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HIGH COURT OF ORISSA
Jagannadha Das, C. J. And Mohapatra, J.
BHARAT SABAIGRASS LTD. - Appellant
Versus
COLLECTOR OF COMMERCIAL TAXES - Respondent
S. J. C. 174 Of 1951
Decided On : JULY 29, 1952
ORISSA SALES TAX ACT, 1947 - SECTION 2(G) - SALE - CONTRACT FOR SALE - VALIDITY OF SECOND PROVISO - EXPORT OF GOODS - TAXABILITY - WHETHER MERE CONTRACT FOR SALE WITHIN THE STATE OF ORISSA AND THE EXPORT OF GOODS FROM ORISSA IS SUFFICIENT FOR TAXATION UNDER THE ORISSA SALES TAX ACT, 1947.
Fact of the Case:
The petitioners, a limited company incorporated under the Indian Companies Act, 1913, carried on business in bamboos and sabaigrass, supplying these articles to various paper mills. Despite carrying on business for a long time, the petitioners failed to register under Section 9 of the Orissa Sales Tax Act. The Sales Tax Officer issued a notice under Section 12(5) of the Act, and the petitioners denied liability to pay tax on the ground that the sales had taken place outside the State of Orissa. The Sales Tax Officer, relying on a letter from the Collector of Commercial Taxes, assessed the petitioners to pay a tax of Rs. 3215/10/-. The petitioners appealed to the Assistant Collector, then to the Collector, and finally to the Commissioner, who upheld the assessment on the ground that the goods were collected and dispatched from Orissa, and therefore it was reasonable to presume that the sales were completed in Orissa.
Finding of the Court:
The High Court found that the assessment was based on the erroneous legal position that a mere contract for sale within the State of Orissa and the export of goods from Orissa was sufficient to make the transaction taxable under the Orissa Sales Tax Act, 1947. The Court held that the second proviso to Section 2(g) of the Act, which defined 'sale' to include a contract for sale, was ultra vires the powers of the Provincial Legislature under Entry No. 48 of List II of the Seventh Schedule of the Government of India Act, 1935, which authorized taxation only on the sale of goods and not on agreements to sell.
Issues: 1. Whether the second proviso to Section 2(g) of the Orissa Sales Tax Act, 1947, which defined 'sale' to include a contract for sale, was ultra vires the powers of the Provincial Legislature. 2. Whether a mere contract for sale within the State of Orissa and the export of goods from Orissa was sufficient to make the transaction taxable under the Orissa Sales Tax Act, 1947.
Ratio Decidendi: 1. The Court held that the second proviso to Section 2(g) of the Orissa Sales Tax Act, 1947, was ultra vires the powers of the Provincial Legislature because it sought to expand the meaning of 'sale' beyond what was contemplated by Entry No. 48 of List II of the Seventh Schedule of the Government of India Act, 1935, which authorized taxation only on the sale of goods and not on agreements to sell. 2. The Court held that a mere contract for sale within the State of Orissa and the export of goods from Orissa was not sufficient to make the transaction taxable under the Orissa Sales Tax Act, 1947, because a contract for sale is an executory contract where no property or ownership passes, whereas a sale is an executed contract where complete ownership passes.
Final Decision: The High Court directed the Commissioner, Northern Division, Sambalpur, to state a case and refer it to the Court on the following point: "whether in the circumstances of the case the assessment is legal being based on the position that mere contract for sale within the state of Orissa and the export of goods from Orissa is sufficient for taxation under the Orissa Sales Tax Act, 1947."
MOHAPATRA, J.
( 1 ) THIS is an application under Section 24, Sub-section (2), Clause (b) of the orissa Sales Tax Act, 1947, asking us to direct the Commissioner, Northern division, Sambalpur, to state a case.
( 2 ) THE petitioners are a Limited Company, incorporated under the Indian companies Act. 1913, having their Head Office at Calcutta. The Firm carries on business in Bamboos and Sabaigrass and supplies the above articles to Orient paper Mills, Brajarajnagar, Titagar Paper Mills and other Bengal Paper Mills. The firm, inspite of carrying on business for a long time, did not take steps to get itself registered under Section 9 of Orissa Sales Tax Act. Thereupon, the Sales tax Officer issued notice under Section 12, clause (5) of the Act in response to grass Ltd. vs. The Collector of Commercial Taxes (29. 07. 1952 - ORIHC) Page 2 of 6 which the Firm denied liability to pay the tax on the ground that the sales had taken place outside the State of Orissa and, as such, no tax was payable in orissa. The Sales Tax Officer, Sambalpur, by his order dated 16-12-49, assessed the petitioners to pay a tax of Rs. 3215/10/ -.
( 3 ) THE Sales Tax Officer's order of assessment solely relied upon the letter of the Collector of Commercial Taxes, Orissa, No. 3264 C. T. /328 C. T. of 48, dated the 22nd September, 1948. There being a reference to the letter of the collector of Commercial Taxes in the body of the order itself, we allowed the production of the said letter and, in order to understand the contents of the said letter, we allowed also the production of the letter written to the Collector by the Asst. Manager of the petitioners, the letter being dated 20th September, 1948. The letter of the Collector runs thus;
"please refer to your letter No. A/364 dated 20-9-48. The export of bamboos by you from. Sambalpur and other districts of Orissa to the titaghur Paper Mills Co. , and the Bengal Paper Mills Co. , in Bengal constitutes a "sale" in Orissa and as such attracts liability to Sales tax. The Orissa Sales Tax Act does not exempt such exports from payment of sales tax. The fact that you have been registered in West bengal does not affect the question in any way. "
( 4 ) AGAINST the order of the assessment, the petitioners went up in appeal to the asst. Collector, and in revision to the Collector and the Commissioner. The commissioner, by his order dated March 19th, 1951, upheld the assessment on reasons different from that of the Sales Tax Officer. He found:
"the goods were collected in Orissa and were despatched from Orissa. Normally, therefore, it is reasonable to presume that the sales were completed in Orissa. No doubt, there may be different contracts belying this presumption; but as no evidence have been produced by the party, this presumption of station of despatch will prevail. It is, therefore, not at all unreasonable that the Sales Tax Officer has treated the gross turnover as assessable. "
( 5 ) THE petitioners' petition to the Commissioner for stating a case and referring the matter to the High Court having been refused, the present petition has been filed. A preliminary objection has been taken by the learned advocate, appearing on behalf of the opposite party, that the present petition is barred by time. The order, refusing to make a reference, bears the date "30th July, 1951", and the present petition has been filed on 28th September 1951. Under the provisions of Section 24 (2) of the Orissa Sales Tax Act, the petition to the high Court has got to be filed within 30 days of such refusal by the commissioner. Subsection (2) runs thus:
"if, for reasons to be recorded in writing, the Revenue Commissioner refused to make such reference, the applicant may, within thirty days of such refusal, either - (a) withdraw his application (and if he does so, the fee paid shall be refunded), or (b) apply to the High Court against such refusal,"
( 6 ) IT is contended by the petitioners that the period of limitation should commence not from
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