Case Law Details
Orissa State Co-operative Milk Producers Federation Ltd. Vs Commissioner of Commercial Taxes Cuttack and others (Orissa High Court)
Orissa High Court held that the suo motu revisional proceeding under section 18(1) of the Odisha Entry Tax Act, 1999 has to be concluded not beyond five years from the original order of assessment.
Facts- In the present case, the original assessment of the Appellant-Dealer u/s. 9C of the OET Act for the period 1st April, 2005 to 31st March, 2008 was completed on 28th March, 2011 by the Deputy Commissioner of Sales Tax (DCST), Bhubaneswar II Circle raising a demand of Rs.37,30,881/- (Entry Tax Rs.5,05,365/- and Penalty Rs.32,25,516/-).
Subsequently the AG (Audit) scrutinized the assessment record and raised certain objections basing on which reassessment proceedings were initiated by the DCST u/s. 10 of the OET Act and completed on 12th March, 2012 for the period 1st April, 2006 to 31st March, 2008.
However, a proposal was sent by AO to the Commissioner for initiation of suo motu revisional proceedings u/s. 18(1) of the OET Act for the entire period 1st April, 2005 to 31st March, 2008.
A Show-Cause Notice (SCN) was issued by the Additional Commissioner for initiation of suo motu revision of order on 11th March, 2016. Among the objections taken by the Dealer to the exercise of the suo motu revisional power was that it was barred by limitation as it was more than 5 years from the order dated 28th March, 2011 passed by the DCST.
In the impugned order dated 10th May 2016, the Additional Commissioner has held that once the proceeding is initiated “the orders can be passed subsequent thereto after giving reasonable opportunity to the Dealer.”
Conclusion- It is a settled legal position that the suo motu revisional proceeding has to be concluded not beyond five years from the original order of assessment.
That apart, the admitted position is that the Assessee-Dealer had filed an appeal against the reassessment order which was pending before the First Appellate Authority and during the pendency of that appeal, the suo motu revisional power was sought to be exercised by the Additional Commissioner. This too is impermissible in law.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
1. Heard.
2. Admit. The following questions of law are framed for consideration by this Court:
i. Was the exercise of the suo motu revisional power by the Additional Commissioner of Sales Tax (Revenue) by way of the impugned order dated 10th May, 2016 under Section 18(1) of the Odisha Entry Tax Act, 1999 (OET Act) without jurisdiction inasmuch as an appeal filed against the Assessment Order sought to be revised, was already pending at the instance of the Assessee?
ii. Is the exercise of the suo motu revisional power by the Additional Commissioner of Sales Tax by the impugned order dated 10th May, 2016 barred by limitation?
3. In the present case, the original assessment of the Appellant-Dealer under Section 9C of the OET Act for the period 1st April, 2005 to 31st March, 2008 was completed on 28th March, 2011 by the Deputy Commissioner of Sales Tax (DCST), Bhubaneswar II Circle raising a demand of Rs.37,30,881/- (Entry Tax Rs.5,05,365/- and Penalty Rs.32,25,516/-). It appears that subsequently the AG (Audit) scrutinized the assessment record and raised certain objections basing on which reassessment proceedings were initiated by the DCST under Section 10 of the OET Act and completed on 12th March, 2012 for the period 1st April, 2006 to 31st March, 2008. However, a proposal was sent by the Assessing Officer to the Commissioner for initiation of suo motu revisional proceedings under Section 18(1) of the OET Act for the entire period 1st April, 2005 to 31st March, 2008 including the excluded period of 1st April, 2005 to 31st March, 2006.
4. A Show-Cause Notice (SCN) was issued by the Additional Commissioner for initiation of suo motu revision of order on 11th March, 2016. Among the objections taken by the Dealer to the exercise of the suo motu revisional power was that it was barred by limitation as it was more than 5 years from the order dated 28th March, 2011 passed by the DCST.
5. In the impugned order dated 10th May 2016, the Additional Commissioner has held that once the proceeding is initiated “the orders can be passed subsequent thereto after giving reasonable opportunity to the Dealer.”
6. This Court has heard the submissions of Mr. Sidharth Ray, learned Senior counsel appearing for the Appellant-Dealer and Mr. Sunil Mishra, learned Additional Standing Counsel for the Revenue.
