JUDGMENT

S. K. DAS, J. –

This appeal on a certificate granted by the High Court of Orissa is from the judgment and order of the said High Court dated August 8, 1955. The State of Orissa and the Sales Tax Assessing Authorities are the appellants. The assessee is the respondent.

The assessee is a forest contractor in Orissa and carried on the business of collecting bamboo, firewood, timber etc., from the forest of Kalahandi in Orissa. He was assessed to sales tax for eight quarters beginning from April, 1, 1949, and ending on March 31, 1951. The Sales Tax Officer found that the assessee stocked the bamboo, timber etc. in his godowns at Lanjigorh and Rupra Road in Orissa, and then sold the goods to customers outside Orissa, the goods being despatched by train and delivered to those customers. A certificate was issued against the assessee for recovering the tax imposed.

Against the orders of assessment the assessee moved the High Court by means of a writ petition. He contended that the sales took place outside Orissa and in any case the sales of the period after the coming into force of the Constitution could not be taxed by Orissa by reason of the Explanation to Article 286(1)(a) of the Constitution, as it then stood. The assessee also challenged the legality of the notification by which the Orissa Sales Tax Act, 1947, was extended to Kalahandi, which was formerly a feudatory State.

Following its earlier decision in B. C. Patel v. Sales Tax Officer, Cuttack ((1955) I.L.R. 1955 Cuttack 267; 7 S.T.C. 221), the High Court held that the notification dated March 1, 1949, by which the relevant provisions of the Orissa Sales Tax Act, 1947, were extended to Kalahandi was invalid in law and consequently the respondent was not liable to sales tax for the pre-Constitution quarters, this is, till the quarter ending on December 31, 1949. For the subsequent quarters also the respondent could not be taxed by reason of Article 286 of the Constitution. Accordingly, the High Court allowed the petition, quashed the assessment orders and directed a refund of the fees paid by the respondent to the assessing authorities on appeal and revision.

On behalf of the appellants it has been pointed out that the decision of the Orissa High Court in B. C. Patel v. Sales Tax Officer, Cuttack ((1955) I.L.R. 1955 Cuttack 267; 7 S.T.C. 221) was set aside on appeal by this Court (see Sales Tax Officer, Cuttack v. Messrs B. C. Patel and Co. ([1959] S.C.R. 520; 9 S.T.C. 467)). It has not been seriously disputed that on the decision of this Court the assessee was rightly assessed to sales tax for all the quarters prior to and ending on December 31, 1949.

It is equally clear that for the post-Constitution quarters the assessee was not liable to be taxed, because admittedly the goods were delivered outside Orissa for consumption in the delivery State.

As to the fees paid, the High Court followed its earlier decision in Chakobhai Ghelabhai ((1955) I.L.R. 1955 Cuttack 529; 7 S.T.C. 36). In Appeal No. 710 of 1957 in which we have pronounced judgment to-day (Since reported as State of Orissa v. Chakobhai Ghelabhai and Co. [1960] 11 S.T.C. 716), we have held that the fees realised under rule 59 of the Orissa Sales Tax Rules, 1947 , are valid and the decision of the High Court to the contrary is wrong.

The result, therefore, is that this appeal must be allowed in part. The assessment orders of the quarters prior to and ending on December 31, 1949, are valid; but the assessment orders for subsequent quarters are invalid and must be quashed. The order of the High Court for refund of fees paid by the respondent is set aside. The certificate proceedings taken against the respondent must now be restricted to the tax payable for those quarters only for which the assessment orders are valid. There will be no order for costs in this Court.

Appeal allowed in part.