)(ii). However, the Tribunal allowed the State's appeals, following a judgment in State of Orissa v. M/s. Sahoo Traders. The Court found that the Tribunal's decision was inconsistent with Supreme Court rulings, which stated that the selling dealer cannot be faulted if the purchasing dealer misuses the goods. The Court concluded that sales made on submission of Form IA by the purchasing dealer were subject to tax and did not contravene Section 5(2)(A)(a)(ii) of the OST Act.

2. Consideration of Sections 6 and 7 read with Sections 4(1) of the OST Act by the Tribunal:
The Court noted that Mr. R.P. Kar, learned counsel for the Petitioner, did not press this issue, as the tax amount involved was insignificant. Therefore, the Court did not delve into the details of this issue.

3. Justification of the Tribunal in sustaining the orders of assessment passed under the OAST Act without a separate notice under Section 12(8) of the OST Act read with the OAST Act:
Similar to the second issue, Mr. R.P. Kar did not press this issue. Consequently, the Court did not provide an in-depth analysis of this matter.

4. Justification of the Tribunal in confirming the orders of assessment under the OAST Act, leaving additional sales tax under Section 5(2)(A)(a)(ii) of the OST Act, which did not form part of the gross turnover under the OST Act:
Again, this issue was not pressed by Mr. R.P. Kar, and the Court did not address it in detail.

Conclusion:
The Court concluded that the Tribunal was not justified in treating the sales of paper to manufacturing registered dealers against declarations in Form IA as a contravention of Section 5(2)(A)(a)(ii) of the OST Act. The impugned orders of the Tribunal for both years were set aside, and the corresponding orders of the ACST were restored. The revision petitions were disposed of with no order as to costs.

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