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2022 Supreme(Ori) 364
IN THE HIGH COURT OF ORISSA AT CUTTACK
S. Muralidhar, R.K. Pattanaik, JJ.
M/s. High-way Trading (Pvt.) Ltd. - Petitioner
Versus
State of Orissa represented by Commissioner of Sales Tax, Cuttack - Opposite Party
STREV Nos.41 and 42 of 2002
Decided On : 20-05-2022
For Petitioner:Mr. Jagabandhu Sahoo, Senior Advocate along with Ms. Kajal Sahoo, Advocate
For Opposite Party : Mr. S.S. Padhy.
The principle of unjust enrichment and the applicability of tax paid under a bona fide mistaken belief were central to the court's decision.
Headnote:
Sales Tax - Carpets - Orissa Sales Tax, 1947 - Section 5(1), Section 8 - [1947 OST Act, Section 5(1), Section 8] - The court considered the interpretation of the term 'pile carpets' and its coverage under the notification. It also discussed the principle of unjust enrichment and the applicability of tax paid under a bona fide mistaken belief. The court held that carpets on which 1st point sales tax has already been paid by the Petitioner to the selling dealer would not again be amenable to sales tax at the last point of sale. The impugned orders of the Tribunal and the corresponding orders of the ACST and STO to the above extent are hereby set aside.
Fact of the Case:
The Petitioner, a dealer under the Orissa Sales Tax, 1947, appealed against the assessment order of the Sales Tax Officer affirming the demands raised for the years 1992-93 and 1993-94. The issue revolved around the exemption of carpets from sales tax at the last point of sale, on which 1st point sales tax had been paid to the selling dealer.
Finding of the Court:
The court found that the carpets purchased by the Petitioner were indeed 'pile carpets' covered under the notification, and the Petitioner had already paid 1st point sales tax to the selling dealer. It held that the Petitioner should not be asked to pay sales tax again on the last point of sale of the same commodity.
Issues: The main issue was whether the carpets dealt with by the Petitioner, on which 1st point sales tax had been paid to the selling dealer, are exempted from sales tax at the last point of sale.
Ratio Decidendi: The court's decision was based on the interpretation of the term 'pile carpets' and its coverage under the notification. It also considered the principle of unjust enrichment and the applicability of tax paid under a bona fide mistaken belief.
Final Decision: The revision petitions were allowed, and the impugned orders of the Tribunal and the corresponding orders of the ACST and STO to the above extent were set aside.
JUDGMENT :
S. Muralidhar, CJ.
1. These two revision petitions arise out of a common order dated 4th July 2001 passed by the Orissa Sales Tax Tribunal, Cuttack (Tribunal) in S.A. Nos.1055 and 1056 of 1998-99 for the years 1992-93 and 1993-94. By the said impugned common order, the Tribunal partly allowed the appeals filed by the Petitioner against a common order dated 31st July 1998 passed by the Assistant Commissioner of Sales Tax (ACST), Appellate Unit, Bhubaneswar dismissing the appeals filed by the Petitioner against the assessment order of the Sales Tax Officer (STO), Bhubaneswar II Circle affirming the demands raised for the years 1992-93 and 1993-94 of Rs.1,96,783/- and Rs. 2,67,853/- respectively.
2. It must be noted at the outset that while STREV No.41 of 2002 pertains to the year 1992-93, STREV No.42 of 2002 pertains to the year 1993-94. By orders dated 24th February 2003, both these revision petitions were admitted. In STREV No.41 of 2002, an order was passed on 6th February 2004 staying the demand after noting that the ACST, Puri Range, Bhubaneswar had by an interim order dated 25th March 1996 noted that the purchase of pile carpets by the Petitioner had already suffered 1st point sales tax.
3. During the pendency of these petitions, STREV No.41 of 2002 happened to be dismissed for default by an order dated 13th September, 2019. By a separate order passed today in CMAPL No.231 of 2022, that order has been recalled and STREV No.41 of 2002 has been restored to file.
4. The following common question of law is framed for consideration:
“Whether the carpets dealt with by the Petitioner on which 1st point sales tax has been paid to the selling dealer, are exempted from sales tax at the last point of sale?”
5. The background facts are that the Petitioner is registered as a dealer under the Orissa Sales Tax, 1947 (OST Act) under the territorial jurisdiction of the STO, Bhubaneswar II Circle. The Petitioner deals inter alia in carpets, vinyl flooring, textile clothes, tarpaulin etc. The Petitioner states that it maintains regular books of account in respect of its business as required by law.
6. For the accounting period 1992-93, the Petitioner had effected total purchase of goods amounting to Rs.21,33,303.08/- and disclosed a gross turnover (GTO) of Rs.25,52,964.30/-. The corresponding figures for 1993-94 were Rs.10,73,942.88/- and GTO of Rs.18,10,189.64/-. The Petitioner claimed corresponding deduction from the return GTO towards 1st point tax paid sales amounting to Rs.23,55,852.79 for 1992-93 and Rs.14,69,461/- for 1993-94.
7. The STO in the assessment order for the respective years turned down the above claim of deduction on the ground that the impugned item viz., item sold by the Petitioner was not “pile carpet” as per the notification dated 30th June 1990 and that the carpet sold was therefore subject to last point sales tax @ 16% in terms of Serial No.23 of the schedule of rate of sales tax. Accordingly, the impugned demand was raised in the two respective assessment orders dated 30th November, 1995 of the STO.
8. Both these orders were confirmed by the ACST by dismissing the Petitioner’s appeals by separate ex parte orders dated 31st July, 1998. The further appeal before the Tribunal was allowed in part by the impugned common order.
9. This Court has heard the submissions of Mr. Jagabandhu Sahoo, learned Senior Advocate for the Petitioner and Mr. S.S. Padhy, learned Additional Standing Counsel for the Opposite Party-Sales Tax Department.
10. Mr. Sahoo referred to the Serial No.23 of the list of 1st point goods as per the notification dated 22nd December 1989 issued by the Finance Department with effect from 1st January 1990 which reads “23. pile carpets”. Serial No.23 on the list of taxable goods, which prescribes the rate of tax to various goods, irrespective of its status as to whether the goods belong to 1st point or last point as per notification dated 30th June 1990 enumerates thus “23. Carpets, pile carpets including
