Case: The State Of Orissa And Another Vs. M/S. Chakobhai Ghelabhai And Company

2. The short facts are these. The respondent firm has its headquarters in Bagbehera in Madhya Pradesh. During the years 1948 to 1951 it was engaged in collecting bide leaves from certain forest areas in Orissa. The leaves so collected were made up into bundles and stored in the respondents godowns in Orissa. They were then sold and despatched to various destinations outside the State of Orissa. The respondent did not get itself registered as a dealer under the Orissa Sales Tax Act, 1947 (Orissa Act XIV of 1947), hereinafter called the Act. On July 21, 1950, a notice was issued to the respondent by the Assistant Sales Tax Officer, Patna Circle, requiring it to submit a return in Form No. IV showing separately the particulars of itsfor each of the quarters commencing October, 1947, and upto June 30, 1950. The respondent was also asked to show cause why a penalty should not be imposed on it under S. 12(5) of the Act. To this notice the respondent sent a reply to the effect, substantially, that it carried on no selling business in Orissa and was, therefore, under no liability to register itself as a dealer in Orissa or to pay sales tax under the Act. Thereafter, the respondent took no part in the assessment proceedings and made no appearance before the assessing authority except on June 30, 1951, when one of its partners Narvaram Popatbhai appeared and said that the accounts were at Bagbehera and the despatches of bidi leaves from Orissa were mixed up with other despatches and, therefore, he was not in a position to give a correct account of the business in Orissa. It was admitted, however, that the bidi leaves were collected in Orissa, were processed and manufactured for sale and then stored in godowns in Orissa; they were then sold and despatched to different customers outside Orissa. The assessing authority held on the materials before it that the transfer of property in the bidi leaves sold and despatched to customers, as aforesaid was completed in Orissa and the respondent wilfully failed to get itself registered and to submit a return of itsThe assessing authority then proceeded to assess the tax to the best of its judgment and determined the taxableto be Rs. 61,250/for each of the twelve quarters, the first quarter ending on June 30, 1948, and the last quarter ending on March 31, 1951. It also imposed a penalty of Rs. 500/for each quarter. The orders of assessment were made on twoJuly,4, 1951, for four quarters and on August 29, 1951, for the remaining eight quarters. Against these orders of assessment the respondent went up in appeal to the Assistant Collector ofSambalpur. One of the pleas taken before the appellate authority was that the respondent was not a dealer in Orissa inasmuch as the sales of bidi leaves were not effected in Orissa. In the course of the hearing of the appeal this plea was given up, and it was admitted by the respondents pleader that "the sales were completed in Orissa". The appeal was then heard on the contentions that (1) the turnover determined was excessive, and (2) that no penalty should have been imposed. These contentions were rejected by the appellate authority. The respondent then moved in revision, but the revision petition having been filed out of time was rejected by the Collector of Commercial Taxes, Orissa.3. The respondent then moved the High Court of Orissa by means of a writ petition in which it was contended that (1) the respondent was not a dealer in Orissa; (2) that the sales of theperiod were sales within the meaning of the Explanation to Art. 286 (1) (a) as it then stood and Orissa could not tax them; (3) that the notice under S. 12 (5) of the Act was bad on various grounds; (4) that the fees levied under R. 59 of the Orissa Sales Tax Rules, 1947, on the respondents memorandum of appeal and revision application were not justified in law; and (5) that the assessment was illegally made and so also the penalty under S. 12 (5) of the Act. On these contentions the respondent asked for a writ quashing the assessment proceedings and the notices of demand and for a direction for a refund of the fees paid. The High Court allowed the petition by its judgment and order dated September 5, 1955. It set said the assessment orders, directed a refund of the fees paid and further made an order that the respondent shall be directed "to furnish a return of its transactions under S. 11 for the period for which it had been served with a notice under S. 11 (1) of the Act". In support of its orders the High Court came to the following findings : (1) that the assessment orders were bad because of the repeal if the second proviso to S. 2 (g) of the Act defining "Sale", by the Adaptation of Laws Order, 1950; (2) that the levy of fees on a graded scale amounted to the imposition of a tax which was unwarranted and beyond the rule making power of the State Government; and (3) that the notice issued under S. 12 (5) was not is accordance with law.

Reasoning:
We do not agree. The question where a sale is completed depends on facts and is not a pure question ofIt is worthy of note that a no stage subsequent to the admission did the respondent repudiate it or challenge its correctness. Even in the writ petition it was not stated that a wrong admission had been made; on the contrary, the appellate authoritys order in which the admission was set out was an annexure to the writ petition. It is indeed true that in paragraph 13(a) of the writ petition a contention was raised with regard to the sales of theperiod and a reference was made to the Explanation to Art. 286(1) (a) as it then stood. But the necessary averments to attract the Explanation were not made, and nowhere was it stated that the goods were despatched outside Orissa for the purpose of consumption in the delivery State. In other words no foundation was laid for making a distinction between theand post Constitution sales, and with regard to all of them it was admitted that they were completed inadmission which was never repudiated or challenged. We are, therefore, of the opinion that the High Court was clearly in error in its first finding as to the unconstitutionality of the assessment orders made.6. We think that the High Court was also in error in its finding as to the legality of the fees levied on the memorandum of appeal and the application in revision. Section 29 of the Act deals with the rule making power. It statesare unable to accept this contention as correct. Section 12(5) talks of a period, and the period may consist of more than one quarter. The return has, however, to be submitted in Form IV which read with R. 20 of the Orissa Sales Tax Rules, 1947, requires the assessee to furnish details of hisfor each quarter. The assessment must, therefore, be made on the taxableThe appellate authority has pointed out that even for the last three quarters the assessing officer, after he had made his orders of assessment in the first five quarters, had directed the respondent to produce his accounts, but no accounts were produced. Section 12(5) enables the assessing authority to make a best judgment assessment for "all subsequent periods" after giving the dealer a reasonable opportunity of being heard. Such an opportunity was given in the present case even in respect of the last three quarters, and we are unable to hold that the assessment for the last three quarters was bad.9. For the reasons given above, we must allow this appeal, set aside the judgment and order of the High Court dated September 5, 1955, and dismiss the writ petition of the respondent. The appellants will be entitled to their costs of the proceedings in the High Court and in this Court.