1961 (5) TMI 55 - HC - VAT and Sales Tax

Interpretation of Sales Tax Act proviso as penalty clause & caution on admitting additional evidence

The Court held that section 5(2)(a)(ii) and its proviso under the Orissa Sales Tax Act should be applied together, with the proviso acting as a penalty ... - Issues:1. Interpretation of section 5(2)(a)(ii) and its proviso under the Orissa Sales Tax Act, 1947.2. Recovery of sales tax from the selling dealer after being realized from the purchasing dealer.3. Consideration of additional evidence under rule 61 of the Orissa Sales Tax Rules, 1947.Analysis:Issue 1:The Court analyzed the applicability of section 5(2)(a)(ii) and its proviso, emphasizing that they are not mutually exclusive. The proviso acts as a penalty clause for breach of conditions in the section. The Court held that both must be applied together, with the proviso serving as a default clause in case of goods being used for purposes other than specified, leading to inclusion in the taxable turnover. The interpretation was supported by previous decisions, concluding that they are not mutually exclusive in their application to a particular sale.Issue 2:Regarding the recovery of sales tax, the Court affirmed that if tax has been collected from the purchasing dealer under an erroneous view, it can be recovered from the selling dealer. The Court emphasized that sales tax must be collected from the correct person, and collecting it from the wrong person does not prevent recovery from the correct party. Therefore, the recovery of sales tax from the selling dealer would not amount to an abuse of the legal process.Issue 3:The Court discussed the consideration of additional evidence under rule 61 of the Orissa Sales Tax Rules. While acknowledging the Tribunal's residual powers to admit fresh evidence, the Court highlighted the need for caution and limitations in exercising such powers. Drawing parallels with the Civil Procedure Code, the Court stated that new evidence should be admitted sparingly. In the specific case, where tax had already been collected from the purchasing dealer, the Court deemed the question academic and unnecessary to express a view on.In conclusion, the Court answered the questions raised by the Sales Tax Tribunal: negatively for Issue 1, affirmatively for the first part of Issue 2, negatively for the second part of Issue 2, and did not provide a specific answer for Issue 3 due to the academic nature of the question. The judgment was delivered by the Judges Baan S. RM and R.K. Das, J., with the reference being answered accordingly.