Single-point taxation limits dealer deduction conditions; extra proof of seller's tax liability under the rules was invalid.

Rule 27(3) of the Orissa Sales Tax Rules was challenged to the extent its proviso required a purchasing registered dealer to prove that the selling registered dealer had paid, or was liable to pay, purchase tax. Section 5(2)(A)(d)(i) read with section 3-B required only proof that the purchase was from a registered dealer in declared goods, and the proviso was found to add a further condition not authorised by the Act. As the Act contemplated single-point taxation and the extra burden could be imposed only by legislation, the proviso was treated as inconsistent with the parent statute and liable to be quashed.

---

---

Issues: Whether the proviso inserted in rule 27(3) of the Orissa Sales Tax Rules, 1947, requiring the purchasing registered dealer to prove that the selling registered dealer had paid or was liable to pay purchase tax, was ultra vires section 5(2)(A)(d)(i) read with section 3-B of the Orissa Sales Tax Act, 1947.

Analysis: Section 5(2)(A)(d)(i) allowed deduction from taxable turnover for purchases from a registered dealer of goods declared under section 3-B, and the statutory condition was only that the purchaser prove purchase from a registered dealer. The impugned proviso added a further requirement that the seller must have paid or been liable to pay purchase tax. That additional burden was not postulated by the Act and enlarged the statutory condition by subordinate legislation. The scheme of the Act was single-point taxation, and the proviso would shift an excessive burden onto the purchaser, a burden that could be imposed only by the Legislature itself.

Conclusion: The proviso to rule 27(3) was held ultra vires the Act and liable to be quashed, in favour of the assessee.

---