9911796707
TMI Blog2009 (1) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... p an integrated steel plant at village Thelkoloi, Rengali in the district of Sambalpur, Orissa and is engaged in manufacturing and sale of sponge iron, iron and steel goods in all forms as well as generation of power. The petitioner is a registered dealer under the OVAT Act within the jurisdiction of the assessing officer. In course of business, the petitioner-company has purchased various materials such as capital goods, steel, cement, raw materials and other inputs for manufacturing of desired end-products. During the tax period from April 1, 2005 to June 30, 2006, the petitioner had effected purchase of raw materials to the tune of Rs. 15,05,96,905 from outside the State of Orissa. The audit assessment was completed by the assessing officer under section 42 of the OVAT Act on the basis of an audit visit report resulting in a demand of Rs. 9,51,531. Thereafter the Senior Audit Officer in the office of the A.G. (C.W. & R.A.), Orissa, Bhubaneswar audited the assessment record and submitted an objection vide its POM No. SRAP-S(VAT)-39/09 January 2008. On the basis of the said objection, the assessing officer initiated a proceeding under section 43 of the OVAT Act as he was of the op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson other than registered dealer subject to fulfilment of other conditions prescribed in section 12 of the OVAT Act and the assessing officer has rightly levied the tax on the purchase turnover of raw materials brought from outside the State. Therefore, the petitioner's case falls under the category (ii). There is no infirmity in the order of the assessment. It was further submitted that after "use or consumption" of the raw materials purchased from outside the State in manufacture of goods, such manufactured goods were not sold within the State or in course of inter-State trade or commerce or in course of export outside India for which the petitioner has rightly been assessed on the value of raw materials purchased from outside the State of Orissa and utilized in manufacture of finished products. In view of the above rival contentions, the question which falls for consideration by this court is whether in exercise of powers under section 12 of the OVAT Act the assessing officer can assume jurisdiction to levy tax on value of the raw materials purchased from outside State? At this juncture, it is necessary to know what is contemplated under sections 1, 2, and 12 of the OVAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he manufacture of goods, such manufactured goods are disposed of otherwise than by way of sale in the State or in the course of inter-State trade or commerce or export out of the territory of India; or (d) used or consumed otherwise, and such tax shall be levied at the same rate, at which tax under section 11 would have been levied, on the sale of such goods within the State on the date of such purchase or receipt." "section 4 of the CST Act: When is a sale or purchase of goods said to take place outside a State.-(1) Subject to the provisions contained in section 3, when a sale or purchase of goods is determined in accordance with sub-section (2) to take place inside a State, such sale or purchase shall be deemed to have taken place outside all other States. (2) A sale or purchase of goods shall be deemed to take place inside a State, if the goods are within the State,- ..." "Entry 54, List II of Seventh Schedule: Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I." "Article 245 -Extent of laws made by Parliament and by the Legislatures of States.-(1) Subject to the provisions of this Constitution, Parliament may mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 12 mean a dealer registered under sub-section (38) of section 2 of the OVAT Act. "Person" has also been defined under sub-section (31) of section 2 of the OVAT Act. Section 1(i) of the OVAT Act says that the OVAT Act extends to the whole of Orissa. Therefore, the terms "registered dealer" and "person" as defined under the OVAT Act refer to the registered dealer and the person carrying on business in the State of Orissa. This Act does not apply to any person or a dealer who is registered in any other State outside the State of Orissa and is not carrying on any business inside the State of Orissa. The provisions of the OVAT Act are applicable, only to the transactions and persons within the State of Orissa. It has no application to persons and transactions which take place outside the State of Orissa. Section 4 of the CST Act, 1956 stipulates that a sale or purchase once determined inside a particular State shall be deemed to be outside of other States. In the present case, it is not disputed that purchases in question were effected from outside the State. Thus, it is impermissible for the State of Orissa much less the assessing officer to impose tax on any outside State sale/purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax and purchase tax. A provision which is made by the Act or by the Rules which seeks to prevent evasion of liability to pay intra-State sales or purchase tax would therefore be within the competence of the Legislature or the authority competent to make the rules. But the State Legislature has no power to legislate for the levy of tax on transactions which are carried on in the course of inter-State trade or commerce or in the course of export. Section 42 of the Bihar Sales Tax Act, 1959, prevents any person from transporting from any railway station, steamer station, airport, post office or any other place any consignment of such goods exceeding the quantity specified with a view to ensuring that there is no evasion of tax payable under the Act. But the power under section 42 can only be exercised in respect of levy, collection and recovery of intra-State sales or purchase tax. It cannot be utilized for the purpose of ensuring the effective levy of inter-State sales or purchase tax. ...In respect of goods which are purchased in the State of West Bengal and brought within the State of Bihar and then despatched to other States in the course of inter-State transaction, no question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the theory of extraterritorial legislative competence placing reliance upon the judgments of the apex court. A Constitution Bench of the honourable Supreme Court in State of Bihar v. Sm. Charusila Dasi AIR 1959 SC 1002, considered the issues as to whether the Bihar Legislature had legislative competence to enact the Bihar Hindu Religious Trusts Act, 1950 for covering the properties of public trust situated in Bihar simultaneously with all the properties of the trusts situated outside the State of Bihar. The court repelled the contention that such an Act which tried to bring within its sweep properties of public trust situated outside Bihar, though the trusts were situated within the State of Bihar had extra-territorial operation, the court observed that there was a general presumption that the Legislature did not intend to exceed its jurisdiction, and it was a sound principle of construction that the Act of a sovereign Legislature should, if possible, receive such an interpretation as would make it operative and not inoperative. Interpreting section 3 of the said Act, the apex court held that as the Act was applicable to all public religious and charitable institutions, which we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase within the State of Orissa. It cannot have extra territorial operation and cannot bring within its ambit transaction of "sale" or "purchase" made outside the State of Orissa. Levy of tax on said transactions would be violative of provisions of article 286 of the Constitution of India and even the State Legislature does not have competence to enact the law having operation outside the State in view of the provisions of article 245 of the Constitution. Such an imposition of tax contravenes section 4 of the CST Act, 1956 which expressly provides that a "sale" inside a particular State shall be deemed to have been made outside all other States. It also contravenes the provision of section 1 of the OVAT Act, which expressly provides that the Act extends only to the State of Orissa and assessment order is in violation of the true spirit of the definition of "sale" and "purchase" contained in section 2 of the OVAT Act. Thus the levy of tax by the State of Orissa under section 12 of the OVAT Act on such purchases is not sustainable in the eye of law. In view of the above, writ petition succeeds and is allowed. The impugned order of assessment dated July 8, 2008 (annexure 4) is her ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
