Sellers are entitled to concessional tax rates based on valid declarations from buyers; liability does not transfer to sellers for buyers' misuses.

JUDGMENT :

S. MURALIDHAR, CJ.

1. The present revision petition by the Assessee arises from an order dated 19^th November, 2010 passed by the Orissa Sales Tax Tribunal, Cuttack (Tribunal) dismissing the Assessee’s appeal in S.A. No.1955 of 2005-06 for the period 2001-02.

2. By the impugned order the Tribunal affirmed the order dated 18^th November, 2005 passed by the Assistant Commissioner of Sales Tax (ACST), Cuttack Range-II, Cuttack in Appeal No.AA 498/CUII of 2004-05. The ACST had dismissed the Assessee’s appeal against the assessment order passed by the Sales Tax Officer, Cuttack II Circle, Cuttack (STO) for the aforementioned period.

3. Admit. The following questions of law are framed for consideration by this Court:

“(a) Whether sale of size wood by the petitioner against declaration Form IV amounting to Rs.12,07,731.00 to a registered dealer namely M/s. Mayur Electronics Ceramics Pvt. Ltd. will not be eligible to concessional rate of tax @ 4% under Entry 81 of List C of the Schedule of rates under Section 5(1) of the Orissa Sales Tax Act.

(b) Whether subsequent change in use of goods purchased against declaration Form IV by the registered purchasing dealer will disentitle the petitioner’s claim of concessional rate of tax under the aforesaid Entry 81 under the OST Act.”

4. The background facts are that the Petitioner is a registered dealer under the Orissa Sales Tax Act, 1947 (OST Act). The Petitioner had sold size wood valued at Rs.12,07,731/- to another registered dealer, namely, M/s. Mayur Electronics Ceramics Pvt. Ltd. (hereafter ‘Mayur’) against declaration Form IV. For the said sale of size wood, the Petitioner claimed concessional rate of tax @ 4% as against the declaration in Form IV furnished by the purchasing dealer under Entry 81 of List-C of the Schedule of rates notified by the State Government being SRO No.149/2001 under Section 5 (1) of the ORISSA ENTRY TAX ACT , 1999 (OET Act). The STO noted that the verification of the declaration form revealed that they were not true declaration forms as they mentioned packing of goods which had been deleted from Form IV with effect from 1^st April, 2001. Since the goods were subject to tax at the first point of sale, it became the duty of the seller to check the declaration form and the registration certificate of the purchasing dealer prior to the sale. Therefore, the declaration in Form IV was disallowed.

5. Aggrieved, the Assessee went in appeal before the ACST, who by an order dated 18^th November, 2005 dismissed the appeal. It was concluded that the selling dealer was not entitled to sell the packing materials for sale against Form IV since they stood excluded from that benefit with effect from 1^st April, 2001. This order was concurred with by the Tribunal by the impugned order. The Tribunal noted that the “Appellant did not dispute” that the goods intended to be used as packing materials were excluded from the concessional rate of tax with effect from 1^st April, 2001.

6. This Court has heard the submissions of Mr. Jagabandhu Sahoo, learned Senior Advocate for the Petitioner and Mr. S.K. Pradhan, learned Additional Standing Counsel for the Opposite Party (Department).

7. The declaration in Form IV furnished by the purchasing dealer to the Petitioner reads as under:

“I/We ………. hereby declare that the goods purchased by me/us in cash memo/bill No. dated the ………from ……………shall be used in the manufacture/processing of goods for sale/in mining/generation or distribution of electricity or any form of power.

Dealer/Authorized Agent.”

Thus, in the above declaration the purchasing dealer disclose