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2019 Supreme(Ori) 16

IN THE HIGH COURT OF ORISSA, CUTTACK
K.S. Jhaveri, Biswanath Rath, JJ.
K.B. Saha And Sons Industries Pvt. Ltd. And Another - Appellants
Vs.
State of Orissa And Others - Respondents
Writ Petition (Civil) No. 12373 of 2003, 12373 of 2003, 9446 of 2003, 9447 of 2003 of 2003, 9448 of 2003, 9588 of 2003, 9589 of 2003, 9590 of 2003, 9591 of 2003, 9643 of 2003, 9644 of 2003, 9646 of 2003, 8480 of 2003, 9244 of 2003, 9662 of 2003, 9663 of 2003, 9664 of 2003, 9665 of 2003, 9666 of 2003, 9667 of 2003, 9673 of 2003 of 2003, 9674 of 2003, 9675 of 2003, 9676 of 2003, 9677 of 2003, 9678 of 2003, 9679 of 2003, 9680 of 2003, 9681 of 2003, 9753 of 2003, 9781 of 2003, 9782 of 2003, 9793 of 2003, 9794 of 2003, 9883 of 2003, 9901 of 2003, 9902 of 2003, 9937 of 2003 of 2003, 9938 of 2003, 10101 of 2003, 10322 of 2003, 10324 of 2003, 10533 of 2003, 10534 of 2003, 10589 of 2003, 10654 of 2003, 10655 of 2003, 10712 of 2003, 10713 of 2003, 10757 of 2003, 10991 of 2003, 10992 of 2003, 11103 of 2003, 11296 of 2003, 11298 of 2003, 11299 of 2003, 11310 of 2003, 11511 of 2003, 11566 of 2003, 11774 of 2003, 11775 of 2003, 11776 of 2003, 11977 of 2003, 11978 of 2003, 11979 of 2003, 11980 of 2003, 12107 of 2003, 12230 of 2003, 12316 of 2003, 12317 of 2003, 12318 of 2003, 12902 of 2003, 13051 of 2003, 13052 of 2003, 13630 of 2003, 13631 of 2003, 11 of 2004, 125 of 2004, 876 of 2004, 973 of 2004 of 2004, 2072 of 2004, 2242 of 2004, 4310 of 2004, 4311 of 2004, 4312 of 2004, 5291 of 2004, 12369 of 2004, 13763 of 2004, 13764 of 2004, 13765 of 2004, 13766 of 2004, 12661 of 2005, 12662 of 2005, 12663 of 2005, 12664 of 2005, 12665 of 2005, 12695 of 2005, 12696 of 2005, 14790 of 2005, 14791 of 2005, 14792 of 2005, 5867 of 2006, 5868 of 2006, 10796 of 2006, 11117 of 2006, 11582 of 2006, 12238 of 2006, 12309 of 2006, 12355 of 2006, 12477 of 2006, 12714 of 2006, 12715 of 2006, 12777 of 2006, 12787 of 2006, 13136 of 2007, 13147 of 2007, 13148 of 2007, 13149 of 2007, 13150 of 2007, 17380 of 2007, 17403 of 2007
Decided On : 10-04-2019

Advocates Appeared:
R.K. Rath, Adv., R.P. Kar, Adv., Sambit S Ray, Adv., S.J. Pradhan, Adv., S.S. Ray, Adv., P.K. Patnaik, Adv., C.R. Swain, Adv., B. Sahu, Adv., B.K. Sharma, Adv., A. Tripathy, Adv., S.R. Pati, Adv., Pitambar Acharya, Adv., S.P. Mishra, Adv., S.K. Patnaik, Adv.

The State Government is competent to legislate an Act for the purpose of imposing tax of purchase of sale of goods subject to the provisions of Entry 92A of List-I of the Constitution of India.

Headnote:
The Orissa Forest Development (Tax on sale of forest produce by Government or Orissa Forest Development Corporation) Act, 2003 (Orissa Act 18 of 2003) is competent to levy tax on intra-State sales but not on inter-State sales.
Fact of the Case:

The petitioners, who are dealers in Kendu leaves within and outside the State of Odisha, challenged the levy and collection of Orissa Forest Development Tax under Section 3 of the Orissa Forest Development (Tax on sale of forest produce by Government of Orissa Forest Development Corporation) Ordinance, 2003 (Orissa Ordinance No. 3 of 2003), which was subsequently enacted into an Act (Orissa Act 18 of 2003) with effect from 18.07.2003. They also challenged the levy of tax with effect from 18.07.2003 on the ground that the rate of tax was notified only with effect from 30.07.2003.
Finding of the Court:

