TMI Blog1986 (1) TMI 377X X X X Extracts X X X X X X X X Extracts X X X X ..... ring any remains after deducting therefrom: period which remains after deducting therefrom: (a) his turnover during that period on(a) his turnover during that period on- (i)........................ (i)........................ (ii) sales to a registered dealer of (ii) sales to a registered dealer of goods specified in the purchasing dealer's goods specified in the purchasing certificate of registration as being indealer's certificate of registration for tended for resale by him in Orissa and on resale by him in Orissa in a manner sales to a registered dealer of containers that such resale shall be subject to levy and other materials for the packing of of tax under this Act; and on sales to a such goods: registered dealer of containers or other Provided that when such goods are materials for the packing of such used by the registered dealer for purgoods: poses other than those specified in his Provided that for the purpose of certificate of registration, the price of ascertaining the deductions under this goods so utilised shall be included in his item the dealer selling the goods shall taxable turnover. furnish to the prescribed authority in the prescribed manner, a declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the time of occurrence. V. The taxation laws are subject to article 301 of the Constitution and no impediment by way of taxation or restriction are available to be imposed on the free flow of trade. As the impugned amendment imposes restriction by imposing tax, the same is illegal. VI. As per the provisions of section 5(3) of the Central Sales Tax Act, 1956 as amended by Central Act 103 of 1976, the last sale or purchase of any goods preceding the sale or purchase occasioning the export outside the territory of India shall also be deemed to be in course of export. The present amendment of section 5(2)(A)(a)(ii) of the O.S.T. Act is, therefore, illegal and unconstitutional and ultra vires the said Central legislation. The petitioners further contend that in the decision reported in [1976] 37 STC 157 (State of Orissa v. Joharimal Gajananda) this Court had the occasion to interpret the provisions of section 5(2)(A)(a)(ii) of the O.S.T. Act as it stood prior to the amendment. It was held: "Under the scheme of the Act, sales tax is leviable at a single point and a registered dealer at the point of sale is entitled to pass on the incidence of sales tax to the buyer. Where t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso found that in spite of the fact there were resales within the State, which answer the ingredients of an intra-State sale, the same is not exigible to Orissa sales tax being in the course of export. There is no doubt that if the restriction imposed under the Constitution did not operate, the sales would have been subjected to tax. Our answers to the questions referred to us, therefore, are: (1) On the facts and in the circumstances of the case, the Tribunal was correct in holding that there was no contravention of the declarations given under rule 27(2) of the Orissa Sales Tax Rules and, therefore the proviso to section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act was not attracted. (2) In the facts and circumstances of the case, the sales by the assessee to the Japanese buyer are covered by the embargo under article 286(1)(b) of the Constitution of India read with section 5 of the Central Sales Tax Act and, therefore, are not exigible to sales tax under the Orissa Act." Basing on the aforesaid decisions, the petitioners contend that in these cases admittedly there were resales within the State of Orissa which answer the ingredients of an intra-State sale and the same are no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ------------------------------------------------ Sl. Case No. Financial Name of the party Goods dealt with No. year by him -------------------------------------------------------------------------------- 1. O.J.C. 1413/78 1974-75 Industrial Minerals Ferro manganese, Metals ferro chrome, ferrosilicon, slags. 2. O.J.C. 960/79 1975-76 do. do. 3. O.J.C. 1771/79 1976-77 do. do. 4. O.J.C. 1493/80 1973-74 Sagarmal Agarwalla Motor oil, lubricants, kendu leaves, tyres, tubes. 5. O.J.C. 1494/80 1974-75 do. do. 6. O.J.C. 1495/80 1975-76 do. do. 7. O.J.C. 1982/80 1975-76 Sanwarmal HariPetrol, diesel, lubriprasad cants, tyre and tubes, cement, kendu leaves, motor parts. 