State of Orissa Vs. Capital Watch and Radio Emporium - Court Judgment

Excerpt:
- state financial corporations act, 1951 [63/1951]. section 29; [p.k. tripathy, a.k. parichha & n.prusty, jj] discharge of loan orissa forest act (14 of 1972), section 56 confiscation of vehicle - held, the authorities under section 56 of the orissa forest act, 1972 are not obliged to release the vehicle from the confiscation proceeding or to pay the sale proceeds of the vehicle after the order of confiscation in favour of orissa state financial corporation when such vehicles were purchased on being financed by the orissa state financial corporation and the loan had not been liquidated by the date of the seizure/confiscation of the vehicle. concept of first charge or second charge has no applicability when the vehicle is not otherwise disposed of to determine the liabilities of the loanee. on the other hand the vehicle having been found indulged in forest offences was made subject matter of a confiscation proceedings, and therefore, the procedure followed for confiscation of the vehicle and for its sale is punitive in nature and not with a view to give benefit to anybody including the department which initiated the confiscation proceeding. apart from that, the claim of the orissa state financial corporation as against its loanee (who had taken the vehicle on hire- purchase agreement) brings the loanee and the sureties within the default clause under the state financial corporation act, 1951 or the heirs and successors of such persons. procedure is provided in the act, 1951 and the rules thereof about the manner in which such loan is to be recovered, and in that context only the vehicle under the hire-purchase agreement is placed as the first charge. if such property is not available for any reason, then the loan is not automatically waived or the loanee and his sureties are not automatically redeemed of the liabilities to repay. the financial corporation is concerned with repayment of loan either from the property or persons offered as surety. thus, a vehicle, which is subject matter of confiscation proceeding under the act, 1872, being not available to the orissa state financial corporation for adjustment of the unpaid loan, that does not at all bring out an anomalous situation so as to defeat the right of the orissa state financial corporation. agreement between the orissa state financial corporation and the loanee is a pure and simple contract governed by the provisions of the contract act, 1872 read with the provisions in the act, 1951 and its rules. on the other hand, a confiscation proceeding under the act, 1972 is punitive in nature for commission of a forest offence. thus, by virtue of the provision in section 56 read with section 64 (2) of the act, 1972, the action taken for confiscation of the vehicle cannot be extended to grant protection of the loan advanced by orissa state financial corporation. by doing that it amounts to grant premium to the pick-pockets in as much as, by making payment of the confiscation amount in favour of the orissa state financial corporation the loan burden of the accused of the forest offence is reduced to the extent of the sale proceeds of the vehicle. in other words, on payment of the sale proceeds of the confiscation proceeding to the orissa state financial corporation towards discharge of the loan account of the accused of a forest offence, it would lead to a system to reward him by repayment of his loan. then it does not become a penalty nor the action become punitive, but it remains as a reward to the accused of forest offence. such a concept is totally not conceivable from any provision in the act, 1972 or the act, 1951. [air 2002 orissa 130 overruled]. -- state financial corporations act, 1951. section 29; discharge of loan orissa forest act (14 of 1972), section 56 confiscation of vehicle - held, the authorities under section 56 of the orissa forest act, 1972 are not obliged to release the vehicle from the confiscation proceeding or to pay the sale proceeds of the vehicle after the order of confiscation in favour of orissa state financial corporation when such vehicles were purchased on being financed by the orissa state financial corporation and the loan had not been liquidated by the date of the seizure/confiscation of the vehicle. concept of first charge or second charge has no applicability when the vehicle is not otherwise disposed of to determine the liabilities of the loanee. on the other hand the vehicle having been found indulged in forest offences was made subject matter of a confiscation proceedings, and therefore, the procedure followed for confiscation of the vehicle and for its sale is punitive in nature and not with a view to give benefit to anybody including the department which initiated the confiscation proceeding. apart from that, the claim of the orissa state financial corporation as against its loanee (who had taken the vehicle on hire- purchase agreement) brings the loanee and the sureties within the default clause under the state financial corporation act, 1951 or the heirs and successors of such persons. procedure is provided in the act, 1951 and the rules thereof about the manner in which such loan is to be recovered, and in that context only the vehicle under the hire-purchase agreement is placed as the first charge. if such property is not available for any reason, then the loan is not automatically waived or the loanee and his sureties are not automatically redeemed of the liabilities to repay. the financial corporation is concerned with repayment of loan either from the property or persons offered as surety. thus, a vehicle, which is subject matter of confiscation proceeding under the act, 1872, being not available to the orissa state financial corporation for adjustment of the unpaid loan, that does not at all bring out an anomalous situation so as to defeat the right of the orissa state financial corporation. agreement