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TMI Blog1992 (10) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... B.A. Mohanty and R.K. Mehta, Advocates, with him), for the respondents. -------------------------------------------------- The judgment of the Court was delivered by V. RAMASWAMI, J.-In the writ petitions filed in the year 1983 the constitutional validity of the Orissa Additional Sales Tax (Amendment and Validation) Ordinance, 1983, is questioned. In Writ Petitions Nos. 207 to 211 of 1984 and 1302 of 1986 the constitutional validity of the Orissa Additional Sales Tax (Amendment and Validation) Act, 1983 (Act 22 of 1983) which replaced the Ordinance is in question. Civil Appeal No. 4596 of 1990 has been filed against the judgment of the Orissa High Court in which the constitutional validity of the Orissa Act 22 of 1983 was upheld. The arguments in the writ petitions and the civil appeal therefore related to the vires of the Orissa Act 22 of 1983 which we will hereinafter refer to as the "Validation Act". The writ petitioners and the appellants in the civil appeal are registered dealers under the Orissa Sales Tax Act, 1947 (hereinafter referred to as the "principal Act"). Section 4 imposes the liability to pay tax in accordance with the provisions of the pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be levied at the first point, such point in respect of goods despatched from outside the State of Orissa shall mean and shall always be deemed to have meant the first of such sales effected by a dealer liable under the Act after the goods are actually taken delivery of by him inside the State of Orissa." It may be seen from the scheme as contained in the provisions of principal Act, if the goods are not exempted under section 6 either the sale or purchase could be taxed and not both. In the case of goods covered by the notification under section 3-B the tax is levied on the purchase and in the case of other taxable commodities on the sale. Section 8 which has an overriding effect by reason of the opening non obstante clause in that section restricts the levy of either the sales tax or purchase tax to a single point in the same series of sales or purchases by successive dealers of the same goods. Though section 4 as such does not restrict the power of the Government to levy multi-point tax since that provision was expressly made subject to section 8 and also by reason of the non obstante clause in section 8 the levy of tax at a single prescribed point and prohibition against lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst class shall try an offence under this Act. 4.. (1) The State Government may make rules for carrying out the purposes of this Act. (2) All rules made under this Act shall, as soon as may be after they are made, be laid before the State Legislature for a total period of fourteen days which may be comprised in one session or in two or more successive sessions and if during the said period the State Legislature makes modifications, if any, therein, the rules shall thereafter have effect only in such modified form; so, however, that such modifications shall be without prejudice to the validity of anything previously done under the rules." It may be seen from the reading of these provisions that the additional sales tax payable by the dealers was in the nature of an enhancement of their liability to pay tax under the principal Act by specified percentage but they were prohibited from passing on the incidence of additional tax to the purchasers. The validity of this provision was never questioned but in fact a similar enactment of the Tamil Nadu Additional Sales Tax Act, 1970, was upheld by this Court in S. Kodar v. State of Kerala [1974] 34 STC 73; [1975] 1 SCR 121. On an interpre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le under the said Act. " By a Notification dated March 23, 1979, the State Government notified, in exercise of the powers under section 3 of the Amending Act, 1979, the rate of additional tax payable at one-half per cent of the annual gross turnover. The assessing officers took the view that under the Amending Act, 1979, every dealer was liable to pay additional tax on his annual "gross turnover" irrespective of its taxability under the principal Act and that the new levy was in the nature of multi-point tax. A number of writ petitions were filed in the High Court of Orissa challenging among others the constitutional validity of the amending Act, 1979. The High Court dismissed these writ petitions See Ashok Servicentre v. Sales Tax Officer [1983] 52 STC 50 (Orissa). holding that under the principal Act the dealer is liable to pay sales tax on the basis of his taxable turnover which is determined in the manner prescribed under the Act while under the 1975 Act as amended in 1979 the liability of the dealer is with reference to his gross turnover and that it was competent to the sovereign Legislature to adopt a different base and a different scheme from the principal Act because they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a dealer relating to any sales or purchases of goods is exempted under section 6 of the principal Act, such turnover cannot be subjected to the levy of additional tax under the Act by virtue of section 3(2) of the Act. The Government Notification S.R.O. No. 410/79 dated March 23, 1979, issued under the second proviso to section 3(1) of the Act exempting the turnover relating to goods whose turnover is exempted from payment of tax under section 6 of the principal Act from payment of additional tax under the Act, is, therefore, redundant. The turnover in respect of goods whose sales or purchases are not taxable under the principal Act in the hands of any dealer by reason of section 8 of the principal Act is not liable to the payment of additional sales tax under the Act. The turnover in respect of sales and purchases of declared goods is not taxable under the Act by reason of the first proviso to section 3(1) of the Act. Any other turnover which is exempted by the State Government under the second proviso to section 3(1) of the Act is also not taxable under the Act. The levy of the additional tax on the gross turnover of a dealer under section 3 of the Act is subject to these conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Act, be liable to pay tax on his gross turnover from the date of commencement of the said business, partnership, firm or concern, as the case may be. (4) A dealer, who is not liable to pay tax under the foregoing sub- sections, shall nevertheless be liable to pay tax on his gross turnover if such dealer has voluntarily or provisionally registered himself under the said Act, or if such dealer is liable to pay tax or registered as a dealer under the Central Sales Tax Act, 1956. (5) All the provisions of the said Act, excluding those contained in sections 4, 5, 8, 29 and 29-A but including those relating to appeal, revision, reference and penalty shall mutatis mutandis apply in relation to the additional sales tax payable under this Act." Section 3 of the Validation Act further provided: "3. Notwithstanding anything contained in any judgment, decree or order of any court or other authority to the contrary, any assessment, reassessment, levy or collection of additional sales tax or imposition of penalty made, any action taken or thing done or purported to have been done under the principal Act before commencement of this Act shall be deemed to have been made, taken, done under an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to remove or remedy and whether the Validating Act has achieved that purpose. The Statement of Objects and Reasons in introducing the Bill seeking amendment of the Additional Sales Tax Act by the Validation Act reads as follows: "The Orissa Additional Sales Tax Act, 1975, was introduced from the 1st day of April, 1975, with a view to mobilising additional resources for the State. The scheme of the Additional Sales Tax Act was rationalised with ef- fect from the 1st day of April, 1979, by the Orissa Additional Sales Tax (Amendment) Act, 1979, by levy of additional tax on gross turnover of dealers which was multi-point in nature. 