TMI Blog1955 (4) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... ch sales tax was assessed, two quarters ending on 30th September, 1949, and 31st December, 1949, relate to the period prior to the commencement of the Constitution and the remaining three quarters relate to the period after the commencement of the Constitution. In view of the restrictions imposed by Article 286 of the Constitution on the power of a State to levy sales tax on transac- tions of sale involving inter-State elements, the two periods will be discussed separately. 4.. Pre-Constitution period-The Orissa Sales Tax Act (hereinafter referred to as the Act) was passed by the Legislature in 1947 and came into force in the old Province of Orissa some time during that year. After the merger of Pallahara State with Orissa, the Government of Orissa as the delegated authority of the Central Government and exercising powers under section 4 of the Extra Provincial jurisdiction Act applied the Orissa Sales Tax Act, 1947, to the former Orissa States including Pallahara State by Notification No. 20306/States dated the 14th December, 1948. The only modification in the Act that was made while so applying the Act to Orissa States was to substitute the words "Orissa States" for the words " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commencement of the year immediately following that during which his gross turnover first exceeded Rs. 5,000." The expression "year" has been defined in section 2(j) of the Act as meaning "financial year", i.e., 1st April to 31st March of the next year. The scheme of the Act was to tax certain classes of dealers in respect of transactions of sale which took place after the commencement of the Act. But in determining the class of dealers liable to pay sales tax their gross turnover during the year preceding the year of assessment was taken into consideration. Thus in the old Province of Orissa the Act came into force some time in August, 1947. But the liability for payment of sales tax did not arise immediately after that date. For that purpose a separate notification under sub-section (1) of section 4 was necessary. By the express provisions of that sub-section at least thirty days' interval should elapse between the date of the commencement of the Act and the date from which transactions of sale would be liable to assessment. Consequently, the Government issued a notification (Finance Department No. 6378-C.T-41/47F. dated the 30th August, 1947) to the following effect: "In exercis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two sub-sections are mutually exclusive and a person who is liable to pay tax under sub-section (1) of section 4 cannot be assessed under sub-section (2) of that section. 7.. In applying the aforesaid reasonings to the present case some difficulty arises chiefly because the commencement of the Act for the purpose of Pallahara should be held to be the 1st March, 1949. A dealer of Pallahara was not liable to pay sales tax in respect of trans- actions of sale effected immediately after that date. That liability arose only from such date as may be prescribed in the notification issued under sub-section (i) of that section and the Act required a minimum interval of thirty days. Consequently, the Government of Orissa issued the following Notification No. 2269-F dated the 1st March, 1949. "In exercise of the powers conferred by sub-section (1) of section 4 of the Orissa Sales Tax Act, 1947 (Orissa Act XIV of 1947) as applied to Orissa State, the Government of Orissa are pleased to appoint the 31st March, 1949, as the date with effect from which every dealer whose gross turnover during the year ending the 31st March, 1949, exceeded Rs. 5,000 shall be liable to pay tax under the said Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receding the commencement of the Act" which is obviously absurd. Hence, I must hold that the said notification is ultra vires the powers conferred on the Government by sub-section (1) of section 4 and invalid. As the petitioner's liability for assessment arose only after the issue of a valid notification under sub- section (1) of section 4 it is obvious that he cannot be held liable to sales tax in respect of transactions of sale which took place from the 1st April, 1949. 9.. Mr. Dhal on behalf of the Department, however, urged that though subsection (1) may not help the Department, sub-section (2) of section 4 would become applicable on the facts of the present case. He urged that by virtue of that sub-section the petitioner whose gross turnover for the year 1948-49 was admittedly above Rs. 5,000 was liable to pay tax in respect of transactions of sale effected during the year 1949-50. This argument however overlooks the opening words of sub-section (2) of section 4 which are to the following effect: "Every dealer to whom sub-section (1) does not apply.................." Therefore, if sub-section (1) does apply to a particular dealer, resort cannot be had to sub-section (2) fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The State of Madras(1). It is, however, unnecessary to decide in the present petition whether on the facts found there was a completed sale within the meaning of the Sale of Goods Act in Pallabara or a mere contract for sale. 12.. Post-Constitution period: I now take up the liability for assessment in respect of transactions of sale which took place after the commencement of the Constitution. The Orissa Sales Tax Act, 1947, was amended by Orissa Act XXIV of 1950 so as to conform to the provisions of Article 286 of the Constitution. Clause (1) of Article 286 prohibited a State from taxing a sale unless such sale took place within the State as explained in the Explanation to that clause of the Article. Similarly, clause (2) of that Article restricted the power of a State to tax a sale which took place "in the course of inter-State trade or commerce". Doubtless, by virtue of the proviso to that clause an order by the President may save taxation on such inter-State sales till the 31st March, 1951. The recent decision of the Supreme Court reported in State of Bombay v. United Motors (India) Ltd.(2) has settled the law regarding the true scope of these two clauses of the Article. Wher ..... X X X X Extracts X X X X X X X X Extracts X X X X
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