1. These appeals are sequel to a batch of writ petitions filed before the Orissa High Court challenging the validity of the amended Section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act, 1947 (the OST Act) as substituted by the Orissa Sales Tax (Amendment) Act, 1978 with retrospective effect. The High Court upheld the validity of the OST Act.
2. The High Court classified the batch of petitions into the following three categories:
1. Assessments in which unamended declarations in From No. XXXIV under Rule 27(2) of the Orissa Sales Tax Rules, 1947 were given and purchases were made without payment of tax.
2. Assessment and imposition of tax on sale or purchase of declared goods in violation of Section 15 of Central Sales Tax Act, 1956 and Section 14-B of the OST Act read with Rule 42-A of the OST Rules.
3. Assessment and imposition of tax after the amendment of Form No. XXXIV, that is, after 26.4.1978. Declarations in amended form were given and purchases were made without payment of tax.
3. The High Court allowed the writ petitions falling under category Nos. (1) and (2) above an the assessment and imposition of tax in respect of those petitioners was quashed. So far as the writ petitions falling under category No. (3) above are concerned, those were dismissed with no order as to costs. The appellants before us are those petitioners who were in the category No. (3) before the High Court. The State of Orissa has not come up in appeal against the judgment of the High Court allowing the writ petitions of the petitioners falling under category Nos. (1) and (2) before the High Court. We are not expressing any opinion in respect of the part of the judgment of the High Court which is not under appeal before us.
4. We have today pronounced judgment in Civil Appeals Nos. 1811-1815 of 1977 titled State of Orissa v. Minerals & Metals Trading Corporation of India Limited wherein we have reversed the full-Bench judgment of the Orissa High Court in Minerals & Metals Trading Corporation of India Limited v. State of Orissa reported in (1976) 38 S.T.C. 189. Before the High Court the appellants had relied upon the full Bench judgment of the Orissa High Court in MMTC case (supra) in support of their contentions. The High Court rejected the contentions of the appellants and upheld the validity of the amended Section 5(2)(A)(a)(ii) of the OST Act on the following reasoning:
Under the scheme of the Act, the taxable event is postponed until the registered dealer sells the goods to an unregistered dealer or a consumer, or in breach of the undertaking given. Law is well settled that the competent legislature can enact law after removing the infirmities or deficiencies as pointed out by the Court. All that is to be seen in such cases is that the amended law is within the competence of the legislature. Powers of the State Legislature under Entry 54 of List II if the VII Schedule to the Constitution are plenary. The impugned amended Act is an attempt by the State Legislature to ensure the single point levy by nullifying the effect of the two decisions of this Court. The question is whether such action is within the competence of the State Legislature and is in conformity with Article 286 of the Constitution of India.
It is the contention of the petitioners that the goods were meant for resale in Orissa and in fact were resold inside orissa. The State Legislature has power to impose tax on the sale or purchase of goods other than news papers. This is subject to the provisions of Entry No. 92 A of List I. The petitioners would have paid the tax while purchasing the goods from a registered dealer. But while purchasing the goods, they have avoided the tax by giving a declaration that the goods purchased were meant for the purpose of resale in Orissa and such resale should be subject to levy tax under the O.S.T. Act. But subsequently, in violation of the declaration they have sold the same in course of inter- state trade or commerce or export and avoided payment of tax. Normally the tax should have been paid at the first point and the petitioners could not have avoided payment of such tax and would have paid the tax but for the declaration given by them. They have sold the goods in violation of the declaration given by them. As already held, in case of declared goods, they are entitled to reimbursement by virtue of Section 15 of the CST Act_ and Section 14-B of the O.S.T. Act and Rule 42-A of the O.S.T. Rules. From Section 15 of the CST Act_, it is abundantly clear that it places restrictions and conditions upon the local law. Its intention is that declared goods should suffer tax at only one point and at a prescribed rate. Section 15 does not bar levy of sales tax by a State on declared goods, but it provides for refund of such tax to the persons making such sale in the course of inter- State Trade or commerce. Therefore, Section 15 clearly shows that there is no bar for levy of charge on declared goods, but that is to be refunded. In Section 15, no provision has been made for refund of tax on goods other than declared goods. From this, it can be gathered that the State has also the power to impose tax on the declared goods. But by virtue of Section 15, it is to be reimbursed. If the intention were not to tax goods other than declared goods, such provision should have been clearly made. Viewed from this angle, it cannot be said that the assessment and the demand of tax made by the authorities are bad and should be struck down. The State by the amended provision has only wanted to impose tax on intra-State sale and it is within the competence and powers of the State Legislature under Entry 54 of List-II of Schedule VII of the Constitution of India.
5. We agree with the above quoted reasoning and the conclusions reached by the High Court.
6. We dismiss the appeals with costs. We quantify the costs to be paid by each of the appellants separately as Rs. 5000/-.