2.. The Supreme Court of India in their judgment dated February 18, 1983 in the case of Ashok Service Centre v. State of Orissa [1983] 53 STC 1; [1983] 2 SCC 82 held that the additional tax imposed under the Orissa Additional Sales Tax (Amendment) Act, 1979, which is an extension of the Orissa Sales Tax Act, 1947, cannot be a multi-point levy since the Orissa Sales Tax Act, 1947, envisages a single point levy. It was also observed that the multi-point levy of additional tax was not clear in the Statement of Objects and Reasons of the Orissa Additional Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equent sales which are not taxable under the principal Act and goods or class of goods exempted under section 6 of the principal Act. Only dealers who are exempted under section 7 of the principal Act would not be liable to pay the additional tax as provided under section 3 of the Validation Act. Thus in effect it means, in respect of the taxable turnover under the principal Act, that the additional tax is an increase of the tax levied thereon and is valid as held in the earlier decision. In respect of the second or subsequent sales and the goods exempted under section 6 of the principal Act the tax is levied at not more than one per cent on the value of the goods purchased and sold by the dealers. It is a tax on the aggregate of the sales effected by a dealer during a year. What was taxable turnover of one dealer may become part of the gross turnover of his purchaser as the sale by the dealer in that case may be a second or subsequent sale. Thus successive transactions become liable for levy of additional tax and the levy becomes multi-point. The Act does not follow the scheme of single point levy provided under the principal Act in respect of this tax. Sections 4, 5 and 8 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned counsel was the Additional Sales Tax Act as now amended is not a supplement to the original Act, and that it is an independent statute and that the legislative competence would have to be tested as an independent taxing enactment. Even so the impugned Act cannot be held to be beyond the legislative competence. Both these enactments deal with the topic of levy of sales tax on sales or purchases which is within the legislative competence of the State Legislature. Both the levies come under the same topic of taxes on the sale or purchase of goods under entry 54, List II. Instead of levying the tax under one enactment the State has chosen to levy the same under two different enactments. By choosing some transactions of sale of goods alone for levy of sales tax in the first instance the Legislature does not exhaust its legislative power in the field of tax on sale of goods. The law does not require the entire gamut under the topic of tax on sales to be covered in the first or one enactment itself on peril of losing its legislative competence on that topic or field. The Legislature may choose certain goods alone or certain dealers or class of dealers alone for purposes of levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndertaking through the Special Officer-cum-Deputy Secretary, Finance Department of the Government of Orissa, on the 2nd December, 1982 to the effect that the Government "undertake that in case they fail in these appeals and the appeals are allowed then the entire amount of additional sales tax realised from the appellants shall be refunded to the appellants with interest at the rate of 12 per cent per annum within three months from the disposal of these appeals". It is stated by the assessees that when they applied for refund they were rejected on the ground that in view of the Ordinance, later replaced by the Validation Act, the assessments have become valid and the assessees are not entitled for refund. The learned counsel contended that firstly the respondents are bound to honour their undertaking to this Court regardless of the effect of the Validation Act and they cannot be permitted to violate their undertaking: secondly, the Ordinance and the Act could not affect the solemn undertaking given to this Court in those cases which were the subject-matter of appeals in the earlier proceedings though the Act may apply in respect of those who were not parties in the earlier proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the inevitable corollaries of that state of affairs." Thus the effect of retrospectively amending the provisions would, for all legal purposes, be that amended provisions shall be deemed to have been included in the original Act from April 1, 1979, and all consequences and incidences which if this amended provision had been there since April 1, 1979 has to be carried to its logical conclusion. By reason of the amending Act the earlier assessments levying additional tax on gross turnover has become valid and enforceable. It may also be noticed that the earlier decision of this Court did not invalidate the assessments as such and what was held was that the additional tax was payable on the taxable turnover by a dealer who is liable to pay tax under section 3(1) of the principal Act. It means that assessment proceedings will have to be reopened if necessary and the taxable turnover to be determined and that tax payable will have to be ascertained and demand be issued. But only after that is done, if any amount is refundable, the Government will be bound to refund the same. However before that could be done the Ordinance and the amending Act came into force, made the liability to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the other cases further contended that no machinery has been created under the Additional Sales Tax Act, as amended by the amending and Validation Act, for assessment and collection of additional tax and that therefore the Act is unenforceable and assessment orders made under the earlier enactments cannot be treated as legal and valid. The argument was that the Commissioner has delegated in exercise of his powers under section 17 only certain of the powers under specified sections in the principal Act in the Notification dated August 30, 1947 and no powers of the Commissioner under the Additional Sales Tax Act to make assessments or for any other purpose under any of the sections of the Additional Sales Tax Act have been delegated to anyone at any time. His further submission was that the assessments to additional sales tax are made under rule 5 of the Orissa Additional Sales Tax Rules, 1975, and not under section 12 and that therefore in the absence of delegation by the Commissioner of his powers as assessing authority under rule 5 of the Additional Sales Tax Rules no sales tax officer acting under the principal Act has power or jurisdiction to make any assessment under the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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