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1981 Supreme(Ori) 82
N.K. Das, R.N. Misra, JJ.
HIMANSU MAJUMDAR
Versus
STATE OF ORISSA
Tax Appeal No. 1 of 1976
Decided On: Decided On : 17-09-1981
S. C. Mohapatra and D. K. Mohapatra, for the appellant.
The Standing Counsel (ST), for the respondent.
If there is any ambiguity in the matter of taxation, it must be resolved in favor of the assessee.
Headnote:
ORISSA SALES TAX ACT, 1947 - SECTION 5 - RATE OF TAX - SEWING MACHINES AND SPARES - DELETION OF ENTRY 47 FROM NOTIFICATION - EFFECT - RATE OF TAX APPLICABLE - GENERAL RATE OR ENHANCED RATE.
Fact of the Case:
The assessee, a registered dealer under the Orissa Sales Tax Act, 1947, was assessed to tax for the year ending on 31st March, 1972. The Sales Tax Officer applied a flat rate of 5% on the sales turnover of sewing machines and spares. The Commissioner, in exercise of his revisionary powers, revised the assessment and applied a higher rate of tax on the ground that sewing machines and spares fell under entry 60 of the notification issued under section 5(1) of the Act, which prescribed a higher rate of tax for machinery and spare parts.
Finding of the Court:
The court held that with the deletion of entry 47 from the notification, sewing machines and spares thereof became taxable at the general rate of 5% and not under entry 60. The court relied on the gazette notification published under the authority of the Chief Secretary, which stated that the rate of tax on sewing machines and knitting machines and parts thereof was reduced from 7% to 5% with the deletion of entry 47.
Issues: Whether the deletion of entry 47 from the notification resulted in sewing machines and spares thereof becoming taxable at the general rate of 5% or the enhanced rate under entry 60 of the notification.
Ratio Decidendi: The court held that the deletion of entry 47 from the notification resulted in sewing machines and spares thereof becoming taxable at the general rate of 5%. The court relied on the following factors: * The gazette notification published under the authority of the Chief Secretary, which stated that the rate of tax on sewing machines and knitting machines and parts thereof was reduced from 7% to 5% with the deletion of entry 47. * The fact that entries 47 and 60 in the notification co-existed and the State Government did not intend to include sewing machines and spares thereof in entry 60. * The fact that the State Government prescribed a higher rate of tax for sewing machines and component parts in a subsequent notification, which indicated that the State Government did not consider sewing machines and spares thereof to be covered by entry 60.
Final Decision: The court allowed the appeal and set aside the order of the Commissioner. The court restored the order of the Sales Tax Officer, which had assessed the turnover at 5%.
JUDGMENT
MISRA, C.J. - This appeal under section 23(4)(c)(i) of the Orissa Sales Tax Act of 1947, hereinafter referred to as the "Act", is directed against the order passed by the Commissioner of Sales Tax in exercise of his powers under section 23(4)(a) of the Act read with rule 80 of the Rules made under the Act.
2. The appellant is a registered dealer under the Act and carries on business in the Steel City of Rourkela. He deals in sewing machines and spares. For the year ending on 31st March, 1972, the dealer was assessed to tax by the Sales Tax Officer, Rourkela Circle. While computing tax, the assessing officer applied the rate of 5 per cent on the sales turnover of sewing machines and spares. The Commissioner entertained a suo motu revision and by his order dated 28th June, 1976, revised the assessment relating to the sales turnover of sewing machines and spares amounting to Rs. 1,20,866.36. He found that the turnover of such goods between 1st April, 1971, and 31st December, 1971, was Rs. 25,183.68 and between 1st January, 1972, and 31st March, 1972, was Rs. 34,702.65. As against the flat rate of 5 per cent applied by the Sales Tax Officer, the Commissioner assessed the first amount at 7 per cent and the second amount at 8 per cent and directed appropriate demands to be raised. This decision of the Commissioner is assailed in appeal.
3. Section 5 of the Act makes provision for rate of tax. At the relevant time the tax payable by a dealer under the Act was to be levied at 5 per cent on the taxable turnover, but the proviso to sub-section (1) of that section authorised the State Government to impose either a higher rate of tax subject to an upper limit or a lower rate of tax as would be specified by a notification. In exercise of such power, the State Government had made a notification bearing No. 33927-CTA-130/57 dated 30th December, 1957, prescribing both lower and higher rates of tax for specified items of goods. Entries 47, 60 and 67 of the said notification which are relevant were to the following effect :
Sl. No. Description of goods Rate of tax
47. Sewing machines and knitting Seven per cent. machines and parts thereof
60. All machinery and spare parts Seven per cent. and accessories thereto
67. Any other articles Five per cent.
On 11th August, 1960, entry 47 was deleted from the aforesaid notification with effect from 1st August, 1960. From 1st January, 1972, the rate of tax against entry 60 was enhanced to 8 per cent. By Notification No. 20215-CTA-14/76-F dated 23rd April, 1976, issued in exercise of the power under the proviso to section 5(1) of the Act, rates of tax were again prescribed by a new schedule. Entry 61 read thus :
Sl. No. Description of goods Rate of tax
61. Machines including sewing Ten per cent machines and component parts and accessories thereof.
In the supplement to the Orissa Gazette dated 17th November, 1961, the report on the administration of the Commercial taxes department for the year 1960-61 was published under the authority of the Chief Secretary to the State Government. In Chapter II of the report, notifications issued during the year were catalogued. Reference was made under item No. (ii) to the relevant notification and the following was stated :
"In Finance Department Notification No. 25714-C.T.A.-65/60-F dated the 11th August, 1960, issued under section 5(1) of the Orissa Sales Tax Act, 1947, deleting the entries in column 2 and 3 against serial No. 47 of the Schedule to the Finance Department Notification No. 33927-C.T.A.-130/57-F dated the 30th December, 1957, with retrospective effect from the 1st August, 1960. By this notification the rate of tax on sewing machine and knitting machine and parts thereof was reduced from 7 per cent to 5 per cent."
The Sales Tax Officer a
