1958 (7) TMI 38 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of reassessment after 36 months of the original assessment.
2. Interpretation of Section 12(7) of the Orissa Sales Tax Act.
3. Applicability of Rule 54 of the Orissa Sales Tax Rules.
4. Relationship between Section 12(7) and Section 23(3) of the Orissa Sales Tax Act.
5. Effect of the Orissa Sales Tax (Amendment) Act, 1955 on reassessment.

Issue-wise Detailed Analysis:

1. Legality of Reassessment After 36 Months of the Original Assessment:
The primary issue in these applications is whether reassessment can be made after 36 months of the original assessment. The petitioners argued that under Section 12(7) of the Orissa Sales Tax Act, no one shall be assessed on amounts that had escaped assessment or had been under-assessed after 36 months from the end of the period for which the tax is payable. The assessments in these cases were admittedly after 36 months, making them contrary to law and without jurisdiction.

2. Interpretation of Section 12(7) of the Orissa Sales Tax Act:
Section 12(7) of the Orissa Sales Tax Act specifies that if the turnover of a dealer has escaped assessment or has been under-assessed, the Collector may assess the amount of tax due within 36 months of the end of that period. The court held that the term "Collector" in Section 12(7) includes both the original assessing officer and the revising authority under Section 23(3). Therefore, the limitation of 36 months applies to reassessments made by the revising authority as well.

3. Applicability of Rule 54 of the Orissa Sales Tax Rules:
The Department contended that Rule 54 of the Orissa Sales Tax Rules, which allows the Collector to revise any order within one year from the date of passing of any order by a subordinate officer, is subordinate to Section 23(3) and not to Section 12(7). However, the court held that Rule 54 does not and cannot grant greater power to the Collector than what is provided under the Act itself. The Collector cannot reassess after the 36-month period provided by Section 12(7), even if Rule 54 allows revision within one year of the appellate order.

4. Relationship Between Section 12(7) and Section 23(3) of the Orissa Sales Tax Act:
The Department argued that Section 12(7) does not control the powers vested in the Collector under Section 23(3), which allows the Collector to revise any order passed under the Act. The court, however, concluded that Section 12(7) includes reassessment made by the revising authority under Section 23(3). Therefore, the limitation period of 36 months applies to reassessments under Section 23(3) as well.

5. Effect of the Orissa Sales Tax (Amendment) Act, 1955 on Reassessment:
The amendment to Section 12(6) of the Orissa Sales Tax Act by Orissa Act I of 1955 added a proviso stating that the period of limitation fixed in the preceding proviso shall not apply to assessments under Section 12(7) or to enhancement of assessment or order of fresh assessment made or passed under Section 23. The court interpreted this amendment as a legislative recognition that prior to the amendment, no reassessment could be made by the Collector after 36 months.

Conclusion:
The court held that the orders of reassessment made by the Collector of Sales Tax were contrary to law and quashed the orders. The petitions were allowed with costs, and a consolidated hearing fee for all three petitions was fixed at Rs. 250.