Case Law Details
Jai Maa Kali Store Vs State of Odisha (Orissa High Court)
Orissa High Court held that petitioner-dealer has right to cross-examine the selling dealers, however, as more than two decades elapsed it might not be practical. Accordingly, assessment would stand completed at the figures disclosed in the return of petitioner-dealer.
Facts- The Petitioner-dealer is a wholesaler of grocery articles. The IST, Mobile Unit, Sambalpur submitted a fraud case report dated 29th November, 2002 on the allegation that the dealer had been involved in clandestine purchase of edible oil from two parties, one in Raipur (Chattisgarh) and the other from Andhra Pradesh. The three transactions were stated to be of a value of Rs.9,45,440/-.
The stand taken by the Petitioner-dealer was that of complete denial. He in fact advanced the plea inter alia that there was another establishment under the name and style ‘M/s. Jai Maa Kali Store in Bargarh Town’ and that the goods in question may have been purchased by that establishment. The Petitioner made a specific prayer before the STO that the alleged selling dealers should be summoned, so that he could have an opportunity of cross-examining them as regards the alleged purchase made by the Petitioner from them. However, the STO rejected this plea.
Conclusion- In the present case, considering that more than two decades have elapsed since those transactions, an opportunity being provided at this stage to the Petitioner to cross-examine the selling dealers might not even be practical. There was no requirement of the selling dealers to preserve any records or to produce such records even if summoned. The entire exercise would certainly at this stage be a pointless one.
For the aforementioned reasons, the Court is unable to sustain the impugned order of the Tribunal and the corresponding orders of the JCST and STO. The said orders are all, accordingly, set aside. The effect of this would be that the assessment would stand completed at the figure disclosed in the returns filed by the Assessee. The question framed is answered in favour of the Petitioner-dealer and against the Department.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
1. For the reasons stated therein, the application is allowed. The filing of the certified copy of Annexure-1 & 2 is dispensed with.
I.A. No.237 of 2018
2. For the reasons stated therein, the delay in filing the appeal is condoned. The I.A. is allowed.
STREV No.96 of 2018
3. This is a revision petition by the Petitioner-dealer arising from an order dated 8th August, 2018 passed by the Odisha Sales Tax Tribunal, Cuttack (Tribunal) dismissing the Petitioner’s S.A. No.1035 of 2003-04. By the impugned order, the Tribunal affirmed the order dated 29th April, 2003 of the Assistant Commissioner of Sales Tax, Sambalpur Range, Sambalpur dismissing the Assessee’s appeal against an assessment order passed by the Sales Tax Officer (STO), Sambalpur-II Circle, Bargarh under Section 12 (4) of the Odisha Sales Tax Act, 1947 (OST Act) for the Assessment Year 2001-02 raising a tax demand and surcharge on the basis of purchase suppression.
4. The following question of law is framed for consideration:
“a. Whether denial of opportunity to cross-examine the third party whose papers constitutes the basis of assessment?”
5. The background facts are that the Petitioner-dealer is a wholesaler of grocery articles. The IST, Mobile Unit, Sambalpur submitted a fraud case report dated 29th November, 2002 on the allegation that the dealer had been involved in clandestine purchase of edible oil from two parties, one in Raipur (Chattisgarh) and the other from Andhra Pradesh. The three transactions were stated to be of a value of Rs.9,45,440/-.
6. The stand taken by the Petitioner-dealer was that of complete denial. He in fact advanced the plea inter alia that there was another establishment under the name and style ‘M/s. Jai Maa Kali Store in Bargarh Town’ and that the goods in question may have been purchased by that establishment. The Petitioner made a specific prayer before the STO that the alleged selling dealers should be summoned, so that he could have an opportunity of cross-examining them as regards the alleged purchase made by the Petitioner from them.
7. The STO rejected this plea on the ground that the details had been gathered by the Department from the computers records available at two check gates bordering Odisha and further that allowing the request of the Petitioner for cross-examination of selling dealers would ‘prolong and hinder the proceedings’. It also was observed that it would result in ‘squandering away the time and that it would ultimately turn futile’. The same approach appears to have been adopted by the JCST and the Tribunal.
8. This Court has heard the submission of Mr. Jagabandhu Sahoo, learned counsel appearing for the Petitioner and Mr. Sunil Mishra, learned Additional Standing Counsel appearing for the Department.
9. The Court finds that in the present case the Department has relied on material purportedly gathered from the computer records at the border check gates at Chichola and Bhagatdehuri, which clearly indicated the name of the selling dealer. The purchaser was shown as the present Petitioner. The Tribunal specifically notes the plea taken by the Petitioner-dealer that ‘another establishment in the name and style M/s. Jai Maa Kali Store is existing in Baragarh Town and the alleged transaction might have been caused by that establishment’.
10. Once the dealer has taken a stand that the person shown to be the purchaser is not the Petitioner but someone by the same name, the burden shifted to the Department to demonstrate that in fact it was the Petitioner who had made those purchases. In similar circumstances, in M/s. K.J. Ispat Ltd. v. Unknown (2012) 55 VST 228 (Ori.) this Court observed as under:
“36. Since the slip was recovered from the petitioner-assessee’s promises, the initial burden is on the assessee to explain the slip and prove that the said slip does not relate to any purchase or sale transaction of the dealer-petitioner. However, where the dealer disowns the slip, unless it is established by the revenue that noting made in the slip relates to unaccounted business transaction of dealer no adverse inference can be drawn.”
11. Interestingly, in the above decision also the dealer had been denied the opportunity of cross-examining the third party on the basis of whose statement the assessment was sought to be reopened.
12. In the present case the computer records which reflect the name of a dealer which is identical to that of the Petitioner. However, in view of the plea of the Petitioner that he did not indulge in those purchases, the Petitioner ought to have been given the chance of cross-examining the alleged sellers in order to defend itself effectively in the assessment proceedings. The justification put forth by the STO that such an exercise would result in ‘squandering away of the time’ or that would to prolong the proceedings, appears not to be justified since the STO could have made the entire exercise of summoning those selling dealers and allowing an opportunity to the Petitioner to cross-examine them, time bound. This could have been done even at the stage of First Appeal. Unfortunately, the matter kept pending in the Tribunal for as long as fifteen years. Today in respect of transaction took place way back in February and March, 2002, the Petitioner would have to face the prospect of having the STO summon the said selling dealers for the purposes of their cross-examining. This is not practical or realistically feasible considering the long lapse of time. At the same time there has clearly been denial of an effective opportunity to the Petitioner-dealer by refusing it the right to cross-examine the selling dealers.
13. While in similar cases it might have been possible for the Court to remand the matter to the STO to complete the above exercise, in the present case, considering that more than two decades have elapsed since those transactions, an opportunity being provided at this stage to the Petitioner to cross-examine the selling dealers might nnot even be practical. There was no requirement of the selling dealers to preserve any records or to produce such records even if summoned. The entire exercise would certainly at this stage be a pointless one.
14. For the aforementioned reasons, the Court is unable to sustain the impugned order of the Tribunal and the corresponding orders of the JCST and STO. The said orders are all, accordingly, set aside. The effect of this would be that the assessment would stand completed at the figure disclosed in the returns filed by the Assessee. The question framed is answered in favour of the Petitioner-dealer and against the Department.
15. The revision petition is disposed of in the above terms.
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