Keshab Automobiles Vs State of Odisha (Orissa High Court)
A comparison of the language used in the amended Section 43 (1) of the OVAT Act with its version prior to 1st October, 2015 makes it clear that a new system has been put in place as far as reopening of returns filed as ‘self-assessmen’ is concerned. Now such reopening is permitted even if there was no formal acceptance of the return originally filed. The concept of a “deemed” acceptance of the return has been introduced for the first time since 1st October, 2015. This is not a mere procedural change. Further, the amending statute itself makes it clear that the amendments are with effect from 1st October, 2015 and not with retrospective effect from an earlier date. Therefore, the Court is precluded from presuming that the amendment to Sections 39 (2) and 43 (1) of the OVAT Act and correspondingly to Rule 50 of the OVAT Rules are either merely clarificatory or retrospective.
From the above discussion, the picture that emerges is that if the self-assessment under Section 39 of the OVAT Act for tax periods prior to 1st October, 2015 are not „accepted‟ either by a formal communication or an acknowledgment by the Department, then such assessment cannot be sought to be re-opened under Section 43 (1) of the OVAT Act and further subject to the fulfillment of other requirements of that provision as it stood prior to 1st October, 2015.
For all of the aforementioned reasons, the reopening of the assessment sought to be made in the present case under Section 43 (1) of the OVAT Act is held to be bad in law. The question framed is accordingly answered in the negative i.e. in favour of the Assessee and against the Department. It is accordingly, held that in the absence of the completion of the assessment under Sections 39, 40, 42 and 44, reassessment under Section 43 (1) of the OVAT Act is unsustainable in law.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
1. This revision petition arises out of the order dated 5th April, 2016 passed by the Odisha Sales Tax Tribunal (Tribunal), Cuttack dismissing the Petitioner’s/Assessee’s S.A.No.64 (VAT) of 201415. By the said order, the Tribunal affirmed the order passed on 3rd February, 2014 by the Joint Commissioner (JCST), Jajpur Range, Jajpur Road dismissing the Petitioner’s First Appeal Case No.AA-399/CUIII/13-14 and thereby confirming the order dated 19th December, 2012 passed by the Sales Tax Officer (STO), Jajpur Circle, Jajpur Road raising a demand of Rs.3,92,434/-against the Petitioner for the period 1st April, 2010 to 31st March, 2011 under Section 43 of the Odisha Value Added Tax Act, 2004 (OVAT Act).
2. While admitting this revision petition on 13th November, 2017 following question was framed for consideration:
“Whether in absence of completion of assessment under Sections 39, 40, 42 or 44 of the OVAT Act, reassessment under Section 43 of the said Act made by the authority below is sustainable in law?
3. On the same date, an interim order was passed by this Court to the effect that if the Petitioner deposits the balance tax dues within a period of four weeks, the penalty levied shall remain in abeyance till the disposal of the revision petition.
4. The background facts are that the Petitioner is a registered dealer carrying on business in automobiles parts of all types of vehicles and lubricants both on wholesale as well as retail basis.
5. The original return filed by the Petitioner for the aforementioned period was not acknowledged by the Department. Basing on a fraud case report received from the STO, Investigating Unit, Jajpur Road, the assessment for the above period was sought to be reopened under Section 43 of the OVAT Act. By an order dated 19th December, 2012 the STO made a reassessment and raised a demand of Rs. 3,92,434/- towards tax and Rs.2,61,622.50 towards penalty under Section 43(2) of the OVAT Act. The JCST and the Tribunal also affirmed the aforementioned order. It is significant that before the Tribunal none appeared for the Assessee/Appellant.
6. This Court has heard the submissions of Mr. Jagabandhu Sahoo, learned Senior Advocate appearing for the Petitioner and Mr. Sunil Mishra, learned Additional Standing Counsel for the Department (Sales Tax).
7. In support of his contention that no reassessment can be made unless the assessment is completed.
8. Mr. J. Sahoo, learned Senior Advocate appearing for the Petitioner has placed reliance on the decision case of the Supreme Court of India in Ghanashyam Das v. Regional Assistant Commissioner of Sales Tax, Nagpur AIR 1964 SC 766; the Full Bench of this Court in M/s. Jaynarayan Kedarnath v. Sales Tax Officer, Cuttack-I West Circle (1988) 68 STC 25 and Balaji Tobacco Stores v. The Sales Tax Officer (decision dated 18th March, 2015 of this Court in W.P.(C) No.31251 of 2011). By referring to Sections 39, 40, 42, 43 and 44 of the OVAT Act, 2004 and the amendments made thereto with effect from 1st October, 2015 together with the pre and post amended Rules and in particular Rule 50, Mr. Sahoo submitted that during the relevant period when the reassessment proceedings commenced it was the unamended Section 43 that was to apply. It is submitted that without there actually being an assessment under Section 39 of the OVAT Act, the provisions of Section 43 (1) of the OVAT Act could not have been invoked for the period prior to 1st October, 2015.
9. On the other hand, Mr. Sunil Mishra, learned Additional Standing Counsel for the Opposite Party (Department) submitted that the first level change was brought about in the OVAT Act in 2010 when all the returns had to be filed only online. Therefore, the actual “acceptance” of the return in physical mode was no longer possible. If the return was defective, notice would be issued to the Assessee to rectify the defects. Otherwise, the returns filed under Section 39 of the Act by way of „self assessment‟ was „deemed‟ to be accepted. He placed reliance on certain portions of the „White Paper on State Level Value Added Tax‟ brought out by the Empowered Committee of the State Finance Commissions on 17th January, 2005.
10. According to Mr. Mishra, the amendments brought with effect from 1st October, 2015 to Sections 39 and 43 of the OVAT Act and Rule 50 of the OVAT Rules were “clarificatory” of the existing legal position that in order to reopen the assessment, there need not be a formal acceptance of the return originally filed by way of self-assessment. Reliance is placed on the decision dated 7th December, 2016 of this Court in W.P.(C) No.22343 of 2015 (M/s. Nilachal Ispat Nigam Ltd. v. State of Odisha). It was submitted that in the said decision this Court had negatived a similar plea that there could be no reopening of the assessment without a formal acceptance of the original return filed by the Assessee by way of self-assessment.
11. The above submissions have been considered. Undoubtedly, by the amendment brought out with effect from 1st October, 2015 the scheme of filing of tax returns, their scrutiny and the manner of invoking Section 43 of the OVAT Act for reopening the assessment underwent significant changes. In Section 39, to begin with, sub-section (2) was substituted with effect from 1st October, 2015 in the following manner:
