- (1.) This is an appeal by special leave. The Collector of Commercial Taxes, Orissa is the appellant, and Messrs. Bharat Sabai Grass Ltd., are the respondents. The respondents entered appearance and filed a statement of their case; but later they withdrew appearance and at the final hearing of the appeal, we have had the assistance of the learned Solicitor-General alone, who appeared in support of the appeal.
(2.) The facts relating to the appeal lie within a very narrow compass, Messrs. Bharat Sabai Grass Ltd., a limited company incorporated under the Indian Companies Act, 1913, had their head office in Calcutta. They carried on the business of collection of bamboo and sabai grass in Orissa and sole the same to certain mills which manufacture paper, namely, the Orient Paper Mill, which is situate in Orissa, and Titagrh Paper Mill, and Bengal Paper Mill, situate in Bengal. Sometime in June 1948, a notice under S. 12(5) of the Orissa Sales Tax Act, XIV of 1947, (hereinafter referred to as the Act) was issued to the respondents to which the latter sent a reply to the effect that they were not selling any goods in Orissa. A correspondence then ensued between the assession authorities on one side and the respondents on the other, and on 22nd September 1948, the appellant informed the respondents that the sales of bamboo and sabai grass which the respondents made to different mills both in Orissa and Bengal were sales in Orissa within the meaning of the provisions of the Act. Then, on 28th September 1948 the respondents were asked to submit returns, get themselves registered under the Act, and pay the requisite tax on their sales. The respondents sent no reply to this letter and after about a year, that is, in November 1949, another notice under S. 12 (5) was issued asking the respondents to submit returns and to produce their books of account before the assessing authority at Sambalpur on or before 20th December 1949. The respondents neither submitted any returns nor filed any books of account, and on 16th December 1949, the Sales Tax Officer, Sambalpur, who was the relevant assessing authority, made a best of judgment assessment on the respondents for eight quarters beginning from 1st October 1947, and ending on 30th September 1949. The estimated turnover of the respondents for the period in question was divided into two parts: one related to the first six quarters during which the respondents carried on business in bamboo and sabai grass in Sambalpur which was part of Orissa from before; and the second to the last two quarters during which the respondents carried on business also in Bamra and Gangpur, two of the Orissa States, which were integrated into Orissa after certain merger agreements. The Act came into force in Bamra and Gangpur areas on 1st April 1949, therefore; for the first six quarters the Sales Tax Officer estimated the gross turnover at Rs. 15,000 for each quarter, and for the remaining period, he estimated the turnover at Rs. 30,000 per quarter. In this way the Sales Tax Officer, Sambalpur, estimated the total gross turnover to be Rs. 1,50,000 and making the usual deductions, determined the taxable turnover at Rs. 1,47,000. On this amount, the tax payable was found to be Rs. 3,215-10-0 and the Sales Tax Officer further imposed a penalty of Rs. 500 under the provisions of S. 12 (5) of the Act. Against the aforesaid order of assessment and penalty, the respondents preferred an appeal which was heard by the Assistant Collector of Sales Tax, Cuttack. This appeal was dismissed on 30th June 1950. An application in revision was then made to the Collector of Sales Tax, Orissa and another to the Commissioner, Northern Division, Sambalpur. Both these applications were dismissed. The respondents then moved the Commissioner for a reference to the High Court under the provisions of S. 24 of the Act. This application was also rejected by the Commissioner.
(3.) Then the respondents moved the High Court of Orissa and by an order dated 29th July 1952, the High Court directed the Commissioner, Northern Division, Sambalpur to state a case on the following question of law:: "Whether in the circumstances of the case the assessment is legal being based on the position that mere contract for sale within the State of Orissa and the export of goods from Orissa is sufficient for taxation under the Orissa Sales Tax Act, 1947." In pursuance of the order of the High Court, a statement of the case was submitted on the question formulated and by its judgment, dated 15th November 1954, the High Court answered the question in the negative and held that the assessment on the respondents was not legal. The present appellant then moved the High Court for a certificate and, this having been refused, the appellant moved this Court and obtained special leave to appeal.;