8. O.J.C. 1983/80 1973-74 do. do. 9. O.J.C. 1984/80 1974-75 do. do. -------------------------------------------------------------------------------- Prior to the amendment of form No. XXXIV, the declaration was given in the following manner: "Certified that the goods ordered in my/our purchase order No............... dated.................purchased from you as per cash memo/bill No................ dated.............for an amount of Rs.................are meant for the purpose of resale in Orissa a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the forms last supplied to him as maintained in form VII-A referred to in clause (v). (iii) Before furnishing the declaration to the selling dealer the purchasing dealer or a person authorised by him in this behalf shall fill in all required particulars in the form, affix his usual signature in the space provided in the form for this purpose. Thereafter, the portion marked 'original' shall be made over by him to the selling dealer and the portion marked duplicate' shall be submitted to the Sales Tax Officer, who issued the forms, while rendering accounts regarding use of declaration forms before him. The purchasing dealer shall only retain the counterfoil of each declaration form. * * *" In view of the above provisions, in order to get exemption under section 5(2)(A)(a)(ii), a declaration in form No. XXXIV shall be furnished by a dealer. There is no other form prescribed for claiming deduction. A registered dealer has to furnish the declaration in the prescribed form to be obtained from the authorities. In the cases coming under this category, at the time of furnishing the declaration as required under the O.S.T. Act and the O.S.T. Rules, the unamended form No. XXXIV was in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 5. O.J.C. 1522/80 1978-79 do. do. 6. O.J.C. 1132/82 1977-78 Rataria Brothers Rice, atta, maida, suji, iron and steel conveyor belt. (declared goods) 7. O.J.C. 188/83 1970-71 Orissa Steel CorIron and steel poration goods. (declared goods) 8. O.J.C. 189/83 1971-72 do. do. ---------------------------------------------------------------------------------------- Except serial No. 5, i.e., O.J.C. 1522/80, the rest are also covered under category (1) as the declaration forms were furnished in the unamended form No. XXXIV. In these cases, the contention of the assessees is that under section 14-B of the O.S.T. Act read with rule 42-A of the O.S.T. Rules and section 15 of the C.S.T. Act, in case of declared goods, the dealer is entitled to get refund of the Orissa sales tax paid by him. Section 14-B of the O.S.T. Act is as follows: "14-B. Refund in case of inter-State trade or commerce.-The Commissioner may refund to such person, in such manner and subject to such conditions as may be prescribed, any amount of tax levied on sales or purchases of goods which are declared under section 14 of the Central Sales Tax Act (74 of 1956) when such goods are subsequently sold in cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and subject to such conditions as may be provided in any law in force in that State; (c) where a tax has been levied under that law in respect of the sale or purchase inside the State of any paddy referred to in sub-clause (i) of clause (i) of section 14, the tax leviable on rice procured out of such paddy shall be reduced by the amount of tax levied on such paddy; (d) each of the pulses referred to in clause (vi-a) of section 14, whether whole or separated and whether with or without husk, shall be treated as a single commodity for the purposes of levy of tax under that law." The petitioners contend that as the assessment was made much after the payment of the Central sales tax, it was impossible for them to have applied for refund of the Orissa sales tax within twelve months from the date of payment. The impugned amendment creates an impossible situation and condition to be fulfilled and is, therefore, bad in law. In reply, it is submitted on behalf of the State that in the scheme of things, in case of declared goods there is first levy under the State Act and then there is second levy on the same goods under the Central Act. The tax paid under the State Act is to be refu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .C. 1891/80 1978-79 Sanwarmal HariKendu leaves, prasad timber, lubricants, bamboo mats. 4. O.J.C. 1326/81 1979-80 Utkal Industries Coltar empty Trading Co. barrel. 5. O.J.C. 1327/81 1978-79 do. do. 6. O.J.C. 2429/81 1977-78 Howrah Motor Co. Motor parts, batteries. 7. O.J.C. 363/82 1978-79 Industrial Minerals Ferro manganese, Metals ferro chrome, etc. 8. O.J.C. 1131/82 1978-79 Howrah Motor Co. Motor parts, batteries. 9. O.J.C. 2360/82 1980-81 Industrial Minerals Ferro chrome. Metals 10. O.J.C. 1673/82 1979-80 do. do. 11. O.J.C. 28/83 1979-80 Howrah Motor Co. Motor parts, batteries, tyres, tubes, lubricants. 