Case: Himatsingka Timber Company Limited Vs. State of Orissa

under which the sale was to be tax-free or not tax-free. He pointed out that the Legislature had granted exemption from tax to sales between one registered dealer and another registered dealer on the latters certificate that the goods were to be used either for resale or for manufacture but had enacted that if the purchasing registered dealer made a breach of the declaration in his certificate the first sale was to be taxable and that this was what had happened. He upheld the tax. The company made an application under section 23(1) of the Orissa Sales Tax Act asking for a reference of seven questions of law for the determination of the High Court. The Member, Board of Revenue, declined to make a reference. It appears that at the time of the argument the company reduced the questions to five which may be set out below :"(1) Whether on the facts and circumstances of the case, the purchases which occasioned the export outside the State of Orissa, came within the constitutional prohibition contained in Article 286 of the Constitution of India;(2) Whether on the admitted facts that the goods in question were sold and delivered outside the State of Orissa for consumption therein it is within the legislative competency of the State Legislature to do the same;(3) Whether on the facts and circumstances of the case the proviso to sub-clause (ii) of clause (a) of sub-section (2) of section 5 of the Orissa Sales Tax Act, 1947, comes within the powers conferred by entry 54 of List II of the Seventh Schedule to the Constitution of India and is intra vires of the State Legislature;(4) Whether the imposition of liability on the appellant-purchaser is within the ambit and scope of the Orissa Sales Tax Act, 1947 (Orissa Act 14 of 1947);(5) Whether the proviso to sub-clause (ii) of clause (a) of sub-section (2) of section 5 of the Orissa Sales Tax Act, 1947 (Orissa Act 14 of 1947) is unconstitutional and void, as offending Article 286 of the Constitution of India."The company then made an application in the High Court for calling for a reference but the High Court rejected the application in view of the decision in the case from Orissa cited earlier.5. At the hearing before us Mr. S. T. Desai conceded that questions 1, 2, 3 and 5 were not open to him as a result of the decision in Endupuri Narasimhams case ([1962] 1 S.C.R. 314; 12 S.T.C. 282.). He confined his arguments to the fourth question which he said arose from the decisions of the Tribunals. That is so general that it can be said to arise in every case. He contended on the strength of the terms of the contract produced by him that property in the sleepers passed to the Sleeper Control Officer in the State of Orissa itself and that as the goods were actually resold in the State they were not liable to tax because the company had complied with the certificate issued by it. This contention was not raised before and is a departure from the earlier stand of the company that the local purchases were in the course of inter-State trade. That argument could only be raised if the property in the goods passed outside the State. There is thus no finding that property in the sleepers or timber passed in the State of Orissa. It is too late now to plead facts. The result is fairly obvious. What is being sought to be taxed is not the sale to the Sleeper Control Officer but the earlier sale to the company by the local dealers which was tax-free as between one registered dealer and another. The first sale was independent of the sale to the Sleeper Control Officer as it was not in the course of inter-State trade and it could be taxed and the law imposing a tax on such a sale was not also ultra vires. The only question in this case was whether the certificate which the appellant-company gave to the local dealers was complied with or not or whether the proviso to section 5(2)(a)(ii) quoted above applied. The company had obtained the sleepers and the timber tax-free by reason of its certificate that they were from resale in the State of Orissa. The company did not sell them but exported them. If there was no sale in the State the company was liable to sales tax on the first sale under the said proviso by reason of the breach of the certificate.Mr. Desai compared section 5(2)(a)(ii) as enacted by the 1950 amendment with that enacted in 1951 which came into force from November 25, 1951. He pointed out that the words "in Orissa" were added in the operative part after the quarter involved in this case and, therefore, the export of the sleepers and timber outside the State did not affect the company as prior to the 1951 amendment exemption was available if the goods were for resale irrespective of the place of sale. This is not correct. The tax was always leviable on the first sale and it would have been so levied but for the certificate which was furnished by the company when making purchases from the local dealers. The certificate was that the sleepers and timber were for resale in Orissa and when that condition was not fulfilled, the tax became payable even under section 5(2)(a)(ii) before the 1951 amendment. This is now settled by a series of decisions the last being Civil Appeal No. 534 of 964 (Modi Spinning & Weaving Mills Co. Ltd. v. The State of Punjab and Others (Since reported at [1965] 16 S.T.C. 310.)) decided by this Court on October 5, 1964.6. In our opinion, the High Court was right in thinking that in view of the rulings referred to by it no question of law arose in this case and in declining to call for a reference and we accordingly dismiss the appeal with costs.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]This contention was not raised before and is a departure from the earlier stand of the company that the local purchases were in the course of inter-State trade. That argument could only be raised if the property in the goods passed outside the State. There is thus no finding that property in the sleepers or timber passed in the State of Orissa. It is too late now to plead facts. The result is fairly obvious. What is being sought to be taxed is not the sale to the Sleeper Control Officer but the earlier sale to the company by the local dealers which was tax-free as between one registered dealer and another. The first sale was independent of the sale to the Sleeper Control Officer as it was not in the course of inter-State trade and it could be taxed and the law imposing a tax on such a sale was not also ultracompany had obtained the sleepers and the timber tax-free by reason of its certificate that they were from resale in the State of Orissa. The company did not sell them but exported them. If there was no sale in the State the company was liable to sales tax on the first sale under the said proviso by reason of the breach of theis not correct. The tax was always leviable on the first sale and it would have been so levied but for the certificate which was furnished by the company when making purchases from the local dealers. The certificate was that the sleepers and timber were for resale in Orissa and when that condition was not fulfilled, the tax became payable even under section 5(2)(a)(ii) before the 1951 amendment. This is now settled by a series of decisions the last being Civil Appeal No. 534 of 964 (Modi Spinning & Weaving Mills Co. Ltd. v. The State of Punjab and Others (Since reported at [1965] 16 S.T.C. 310.)) decided by this Court on October 5, 1964.6. In our opinion, the High Court was right in thinking that in view of the rulings referred to by it no question of law arose in this case and in declining to call for a reference and we accordingly dismiss the appeal with costs.