Case Law Details
Aman Enterprises Vs State of Odisha and others (Orissa High Court)
Orissa High Court, in the case of Aman Enterprises vs. State of Odisha and Others, addressed the issue of delayed audit reports under Section 41(4) of the Orissa Value Added Tax (OVAT) Act and their legal implications for subsequent proceedings. The petitioner challenged an assessment order based on an audit report that was not submitted within the mandatory seven-day period after the audit’s conclusion, as required by law. The court emphasized the importance of adhering to statutory timelines, citing its earlier rulings in similar cases. It ruled that any proceedings or orders based on a delayed audit report are legally unsustainable, setting aside the impugned assessment order.
The court also addressed the procedural fairness in handling such cases. It clarified that the Tribunal, as the final fact-finding body, must adjudicate on the merits of the case during rehearing. By answering the legal question in favor of the petitioner, the court reinforced the mandatory nature of compliance with statutory timelines under Section 41(4) and similar provisions in related tax laws. This decision highlights the necessity for strict adherence to procedural requirements by revenue authorities, ensuring fairness and legal integrity in tax assessments.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
1. Mr. Kar, learned senior advocate appears on behalf of petitioner and submits, his client has filed for revision. It be admitted on substantial questions of law arising out of impugned order of the Tribunal. It is order dated 6th December, 2021 in SA nos.83(V), 131(V) and 362(V) of 2013-14.
2. He submits, questions arising in this petition are same as in STREV no.8 of 2022, dealt with today. There is an additional question that arises on proceeding by revenue consequent to delayed audit report under section 41(4) of Orissa Value Added Tax Act, He relies on order dated 20th December, 2022 of coordinate Bench in W.P.(C) No.18698 of 2015 (M/s. Bateman Engineering (India) Private Limited v. Commissioner of Sales Tax, Orissa and others). Paragraph 5 and 6 are reproduced below.
“5. The mandatory nature of the time limits set out in Section 41(4) of the OVAT Act that the report must be submitted within seven days of the conclusion of the audit visit has been emphasized by this Court in its order, in the context of an identical provision i.e. Section 9-B (2) of the Orissa Entry Tax Act, 1999 (OET Act), in an order dated 28th June, 2022 in W.P.(C) No.9856 of 2010 (M/s. Grihasthi Udyog v. Commissioner of Sales Tax).
6. With the said time limit not having been adhered to as far as the present case is concerned, the Court has no hesitation in concluding that all proceedings consequent to the said AVR including the impugned assessment order are unsustainable in law. The impugned assessment order and all proceedings and orders consequent thereto are accordingly set aside.”
He clarifies the writ petition was on pari materia provision under section 9-B (2), inter alia, in Orissa Entry Tax Act, 1999.
3. Mishra, learned advocate, Standing Counsel appears on behalf of revenue and submits, there has been, inter alia, Special Leave Petition (Civil) diary no.29294 of 2018 that came up for hearing before the Supreme Court and order dated 6th November, 2024 was made. Text of the order is reproduced below.
“These matters will not be taken up for hearing till 22.11.2024.”
4. We admit the revision on the question of law as below.
“Where revenue undertakes audit and does not report on it within time prescribed by section 41(4), can the belated report be relied upon for consequent proceeding taken by it?”
5. We have heard the parties. The question is answered in the negative and in favour of assessee. The other question formulated in STREV no. 8 of 2022 (supra) is also deemed to have been answered as covered thereby. We make similar direction restoring the case to the Tribunal, for hearing and adjudication In making the direction we also adopt our reasoning given in STREV no. 8 of 2022 (supra).
6. On request made by Mr. Mishra we clarify that the adjudication is to be on facts as well because the Tribunal is the last forum for findings on facts.
7. The revision is disposed of.
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