Case Law Details
R.K. Industries Vs State of Odisha (Orissa High Court)
The factual finding by the JCST was that the reopening of the assessment was done by the AO by simply accepting the objection of the AG (Audit) without forming independent opinion on whether such objection by the AG (Audit) was correct or not. There was no recording by the Addl. STO about being satisfied independently then there was escapement of taxable turnover. The legal position in this regard has been explained by this Court in Indure Ltd. v. Commissioner of Sales Tax, [2006] 148 STC 61 (Orissa) where it has been held that an objective opinion has to be formed by the STO and that he cannot “totally abdicate or surrender his discretion to the objection of the audit party by mechanically reopening assessment under Section 12(A) as has been done in this case.” It may be noticed here that the above observation was made in the context of Section 12(8) of the OST Act which corresponds to Section 43 of the OVAT Act.
In the above circumstances, simply remanding the matter to the STO as has been done by the JCST would serve no purpose since in no way would that alter the factual position namely, that in the record sheet there would be no recording of the objective opinion of the STO about escapement of taxable turnover.
In that view of the matter while setting aside the order of the Tribunal as well as the JCST and the corresponding assessment order, this Court disposes of the revision petition by answering the question framed in the negative i.e. in favour of the Dealer and against the Department.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
1. For the reasons stated in the application, the prayer for dispensing
with filing of certified copy of Annexures-2, 4 and 5 are dispensed with. The application is accordingly disposed of.
STREV No.23 of 2021
2. Admit.
3. The following question of law is framed for consideration by this Court:
“Whether the assessment under Section 43 of the Orissa Value Added Tax Act, 2004 (OVAT Act) requires to be set aside in light of the judgment of this Court in Indure Limited v. Commissioner of Sales Tax [2006] 148 STC 61 (Orissa) ?
4. The present revision petition arises from an order dated 26th February, 2021 passed by the Orissa Sales Tax Tribunal, Cuttack in dismissing the dealer’s S.A. No.122(V) of 2019 for the period 1st April, 2012 to 31st March, 2014.
5. In effect the Tribunal affirmed an order dated 29th April, 2019 passed by the Joint Commissioner of Sales Tax (Appeals), Cuttack (JCST) setting aside the assessment order passed by the Additional Sales Tax Officer, Kendrapara Circle, Kendrapara under Section 42 of the OVAT Act.
6. The dealer is engaged in manufacturing of ground nut oil and de oiled cake using raw groundnuts. The original assessment was completed under Section 42(4) of the OVAT Act for the aforementioned period raising a demand of Rs.2120.00 towards tax and penalty. The Assessing Officer (AO) did not calculate any VAT on sale of de-oiled cake because it was exempted from VAT.
7. On the basis of the report of the AG (Audit) on short levy of purchase tax, the Addl. Sales Tax Officer initiated proceedings in Form VAT 307 and thereafter completed the assessment raising a demand and penalty totaling Rs.2,35,352.00. The appeal filed by the dealer against the above assessment order came to be allowed by the JCST by the order dated 29th April, 2019. The JCST noted in the order as under:
“But on perusal of the assessment record, it is noticed that the assessing officer has issued notice in Form VAT-307 to the dealer appellant for assessment of tax on escaped turnover for the tax period 01.04.2012 to 31.03.2014 but completed assessment u/s. 42 of the OVAT Act, 2004 for the above period which is contradictory. Further on perusal of the order sheet maintained by the assessing officer, it is noticed that the A.O. has not recorded any reason for initiation of the proceeding for re-assessment either in the order sheet or in the notice issued in Form VAT-307. The A.O. has simply accepted the objection of AG (Audit) and issued notice in Form VAT-307. She has to form her own opinion whether the objection raised by AG (Audit) is correct or not. If she is satisfied with the AG objection, she has to record it in the order sheet before reopening of the case. Further the dealer was earlier assessed by the Asst. Commissioner of Sales Tax, Kendrapara Circle, Kendrapara on dated 02.12.2015 U/s. 42(4) of the OVAT Act, 2004 for the tax period 01.04.2012 to 31.03.2014 and again on the basis of objection of AG (Audit), reassessment cannot be made under the same Act and for the same period. The A.O. has to reopen the case for assessment of tax on escaped turnover/under-assessment u/s. 43 of the OVAT Act, 2004. Further there is no post of Addl. Sales Tax Officer U/s. 3 of the OVAT Act, 2004 read with Rule-3 of the OVAT Rules, 2005. The A.O. has to pass assessment order in the capacity of Sales Tax Officer”.
8. However, instead of quashing the reassessment order, the JCST choose to remit the matter to the AO for a fresh hearing and a decision. It is this order that has been affirmed in the further appeal filed by the dealer in the Tribunal.
9. This Court has heard the submissions of Mr. Jagabandhu Sahoo, learned Senior Advocate for the Petitioner and Mr. Sunil Mishra, learned Additional Standing Counsel for the Department.
10. The factual finding by the JCST was that the reopening of the assessment was done by the AO by simply accepting the objection of the AG (Audit) without forming independent opinion on whether such objection by the AG (Audit) was correct or not. There was no recording by the Addl. STO about being satisfied independently then there was escapement of taxable turnover. The legal position in this regard has been explained by this Court in Indure Ltd. v. Commissioner of Sales Tax, [2006] 148 STC 61 (Orissa) where it has been held that an objective opinion has to be formed by the STO and that he cannot “totally abdicate or surrender his discretion to the objection of the audit party by mechanically reopening assessment under Section 12(A) as has been done in this case.” It may be noticed here that the above observation was made in the context of Section 12(8) of the OST Act which corresponds to Section 43 of the OVAT Act.
11. The above settled legal position has been reiterated by this Court in its order dated 22nd March, 2021 in P.(C) No.3821 2013 (M/s. Goel Traders v. Sales Tax Officer).
12. In the above circumstances, simply remanding the matter to the STO as has been done by the JCST would serve no purpose since in no way would that alter the factual position namely, that in the record sheet there would be no recording of the objective opinion of the STO about escapement of taxable turnover.
13. In that view of the matter while setting aside the order of the Tribunal as well as the JCST and the corresponding assessment order, this Court disposes of the revision petition by answering the question framed in the negative i.e. in favour of the Dealer and against the Department.
14. An urgent certified copy of this order be issued as per rules.