12. O.J.C. 401/83 1980-81 do. do. 13. O.J.C. 402/83 1981-82 Metalloy India Mineral ores. 14. O.J.C. 1647/83 1981-82 Industrial Minerals Ferro chrome, etc., Metals mineral ores, scrap iron. -----------------------------------------------------------------------------------On behalf of the petitioners it is contended that article 286 of the Constitution is a prohibition and it is too well-settled that the Seventh Schedule is subject to the constitutional limitations. Article 286(1)(a) and (b) prohibits any taxation on sale of goods if such goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence is always on the seller. The amended Act has not put any embargo on the seller in choosing the purchaser. In the event the purchaser intended to effect the sale in course of inter-State trade/commerce to any foreign buyer, it was open to him to effect the purchase without furnishing the statutory declaration. It was further submitted that the legislature has not prevented the dealer from making the purchase by paying tax and thereafter selling the same in course of inter-State trade/export. The Legislature under the amended Act has vindicated the single point levy and never intended or desired to tax the export/inter-State sale. Thus, the submission that this amended law is hit by article 286(1) is based on the misconception that the Legislature intended to impose tax on export/ inter-State sale. It is now well-settled that the power to impose taxes on the sale or purchase of goods, other than newspapers, belonging to State (entry 54, List II), vests in the State Legislature. But taxes on imports and exports (entry 92A, List I) are exclusively Union subjects. Article 286 is intended to ensure that sales taxes, imposed by the States do not interfere with imports, exports and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sa v. Joharimal Gajananda) and [1976] 38 STC 189 (Orissa) [FB] (M.M.T.C. of India Ltd. v. State of Orissa) the petitioners contend that in the present cases the assessees purchased goods by giving declaration for resale in Orissa and in fact resale was inside Orissa. So they are entitled to the benefits of the above two decisions and the transactions of the petitioners being in course of interState trade or commerce, those cannot be made liable to sales tax as now demanded. On the other hand, it is contended by the opposite parties that no doubt what the petitioners contend is true if the declaration is given in unamended form, i.e., resale in Orissa. But in view of the amendment of section 5(2)(A)(a)(ii) and form No. XXXIV, the resale is to be in Orissa in the manner that such resale shall be subject to levy of tax under the O.S.T. Act. By giving the above declaration/undertaking, i.e., to resell in Orissa in a manner that such resale shall be subject to levy of tax under the O.S.T. Act, the petitioners have purchased the goods free of tax, but they have resold the goods in breach of the declaration given by them and are claiming deduction which is not permissible. For breach of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ler or a consumer, or in breach of the undertaking given. Law is well-settled that the competent legislature can enact law after removing the infirmities or deficiencies as pointed out by the Court. All that is to be seen in such cases is that the amended law is within the competence of the legislature. Powers of the State Legislature under entry 54 of List II of the Seventh Schedule to the Constitution are plenary. The impugned amended Act is an attempt by the State Legislature to ensure the single point levy by nullifying the effect of the two decisions of this Court. The question is whether such action is within the competence of the State Legislature and is in conformity with article 286 of the Constitution of India. It is the contention of the petitioners that the goods were meant for resale in Orissa and in fact were resold inside Orissa. The State Legislature has power to impose tax on the sale or purchase of goods other than newspapers. This is subject to the provisions of entry No. 92A of List I. The petitioners would have paid the tax while purchasing the goods from a registered dealer. But while purchasing the goods, they have avoided the tax by giving a declaration th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been made in the very same decision which demolishes the arguments advanced on behalf of the petitioners: "The only consequence of the resales being sales in the course of inter-State trade or commerce was that they were not taxable under the State legislation. But there is no provision in the State Act which requires that in order that an assessee may be exempt from purchase tax in respect of purchase of goods made by him against a declaration in form No. S.T. 17, he must resell the goods within the State in such a manner that such resale becomes exigible to tax under the State legislation." The other argument advanced that the amendment is violative of article 301 of the Constitution of India does not cut much ice. According to article 301, subject to the other provisions of this part (Part XIII), trade, commerce and intercourse throughout the territory of India shall be free. "Freedom" in this article does not mean absolute freedom. There is a violation of the freedom guaranteed by article 301 only where a legislative or executive act operates to restrict trade, commerce or intercourse, directly and immediately, as distinct from creating some indirect or inconsequential ..... X X X X Extracts X X X X X X X X Extracts X X X X
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