The Court held that the State Government is competent to legislate an Act for the purpose of imposing tax of purchase of sale of goods, but the Act in question will operate only for intra-State sales. In so far as transactions which are clearly inter-state transactions in nature, there can be no levy of the said tax in view of the clear provisions under Entry-92A of List-I of the Constitution of India.
Issues: 1. Whether the State Government is competent to enact an Act for the purpose of imposing tax of purchase of sale of goods? 2. Whether the Act in question will operate for intra-State sales or inter-State sales? 3. Whether the tax collected prior to the notification of the rate of tax is bad in law?
Ratio Decidendi: 1. The State Government is competent to legislate an Act for the purpose of imposing tax of purchase of sale of goods subject to the provisions of Entry 92A of List-I of the Constitution of India. 2. The Act in question will operate only for intra-State sales. In so far as transactions which are clearly inter-state transactions in nature, there can be no levy of the said tax in view of the clear provisions under Entry-92A of List-I of the Constitution of India. 3. The tax collected prior to the notification of the rate of tax is bad in law.
Final Decision: The writ petitions were allowed to the extent that the provision of the Act, 2003 will not be enforced for transactions which are inter-State in nature. The Corporation was directed to examine facts of each of the matter individually and recommend the State Government or the competent authority for refund of the Tax collected. The amount of tax collected, which is lying with the Corporation, will be refunded by the Corporation and if it is lying with the State Government, the same will be refunded by the State Government within a period of four months from the date of receipt of a copy of the judgment along with application for refund from the petitioners individually. If the amount is not refunded, as directed, within four months, then claimant will be entitled to interest at the rate of 8% from the date of depositing the amount.

JUDGMENT :

K.S. Jhaveri, J.

Since the issues involved in all these writ petitions are similar in nature, as agreed upon by learned counsel for the parties, all these writ petitions are taken up together for analogous hearing and to decide the same by a common judgment. For the sake of convenience of discussion, on the request of the parties involved in the cases, W.P.(C) No.12373 of 2003 is taken up as the leading case for hearing.

2. By way of these writ petitions, the petitioners have challenged the levy and collection of Orissa Forest Development Tax under Section 3 of The Orissa Forest Development (Tax on sale of forest produce by Government of Orissa Forest Development Corporation) Ordinance, 2003 vide Orissa Ordinance No. 3 of 2003, dated 18.07.2003, which has been subsequently enacted into an Act i.e. The Orissa Forest Development (Tax on sale of forest produce by Government or Orissa Forest Development Corporation) Act, 2003 on 8.12.2003 i.e. Orissa Act 18 of 2003 (for short "the Act, 2003") making it effective from 18.07.2003. Petitioners have further challenged the levy of the tax with effect from 18.07.2003 on the ground that the rate of tax has been notified only with effect from 30.07.2003.

3. The relevant provisions for our consideration are the definitions under Sections 2(d) and 2(g) and sub-sections (1),(2) and (3) of Section 3, and Section 6 of the Act, 2003. The rate of tax prescribed vide Notification dated 30.07.2003, is as follows:

4. Further a letter was issued on 24.09.2003 by the Chairman-cum-Managing Director of Orissa Forest Development Corporation to all the Divisional manager (KL) and others of Orissa Forest Development Corporation Ltd., where a clarification has been issued. Relevant portion in paragraph-2 of the said letter reads as under:

"(2) Now it has been clarified by the Laws Department and communicated vide F&E Department letter No. 14527/F&E dated 30.8.2003 that exemption granted under article 286(I)(b) of the Constitution of India and the provisions of Section 5 of the C.S.T. Act would be applicable in all appropriate cases. Hence, sales in course of export would be exempted of Forest Development Tax, if such sales satisfy the condition laid down under Section 5 (Sub-Section (3) of C.S.t. Act. For this purpose, the facts and circumstances of each individual case are to be verified and if the provisions of Section 5(3) of the C.S.T. Act are satisfied, exemption of E.D.T. can be allowed."

5. Mr. R.K. Rath, learned Senior Counsel appearing for the petitioner along with Mr. R.P. Kar & Mr. A.N. Ray, taking lead on behalf of the other counsel for petitioners, in course of argument, has mainly contended that the State legislation in question itself is not competent to levy tax on inter-state sale which has been carried on by the petitioners.

Sl. No.	Name of Forest Produce	Rate of Forest Development Tax
1.	Bamboo	1%
2.	Timber	4%
3.	Kendu Leaf	16%

5.1 The nature of sale by the Orissa Forest Development Corporation Ltd. (OFDC Ltd.) has been declared to be an interState sale in an earlier judgment which came to be delivered by this Court in OJC No.9724 of 2000 and batch of writ petitions reported in 2001 (I) OLR-586. The said judgment was confirmed by Hon'ble the Supreme Court in State of Orissa and another v. K.B.Saha and Sons Industries (P) Ltd. and others, (2007) 9 SCC 97.

5.2 It is contended by the learned Sr. Counsel for the petitioners that with the aim to overcome the effect of the judgment of this Court and pending SLP before the Hon'ble Supreme Court during the relevant point of time, an Ordinance came to be issued in 2003 which is in contravention of Entry 54 List-II of the VIIth Schedule of Constitution of India.

5.3 It is submitted by the learned Sr. Counsel for the petitioners that the Act,2003 being one under Entry-54 of Li

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Judicial Analysis

2019 Supreme(Ori) 16

The State Government is competent to legislate an Act for the purpose of imposing tax of purchase of sale of goods subject to the provisions of Entry 92A of List-I of the Constitution of India.

Cases Referred (24)

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