1995 (9) TMI 332 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to legality of proceeding initiated under section 12(8) of the Orissa Sales Tax Act, 1947 for the assessment year 1989-90.

Detailed Analysis:

1. The petitioner, engaged in manufacturing M.S. rods and trading in iron and steel, contested the proceeding initiated under section 12(8) of the Orissa Sales Tax Act, 1947 for the assessment year 1989-90, where a demand of Rs. 3,200 was raised by the Sales Tax Officer. Subsequently, a notice was issued for reopening the assessment, citing reasons related to under-assessment and deduction disallowance based on a Supreme Court decision. The petitioner objected to the reopening, citing lack of conditions precedent and jurisdiction under the Act and Rules. The petitioner also referred to a previous court decision on deductions. The petitioner requested the dropping of the proceeding and an opportunity to present its case.

2. The petitioner's counsel argued that the Sales Tax Officer should have first considered the maintainability of the proceeding to avoid prolongation and should have granted an opportunity for the petitioner to present supporting materials. The Revenue's counsel contended that objections raised by the petitioner would be addressed during the assessment process and that no adjudication should occur at this stage.

3. The court emphasized the dealer's right to challenge the jurisdiction of the taxing authority and the validity of the reassessment proceeding under section 12(8) of the Act. The court noted that the notice is not the sole basis for jurisdiction, as the necessary conditions can be established from the record. Referring to Supreme Court decisions under the Income-tax Act, the court highlighted that the basis of reopening should be conclusive and not speculative, ensuring that the assessment is not merely a chance of escaped assessment.

4. It was ruled that the petitioner has the right to question the jurisdiction of the taxing authority and demonstrate the absence of necessary conditions for reassessment. The court directed the Sales Tax Officer to consider the petitioner's objections regarding the lack of reasons or jurisdiction for reopening and to proceed with reassessment only if these issues are resolved against the dealer. This approach was deemed in line with the provisions of the Code of Civil Procedure, allowing jurisdictional issues to be determined as preliminary matters to avoid unnecessary delays.

5. The court instructed the petitioner to appear before the Sales Tax Officer to file objections, granting an opportunity to substantiate its position. The Sales Tax Officer was directed to consider the objections raised by the petitioner before proceeding with reassessment. The writ application was disposed of accordingly, with both judges concurring on the decision.