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Issues: (i) Whether section 5(2)(a)(ii) of the Orissa Sales Tax Act, 1947 and its proviso are mutually exclusive in their application to a sale. (ii) Whether tax once realised from the purchasing dealer under due process of law can again be recovered from the selling dealer, and whether such recovery amounts to abuse of process.
Issue (i): Whether section 5(2)(a)(ii) of the Orissa Sales Tax Act, 1947 and its proviso are mutually exclusive in their application to a sale.
Analysis: The deduction under section 5(2)(a)(ii) and the proviso operate together. The section grants exemption or deduction for specified sales, while the proviso denies that benefit where the goods are used for purposes other than those specified in the certificate of registration. The proviso is a qualifying and penal consequence attached to the main provision, not a separate and mutually exclusive provision.
Conclusion: The answer is in the negative. Section 5(2)(a)(ii) and its proviso are not mutually exclusive in their applicability to a particular sale.
Issue (ii): Whether tax once realised from the purchasing dealer under due process of law can again be recovered from the selling dealer, and whether such recovery amounts to abuse of process.
Analysis: Sales tax is to be collected from the correct person in law. If tax has already been realised from the purchasing dealer under due process, even under an erroneous view of the proviso, that does not prevent recovery from the selling dealer if he is the person properly liable. Such recovery does not become abusive merely because the tax was earlier collected from another dealer. The third question relating to additional evidence was treated as academic and not answered.
Conclusion: The first part is answered in the affirmative and the second part in the negative. The tax can be recovered again from the selling dealer, and such recovery is not an abuse of process.
Final Conclusion: The reference was answered in favour of the Revenue on the substantive questions, with the third question left unanswered as academic.
Ratio Decidendi: The proviso to a turnover exemption provision must be read with the main provision as part of one scheme, and tax liability attaches to the dealer legally liable even if tax was earlier collected from another dealer under an erroneous view.
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