1993 (1) TMI 261 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to the legality of assessments made by the Sales Tax Officer under rule 10 of the Central Sales Tax (Orissa) Rules, 1957 for the assessment years 1987-88, 1988-89, 1989-90, and 1990-91.

Analysis:

The petitioners contested the tax levy on charges for fabricating LPG cylinders from materials supplied by oil companies. Initially, assessments were completed without tax imposition. However, reassessment proceedings were initiated by the Assistant Commissioner of Sales Tax (ACST) without providing reasons or materials to the petitioners. The ACST's involvement in advising the assessing officer was deemed acceptable for guidance purposes only, not for imposing decisions. The assessing officer, after re-examining the matter based on ACST's directive, concluded in favor of reassessment under rule 10 of the Central Rules and section 12(8) of the Orissa Sales Tax Act, 1947. The power to reopen assessments is governed by section 12(8) of the Act and rule 10 of the Central Rules, requiring a valid reason for reassessment, which must be recorded and produced if challenged.

The petitioners requested reasons for the reassessment, which were not provided. The assessing officer proceeded on the assumption that the assessee cannot request disclosure of materials leading to reassessment. Despite the availability of alternative statutory remedies, the Court nullified the assessment proceedings, directing the petitioners to appear before the Sales Tax Officer to be informed of the materials necessitating reassessment. The petitioners were granted the opportunity to raise objections, which the Sales Tax Officer would address in accordance with the law. Failure to appear would allow the assessing officer to complete the assessments ex parte.

In conclusion, the writ applications challenging the assessments were disposed of, with no costs incurred. The judgment was agreed upon by both judges.