between the orissa state financial corporation and the loanee is a pure and simple contract governed by the provisions of the contract act, 1872 read with the provisions in the act, 1951 and its rules. on the other hand, a confiscation proceeding under the act, 1972 is punitive in nature for commission of a forest offence. thus, by virtue of the provision in section 56 read with section 64 (2) of the act, 1972, the action taken for confiscation of the vehicle cannot be extended to grant protection of the loan advanced by orissa state financial corporation. by doing that it amounts to grant premium to the pick-pockets in as much as, by making payment of the confiscation amount in favour of the orissa state financial corporation the loan burden of the accused of the forest offence is reduced to the extent of the sale proceeds of the vehicle. in other words, on payment of the sale proceeds of the confiscation proceeding to the orissa state financial corporation towards discharge of the loan account of the accused of a forest offence, it would lead to a system to reward him by repayment of his loan. then it does not become a penalty nor the action become punitive, but it remains as a reward to the accused of forest offence. such a concept is totally not conceivable from any provision in the act, 1972 or the act, 1951. [air 2002 orissa 130 overruled]. h.l. agrawal, c.j.1. by this reference under section 24(1) of the orissa sales tax act, 1947 (hereinafter referred to as the 'act'), the additional sales tax tribunal, orissa, has forwarded a statement of case and referred the following question for giving an interpretation to the expression 'cost' appearing in serial no. 90 of the notification dated 23rd april, 1976 :whether, on the facts and in the circumstances of the case, the additional sales tax tribunal was correct in holding that the expression 'cost' appearing in serial no. 90 of notification no. 20215 dated 23rd april, 1976 as further amended by notification no. s.r.o. 972/76 dated 24th september, 1976 refers to the purchase cost and not the selling cost of a radio ?2. the opposite party is a registered dealer under the act and deals in radio, microphone, etc. for the period 1976-77 the dealer was assessed to tax under section 12(4). it was found to have sold 82 nos. of murphy radio, the sale price of which was more than rs. 150 each, but the purchase price was less than that, and accordingly sales tax was charged on the turnover of sale of the said radios at the rate of 12 per cent resulting in demand of an additional tax. serial no. 90 reads as follows :schedule-------------------------------------------------------------------------serial description of goods rate of taxno.-------------------------------------------------------------------------90 'wireless reception instruments and appara- twelve per cent. tus, radio and radio-gramophones, television sets, accumulators, amplifiers and loud-speakers and spare parts, component parts and accessories thereof and electrical valves, except radios costing less than rupees one hundred and fifty each.'-------------------------------------------------------------------------3. the contention of the dealer before this court has been that in view of the said entry, the purchase price of each radio being less than rs. 150, tax only at the rate of 6 per cent on the sale of the radios was exigible.4. the first appellate authority held that the 'cost' referred to in serial no. 90 of the notification in question relates to the 'sale price' and not the 'purchase price' as contended by the dealer.the tribunal, however, on further appeal took a contrary view and accepted the stand of the dealer. in that view of the matter, the present reference has been made on the application of the state for proper interpretation of the expression 'cost'.5. it was submitted on behalf of the dealer in this court that the expression 'cost' must mean the cost to the selling dealer and not the sale price. it was accordingly contended that the notification would have no application to the sale of radios, etc., which were purchased by the dealer for less than rs. 160 each but were sold at a price higher than rs. 150. in support of the contention, some other notifications were filed to show that wherever a 'sale price' was intended, the notification specifically stated to that effect, e.g., 'when the price exceeds rupees...a piece'.6. section 5(1) under which notifications are issued reads as follows :5. rate of tax.-(1) the tax payable by a dealer under this act shall be levied on his taxable turnover at such rate, not exceeding thirteen per cent and subject to such conditions as the state government may, from time to time, by notification, specify.the whole structure and scheme of the sales tax act contemplate a taxable turnover on the sale price.'purchase price' has been defined in section 2(ee) of the act. similarly, 'sale price' has been defined in section 2(h). the act does not define anywhere 'cost price'. section 4 which deals with incidence of taxation also takes into account only the dealer's 'gross turnover' during a year. sales tax means an incidence of tax on sale. obviously, the notification had been issued 'for realisation of sales tax. the expression 'cost' must therefore mean the sale price of the goods sold by the dealer, i.e., which will be the cost for him for purchasing the radio.7. the determining factor regarding the rate of tax in the transaction of the present nature therefore being the 'sale price' and undisputedly sale price of each radio being rs. 150, the dealer must be held to be liable to pay tax at the rate of 12 per cent under serial no. 90 of this notification. 'purchase price' of such radios by the selling dealer must be completely an irrelevant consideration for computation of the rate of tax.8. the answer to the question therefore must be given in favour of the department and against the dealer.s.c. mohapatra, j.i agree.