Limitation and sales tax principles: refusal orders run from communication, and mere contracts to sell are not taxable sales.

An adverse refusal order is treated as effective only when communicated to the aggrieved party, so limitation runs from knowledge of the order and the time spent obtaining copies may be excluded where the Limitation Act applies. In sales tax matters, liability arises only from a completed sale; a mere agreement to sell, even coupled with export from the territory, does not by itself constitute a taxable sale. The note further states that a construction taxing executory contracts or transactions not shown to be completed within the taxing territory is not supported by the governing meaning of "sale."

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Issues: (i) Whether the application to the High Court was within limitation, the period being computed from the date of communication of the refusal order rather than the date on which it was signed; (ii) Whether a mere contract for sale and export of goods from Orissa were sufficient to sustain taxation under the Orissa Sales Tax Act, 1947.

Issue (i): Whether the application to the High Court was within limitation, the period being computed from the date of communication of the refusal order rather than the date on which it was signed.

Analysis: The expression "refusal" was treated as implying a communicated refusal, because a party cannot be expected to challenge an order before it is brought to its knowledge or there is an opportunity of knowing it. The special law did not expressly exclude the benefit of Section 12 of the Indian Limitation Act, and the time taken in obtaining the copy was therefore allowable. On the facts proved by affidavit, the petitioners were held entitled to exclude the requisite period spent in procuring copies.

Conclusion: The application was within time, and the preliminary objection on limitation failed.

Issue (ii): Whether a mere contract for sale and export of goods from Orissa were sufficient to sustain taxation under the Orissa Sales Tax Act, 1947.

Analysis: Tax under the Act could be levied only on a completed sale, not on an executory agreement to sell. A contract for sale does not by itself pass property, whereas a sale is an executed transaction involving transfer of ownership. To the extent the Act was construed to tax a mere contract for sale or to treat mere export from Orissa as enough to create tax liability, such a construction was beyond the legislative meaning of "sale" under the governing constitutional entry and was treated as invalid. The factual basis before the assessing authority did not establish that the sales were completed in Orissa.

Conclusion: Mere contract for sale and export from Orissa were not sufficient to sustain the assessment.

Final Conclusion: The challenge succeeded, the refusal to state a case was set aside, and the matter was directed to be referred on the legality of the assessment.

Ratio Decidendi: For limitation purposes, an adverse refusal order takes effect only when communicated to the aggrieved party, and a taxing statute authorising levy on sales cannot extend to a mere agreement to sell or to transactions not shown to be completed sales within the taxing territory.

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