1995 (2) TMI 407 - HC - VAT and Sales Tax

Court upholds constitutionality of Orissa Sales Tax Act provisions

Bharat Heavy Electricals Ltd. Versus State of Orissa and Others

The court found that the challenge to the vires of sections 5(2)(A)(a)(1) and 5(2)(AA)(i) of the Orissa Sales Tax Act was not sustainable. The court held ... - Issues Involved:1. Challenge to the vires of sections 5(2)(A)(a)(1) and 5(2)(AA)(i) of the Orissa Sales Tax Act.2. Legality of the notice issued by the Sales Tax Officer.3. Jurisdiction of the Orissa Sales Tax Act on inter-State sales/import sales.4. Interpretation of 'taxable turnover' and 'works contract' under the Orissa Sales Tax Act.5. Applicability of the Supreme Court's decision in Gannon Dunkerley & Co. v. State of Rajasthan to the Orissa Sales Tax Act.Issue-wise Detailed Analysis:1. Challenge to the Vires of Sections 5(2)(A)(a)(1) and 5(2)(AA)(i) of the Orissa Sales Tax Act:The petitioner challenged the constitutionality of sections 5(2)(A)(a)(1) and 5(2)(AA)(i) of the Orissa Sales Tax Act, arguing that these sections required a dealer to include in the gross turnover transactions with inter-State export and import elements, which should be governed by the Central Sales Tax Act, 1956. The petitioner contended that these provisions were ultra vires the State powers.2. Legality of the Notice Issued by the Sales Tax Officer:The petitioner challenged the notice dated May 28, 1992, issued by the Sales Tax Officer, which called upon the petitioner to submit returns for the assessment year 1991-92. The petitioner argued that the notice was arbitrary, illegal, and without jurisdiction.3. Jurisdiction of the Orissa Sales Tax Act on Inter-State Sales/Import Sales:The petitioner argued that the supplies made under contracts with NALCO and NTPC were inter-State sales/import sales and were covered under the Central Sales Tax Act, 1956. The petitioner contended that the local Sales Tax Act of Orissa had no jurisdiction to levy any tax on these supplies.4. Interpretation of 'Taxable Turnover' and 'Works Contract' under the Orissa Sales Tax Act:The petitioner contended that the definitions and provisions related to 'taxable turnover' and 'works contract' under the Orissa Sales Tax Act were unconstitutional. The petitioner argued that section 5(2)(AA)(i) of the Orissa Sales Tax Act was similar to section 5(3) of the Rajasthan Sales Tax Act, which was struck down by the Supreme Court in Gannon Dunkerley & Co. v. State of Rajasthan.5. Applicability of the Supreme Court's Decision in Gannon Dunkerley & Co. v. State of Rajasthan to the Orissa Sales Tax Act:The petitioner argued that the principles laid down by the Supreme Court in Gannon Dunkerley & Co. v. State of Rajasthan should apply to the Orissa Sales Tax Act. The petitioner contended that the provisions of the Orissa Sales Tax Act should be struck down as they were similar to the provisions of the Rajasthan Sales Tax Act that were declared unconstitutional by the Supreme Court.Judgment Summary:The court found that the challenge to the vires of sections 5(2)(A)(a)(1) and 5(2)(AA)(i) of the Orissa Sales Tax Act was not sustainable. The court held that the provisions of the Orissa Sales Tax Act were not contrary to or inconsistent with constitutional limits for exercising legislative power. The court observed that section 5(2)(AA)(i) of the Orissa Sales Tax Act was not similar to section 5(3) of the Rajasthan Sales Tax Act, which was struck down by the Supreme Court.The court noted that the Supreme Court's decision in Gannon Dunkerley & Co. v. State of Rajasthan did not necessitate reopening the question of vires of the challenged provisions of the Orissa Sales Tax Act. The court held that the provisions of the Orissa Sales Tax Act did not suffer from any inherent defect or infirmity as to constitutional limitations.Regarding the legality of the notice issued by the Sales Tax Officer, the court found that the challenge was premature. The court observed that it was open to the petitioner to file its show cause replies and raise all permissible points under law. The court directed the Revenue to adjudicate the matter strictly in terms of the Supreme Court's decision, ensuring that the State Legislature did not transgress its constitutional limitations.In conclusion, the court disposed of the writ petition, holding that the provisions of the Orissa Sales Tax Act were constitutionally valid and that the challenge to the notice issued by the Sales Tax Officer was premature. The court made no order as to costs.