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N.K. Das, S.K. Ray, JJ.
THE TITAGHUR PAPER MILLS COMPANY LTD. AND ANOTHER
Versus
STATE OF ORISSA AND OTHERS (AND OTHER CASES)
Original Jurisdiction Case No. 811 of 1977, etc.
Decided On: Decided On : 19-09-1979
ORISSA SALES TAX ACT - PURCHASE TAX - BAMBOOS AGREED TO BE SEVERED AND STANDING TREES AGREED TO BE SEVERED - NOTIFICATION IMPOSING PURCHASE TAX - VALIDITY - WHETHER THE NOTIFICATIONS ARE ULTRA VIRES THE ACT - WHETHER THE TRANSACTIONS AMOUNT TO SALE OF GOODS - WHETHER THE IMPOSITION OF PURCHASE TAX AMOUNTS TO DOUBLE TAXATION - WHETHER THE NOTIFICATIONS AMOUNT TO EXCESSIVE DELEGATION - WHETHER THERE HAS BEEN BUSINESS OF PURCHASE BY THE PETITIONERS - WHETHER THERE HAS BEEN RESTRICTION ON TRADE AND BUSINESS.
Fact of the Case:
The petitioners, who have taken settlement of forest areas for exploitation of bamboos and the petitioners who have taken annual settlement for exploitation of timber and other forest produce, have challenged the notifications of the State Government in the Finance Department on the following grounds: 1. According to the impugned notifications, they are bound to submit returns. 2. Notices have been issued to them and, in many cases, assessments have also been completed and demands have been made. 3. They contend that the purchase tax is not exigible. 4. By imposition of purchase tax, the State Government is taxing the same goods twice, namely, sales tax as well as purchase tax. 5. The notifications are beyond the competence of the Government and are ultra vires the Act. 6. Besides the above submissions, they also contend that those, who have taken settlement of forest for exploitation of bamboos, have got interest in the land and all the petitioners contend that the contract taken up by them amounts to works contract and, as such, is not exigible to tax under the Orissa Sales Tax Act and the notifications.
Finding of the Court:
1. The notifications in question are issued in exercise of powers of sub-ordinate delegation. 2. The norm for the operation of delegated legislation has received judicial attention and it is established that exercise of power of subordinate delegation will be prospective and cannot be retrospective unless the statute authorities such an exercise expressly or by necessary implication. 3. The impugned notifications amount to taxation on agreements of sale, but not on sale and purchase of goods. 4. In the case of bamboo exploitation contracts, the impugned notifications amount also to impost of tax on profit a prendre and, as such, are against the provisions of the Orissa Sales Tax Act.
Issues: 1. Whether the notifications are ultra vires the Act? 2. Whether the transactions amount to sale of goods? 3. Whether the imposition of purchase tax amounts to double taxation? 4. Whether the notifications amount to excessive delegation? 5. Whether there has been business of purchase by the petitioners? 6. Whether there has been restriction on trade and business?
Ratio Decidendi: 1. The impugned notifications amount to taxation on agreements of sale, but not on sale and purchase of goods. 2. In the case of bamboo exploitation contracts, the impugned notifications amount also to impost of tax on profit a prendre and, as such, are against the provisions of the Orissa Sales Tax Act.
Final Decision: The impugned notifications of May, 1977, and December, 1977, in so far relating to “bamboos agreed to be severed” and “trees agreed to be severed” are quashed.
JUDGMENT
DAS, J. - All these petitions challenge the notifications of the Government of Orissa in the Finance Department being S.R.O. No. 372 of 1977 and S.R.O. No. 373 of 1977 both dated 23rd May, 1977, under section 3-B and section 5 of the Orissa Sales Tax Act of 1947 and also Notifications S.R.O. Nos. 900 and 901 of 1977 dated 29th December, 1977, under sections 3-B and 5 of the Orissa Sales Tax Act. The first notification came into operation from 1st June, 1977, and the second notification came into effect from 1st January, 1978. Both these notifications relate to the imposition of purchase tax on "bamboos agreed to be severed and standing trees agreed to be severed".
The notifications of 23rd May, 1977 (hereinafter refereed to as "the notifications of May"), run as follows :
"S.R.O. No. 372/77. - In exercise of the powers conferred by section 3-B of the Orissa Sales Tax Act, 1947 (Orissa Act 14 of 1947), the State Government do hereby declare that standing trees and bamboos agreed to be severed shall be liable to tax on turnover of purchase with effect from the first day of June, 1977, and direct that the following amendment shall be made in the notification of Government of Orissa, Finance Department No. 20209 - CTA-14/76-F. dated the 23rd April, 1976 :
Amendment. - In the schedule to the said notification, after serial numbers 2 and 16, the following new serial and entry shall be inserted under appropriate heading, namely :-
---------------------------------------------------------------- Serial No. Description of goods ---------------------------------------------------------------- (1) (2) ---------------------------------------------------------------- 2A Bamboos agreed to be severed.
16A Standing trees agreed to be severed." ----------------------------------------------------------------
The other notification is as follows :
"S.R.O. No. 373/77. - In exercise of the powers conferred by the first proviso to sub-section (1) of section 5 of the Orissa Sales Tax Act, 1947 (Orissa Act 14 of 1947), the State Government do hereby direct that the following amendment shall be made in the notification of the Government of Orissa, Finance Department No. 20212 - CTA-14/76-F. dated the 23rd April, 1976, and that the said amendment shall take effect from the first day of June, 1977.
Amendment. - In the schedule to the said notification, after serial numbers 2 and 16, the following new serial and entry shall be inserted under appropriate heading, namely :-
------------------------------------------------------------------- Serial No. Description of goods Rate of tax (1) (2) (3) ------------------------------------------------------------------- 2A Bamboos agreed to be severed. Ten per cent
16A Standing trees agreed to be severed. Ten per cent." -------------------------------------------------------------------
The other two notifications, namely, S.R.O. Nos. 900 and 901 of 29th December, 1977 (hereinafter referred to as "the December notifications"), were also to the same effect, but it is stated therein that these notifications were made in supersession of the previous notifications in the matter. The notifications of December, 1977, had to be issued as a consequence of amendment of section 5 of the Act.
2. Out of all the petitioners, the petitioners in O.J.C. Nos. 811 of 1977, 1090 of 1977, 740 of 1978, 140 of 1978 and 970 of 1979 (hereinafter referred to as "the bamboo contractors") have challenged the notifications relating to bamboos agreed to be severed and the petitioners in all other writ petitions (hereinafter referred to as "the forest contractors") have challenged the notifications relating to the standing trees agreed to be severed. But the stand taken by all of them is common.
3. The petitioners in the bamboo exploitation
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