7. At the outset it requires to be noticed that it is a settled legal position that the suo motu revisional proceeding has to be concluded not beyond five years from the original order of assessment. Section 18(2) of the OET Act reads as under:
“18. Revisional powers of Commissioner.—
(1) xxx xxx
(2) xxx
(1) The Commissioner shall not revise, under sub-section (1), any order, if—
(i) period for filling of appeal against the order as provided under section 16 or 17 has not expired; or
(ii) the order has been made a subject matter of appeal under section 16 or 17; or
(iii) more than five years have expired after the order, sought to be revised, was passed.
Explanation.—
In computing the period of limitation for the purposes of this sub-section, any period during which any proceeding under this section is stayed by an order or injunction of any Court shall be excluded.”
8. This Court has interpreted a similar provision contained in Section 23(1) of the Odisha Sales Tax Act, 1947 read with Rule 80 of the Odisha Sales Tax Rules, 1947 in the cases of M/s. Sagarmal Agarwalla v. Commissioner of Sales Tax, Odisha, 2018 (I) OLR 647; and vide Order dated 10th July, 2019 passed in the case of P.P. Rice Mills v. Special Additional Commissioner of Sales Tax, W.P.(C) No.6366 of 2004. In P.P. Rice Mills (supra), this Court held as follows:
“3. In that view of the matter, we are of the opinion that now the case of the petitioner will be governed by the aforesaid decision of this Court in the case of M/s. Sagarmal Agarwalla (supra), which was disposed of on 10.01.2018 with the following order:
“xx xx xx
The petitioner is a registered dealer under the provisions of Central Sales Tax Act as well as Orissa Sales Tax Act dealing with petrol, diesel, kendu leaves and jute, having its place of business at Dhenkanal under the administrative territorial jurisdiction of the Sales Tax Officer, Dhenkanal-I Circle, Angul. The petitioner was initially assessed under Rule 12(5) of the Central Sales Tax (Orissa) Rules, (in short “CST(O) Rules”) in the year 1991 by the Sales Tax Officer-opposite party no.3, who, vide order dated 05.03.1993, after examining the books of accounts and related documents, allowed the claim of exemption made by the petitioner under Section 6(2) of the Central Act and determined to refund an amount of Rs.12,814/-. But, subsequently, on receipt of objection raised by the audit party questioning grant of exemption under the Central Act, opposite party no.3 reopened the assessment, called upon the petitioner to participate in the reassessment proceeding and, by order dated 25.08.1993, disallowed the claim of exemption and demanded a sum of Rs.7,696/- under the Central Act. The Assistant Commissioner of Sales Tax, Cuttack-II Range, Cuttack-opposite party no.2 initiated a proceeding under Rule 80 of the Orissa Sales Tax Rules to revise the reassessment already made, vide order dated 25.08.1993, in the year 1990-91 and held, by order dated 05.09.1996, that claim for exemption made by the petitioner is not allowed and that the entire claim of exemption on the said transaction was put to sales tax under the Central Act. Against the said revisional order dated 05.09.1996, the petitioner preferred an appeal before opposite party no.1, who dismissed the same by order dated 05.06.1999 without assigning any reason, hence this application.
2. Sri J. Sahoo, learned Senior Counsel appearing along with Sri S.K. Mohanty, learned counsel for the petitioner raised various questions, but confined his argument only to the question of limitation stating inter alia that the order dated 05.09.1996 passed by opposite party no.2 is beyond the prescribed period of limitation as provided under Section 23 of the Orissa Sales Tax Act read with Rule 80 of the Orissa Sales Tax Rules. It is contended that Rule 80 provides for suo motu revision by the Commissioner of Sales Tax within a period of three years from the date of passing of the order by the Sales Tax Officer, but the reassessment having been made by the Sales Tax Officer on 25.08.1993, the order dated 05.09.1996 passed by opposite party no.2 is beyond the period of limitation and, as such, the same is liable to be quashed.
xx xx xx
5. The fact delineated above being undisputed, for just and proper adjudication of the case in hand, it may be proper to reproduce the relevant Section 23(4)(a) of the O.S.T. Act and the relevant Rule-80 of the O.S.T.Rules.
