Continuing sales tax liability survives a later turnover threshold increase where the amendment preserves earlier accrued liabilities.

Tax liability that had already accrued under the unamended charging provision continued for the statutory three-year period under the continuation rule, and a later increase in the turnover threshold did not extinguish that earlier liability. The amendment also preserved liabilities arising before its appointed date, so the revised limit effective from 1 July 1969 could not govern prior periods. Assessments for the later quarters were therefore not unsustainable merely because turnover then fell below the amended threshold, and the continuation of liability under section 4(3) remained operative.

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Issues: (i) Whether a dealer whose liability had accrued under section 4(2) of the Orissa Sales Tax Act, 1947 before the amendment made by Orissa Act 15 of 1968 continued to remain liable for the statutory period of three consecutive years under section 4(3); (ii) Whether the Tribunal was justified in annulling the assessments for the quarters ending 30th September, 1969 and 31st December, 1969 on the footing that the amended turnover threshold controlled the entire liability.

Issue (i): Whether a dealer whose liability had accrued under section 4(2) of the Orissa Sales Tax Act, 1947 before the amendment made by Orissa Act 15 of 1968 continued to remain liable for the statutory period of three consecutive years under section 4(3).

Analysis: The charging scheme under section 4 of the Act showed that once liability had attached under the unamended provision, section 4(3) continued that liability until the expiry of three consecutive years during each of which the gross turnover failed to exceed the prescribed limit. Section 16 of Orissa Act 15 of 1968 further declared that liability for any period prior to the appointed date would not be affected by the amendment. The amended threshold from 1st July, 1969 could not displace liability already incurred under the parent provision for earlier periods.

Conclusion: The liability continued for a period of three consecutive years and the answer to this issue was against the assessee and in favour of the Revenue.

Issue (ii): Whether the Tribunal was justified in annulling the assessments for the quarters ending 30th September, 1969 and 31st December, 1969 on the footing that the amended turnover threshold controlled the entire liability.

Analysis: The amendment raising the turnover limit took effect only from 1st July, 1969, while periods prior to that date had to be governed by the unamended Act because section 16 preserved liability for earlier periods. Since the assessee had already become liable and the statutory continuation under section 4(3) operated, the Tribunal was in error in treating the assessments for the subsequent quarters as unsustainable. The assessments could not be annulled merely because the turnover for later periods did not exceed the revised limit.

Conclusion: The Tribunal was not justified in annulling those assessments and the answer to this issue was against the assessee and in favour of the Revenue.

Final Conclusion: The reference was answered in favour of the Revenue by holding that the pre-amendment liability continued under the statutory continuation provision and that the consequential assessments for the later quarters were valid.

Ratio Decidendi: Where tax liability has already accrued under the unamended charging provision, a later enhancement of the threshold does not extinguish that liability for the statutory continuation period, particularly where the amendment itself preserves earlier liabilities.

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