Decided on July 30,1953



- (1.) THIS is an application to revise the order of the Collector of Sales Tax, revising the order of the Assistant Collector in the matter of assessment of sales tax on the petitioner for the quarters ending 30th June, 1951, and 30th September, 1951. The points in issue for both the quarters are same. Therefore, this order is common to revisions 51 and 52 in this Court.
(2.) FOR the quarter ending 30th June, 1951, the dealer claimed a deduction of Rs. 68,807-11-6 from his gross turnover for sales alleged to have been made in the course of inter-State trade. Similarly, for the quarter ending 30th September, 1951, he claimed a deduction of Rs. 1,56,245-9-6. The facts elicited are that for the goods for which he claimed exemption he had bought the goods from another dealer in Orissa under a certificate of registration maintained by him, that he purchased the goods for resale. The learned Collector has found that the resale not being in Orissa, the dealer must be presumed to come under the mischief of proviso to item (ii) of sub-clause (a) of clause (2) of Section 5 of the Act which says that if the goods are used by the registered dealer for purposes other than those specified in the certificate of registration the price of goods so utilised shall be included in his taxable turnover. If the sale outside Orissa can be taken as contrary to the purpose specified in the certificate, then the dealer is liable for the tax, whatever be the nature of the actual transaction. The proviso imposes a penalty for defrauding the State of source of taxation at a previous stage by a false certificate. It is, therefore, a penalty that is levied, and not a tax, and Article 286 of the Constitution will not protect the petitioner if he has used the goods in a manner other than that specified in his certificate of registration. The Collector has held that "intended for resale" should be construed to be intended for resale in Orissa though the words "in Orissa" were only added on 25th November, 1951, by the amendment of the Act. The Collector argues that being an Act of the State Legislature, the Sales Tax Act cannot be operative beyond the State frontiers, and, therefore, the terms used in the Act must be construed as meaning sale or resale within the State. This argument, firstly, is not tenable, because the right of the State Government to tax arose not from the location of the exact transaction of sale. Before the Constitution, the settled law was that even though under the Sale of Goods Act a sale might have been held to have occurred outside the State, a State had the right to legislate for taxing of the commodity where some part of the sale transaction took place within the State. So, before the Constitution, the transaction of sale or resale need not have been legally a sale or resale within the State. After the Constitution, under Article 286, an extra-territorial right has been given to the State, and a sale or resale can also have an extra-territorial meaning. The first premise on which the Collector has acted is, therefore, not sound. A taxing law has to be construed strictly. The question of intentions does not come into the picture if the words have a clear meaning. All that item (ii) of sub-clause (a) of clause (2) of Section 5 says is that sales to a registered dealer of goods specified in the purchasing dealer's certificate as being intended for resale by him will be deducted. In this case the dealer, who was the purchasing dealer, had the entry that he purchased jute for resale. He actually sold the jute outside the State. Can resale be restricted to only resale within Orissa ? Sale is defined in clause (g) of Section 2 of the Act as transfer of property in goods etc. There is no territorial nexus attached to this definition. The structure of the Act was to bring dealers who carry on business of selling or supplying goods in Orissa within the ambit of the legislation. But nowhere has there been a specific definition given to sale as limiting it to within Orissa. So, strictly construing the statute, the petitioner was fully covered, if he had resold the articles instead of using them. He has, in fact, resold the articles, but outside Orissa. This lacuna in the legislation has been covered specifically by introduction of the words "in Orissa" in this item. But, before that, the lacuna exists. It cannot, therefore, be said that the petitioner used the goods contrary to the purposes specified in the certificate of registration. The dealer is, therefore, not liable for taxation on this turnover under the proviso to item (ii) of clause (a) of clause (2) of Section 5 of the Act.
(3.) THE transaction of sale being with a jute mill outside Orissa directly, this item of sale is covered by Article 286(1)(a) of the Constitution of India, and will be exempted. Petition allowed. The transactions under issue are allowable as rebate from the turnover for the periods ending 30th June, 1951, and 30th September, 1951. Assessment will be corrected accordingly. Petition allowed.;

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