“23. Appeal and Revision
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(4) (a) Subject to such rules as may be made and for reasons to be recorded in writing, the Commissioner may, upon application by a dealer (or person) or on his own motion revise any order made under this Act or the rules made thereunder by any person other than the Tribunal, appointed under sub-section (3) of Section 3 to assist him: Provided that the Commissioner shall not entertain any such application for revision if the dealer (or person) filing the same having a remedy by way of appeal under sub-section (1), or sub-section (3) did not avail of such remedy or the application is not filed within the prescribed period.
xx xx xx
“Rule 80. Revision by the Commissioner Suo Motu
The Commissioner may on his own motion at any time within three years from the date of passing of any order by the Sales Tax Officer or within two years from the date of passing of any order by the Additional Commissioner, Special Additional Commissioner or Assistant Commissioner, as the case may be, call for records of the proceedings in which such order was passed and if he considers that any order 6 passed therein is erroneous in-so-far-as it is prejudicial to the interest of the revenue he may after giving the dealer an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary revise any such order:
Provided that the Commissioner shall not revise any order under this rule-
(1) Where an appeal against the order is pending before the appellate authority under section 23, or
(2) Where time limit for filing an appeal under Section 23 has not expired.”
6. In view of the aforementioned provisions, taking into consideration the factual aspect of the case in hand, the only dispute which is to be resolved by this Court in the present writ petition is with regard to interpretation of Section 23(4)(a) of O.S.T.Act read with Rule 80 of the O.S.T.Rules wherein the limitation for the suo motu revision has been provided for.
7. The power of the Commissioner to revise an order either on application by the dealer on his own motion has been provided for under sub-section (4)(a) of Section 23 of the O.S.T.Act which is subject to limitation provided under Rule 80 of the Rules. There is no dispute with regard to the power of the Commissioner to initiate suo motu proceedings for revision.
8. The only question which remains for determination of this Court is as to whether under Rule 80 of the Rules, revisional proceedings are to be concluded from the date of passing of the final orders passed within a period of three years sought to be revised or the proceedings if initiated within three years can be concluded beyond the period of three years.
9. For the purpose of this case, the relevant Rule 80 can be read in the manner that the Commissioner may on his own motion at any time within three years from the date of passing of any order by the Sales Tax Officer……., call for records of the proceedings in which such order was passed and if he considers that any order passed therein is erroneous………he may after giving the dealer an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary revise any such order.
10. Any interpretation contrary to the above would mean that even though initiation of proceedings for revision may be done within three years, final order can be passed after years of such initiation which would keep the matter hanging for years together, which cannot be the intention of the Act. The purpose of Rule 80 is to give finality to the suo motu proceedings initiated by the Asst. Commissioner within a specified period and the same can be done after proper interpretation is given that the proceedings are to conclude and revision orders passed within a period specified in the Rule.
11. In our view, the entire Rule 80 cannot be read in a disjoined manner. On reading of the Rule in a joint manner would make it clear that for revising an order within a period of three years after providing opportunity to the assessee and calling for the records, the revision order itself has to be passed within a period of three years.
xx xx xx”
9. Consequently, the above observation of the Additional Commissioner of Sales Tax (Revenue) in the impugned order is clearly erroneous.
10. That apart, the admitted position is the Assessee-Dealer had filed an appeal against the reassessment order which was pending before the First Appellate Authority and during the pendency of that appeal, the suo motu revisional power was sought to be exercised by the Additional Commissioner. This too is impermissible in law as has been held by this Court in M/s. Sarala Project Works Pvt. Ltd. v. Additional Commissioner of Sales Tax, Cuttack, P.(C) No. 5129 of 2016, vide Order dated 22nd December,2022 where it was held as under:
“10. The counter affidavit fails to answer to the principal ground of challenge viz., that despite there being available to the Department the remedy of an appeal in terms of Section 78 of the OVAT Act, the Commissioner has chosen to exercise suo motu revisional power under Section 79 (1) of the OVAT Act. Further, there is no denial in the counter affidavit that there is statutory bar under Section 79 (4) (b) of the VSAT Act to the Commissioner exercising suo-motu revisional power since the issue was already the subject matter of an appeal.”
11. For the aforementioned reasons, the questions framed by this Court are answered in favour of the Appellant-Dealer and against the Department. The impugned order dated 10th May, 2016 of the Additional Commissioner is hereby set aside.
12. The appeal is allowed in the above terms, but in the circumstances, with no order as to costs.
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