2008 (8) TMI 807 - HC - VAT and Sales Tax

Whether the order of assessment being nullity and without jurisdiction cannot be given effect to and is liable to be set aside? Held that - In such a fact-situation as writ is a discretionary relief and should not be granted in favour of a person like the petitioner who just wants to buy time and withhold the public money adopting such dilatory methods the petitioner has disentitled itself for any equitable relief. Mr. Sahoo is not able to point out as to how the cause of the assessee has been prejudiced by such assessment order. But considering the fact that the assessment order had been passed by an officer lacking inherent jurisdiction it cannot be sustained in the eyes of law. Therefore the petition deserves to be allowed. In the fitness of the case petitioner ought to have approached the appellate forum. However in order to avoid the pre-deposit condition of 20 per cent of the assessed amount he approached this court directly. Thus to meet the ends of justice it is desirable that the petitioner be asked to deposit 20 per cent of the assessed tax and interest before the assessing authority Range Cuttack within a period of four weeks from today. The assessing authority range shall issue a fresh notice for making a fresh audit assessment and shall complete all proceedings within a period of three months from the date of issuance of notice. However it is clarified that any observation made herein shall not prejudice the case of either side.

Summary

Issues Involved:
1. Competence and jurisdiction of the assessing authority.
2. The petitioner's failure to raise jurisdictional objections at the appropriate time.
3. The legal implications of an order passed by an authority lacking inherent jurisdiction.
4. The discretionary nature of writ relief and the equitable considerations involved.
5. Directions for fresh audit assessment and compliance requirements.

Detailed Analysis:

1. Competence and Jurisdiction of the Assessing Authority:
The petitioner challenged the order of assessment dated July 3, 2008, passed by the Sales Tax Officer, Cuttack-II Circle, under the Orissa Value Added Tax Act, 2004 (OVAT Act) and Orissa Value Added Tax Rules, 2005 (Rules, 2005). The core argument was that the officer lacked competence to make the assessment and pass the order, as only the assessing authority of the range, as per rule 34(12)(b) of the Rules, 2005, was authorized to do so. The court emphasized that jurisdiction is a legislative function and cannot be conferred by consent or superior court decree. Orders passed without jurisdiction are nullities (United Commercial Bank Ltd. v. Their Workmen AIR 1951 SC 230).

2. Petitioner's Failure to Raise Jurisdictional Objections:
The petitioner did not challenge the jurisdiction of the assessing authority either by filing a writ petition or raising objections under rule 49(3) of the Rules, 2005. The petitioner participated in the proceedings and invited the assessment order. The court noted that had the petitioner raised the jurisdictional issue timely, the proceedings could have been transferred to the competent authority. The court cited several cases affirming that objections to jurisdiction must be raised at the earliest opportunity (State Bank of India v. Ram Das [2003] 12 SCC 474).

3. Legal Implications of an Order Passed by an Authority Lacking Inherent Jurisdiction:
The court reiterated that orders passed by authorities lacking inherent jurisdiction are null and void. This principle was supported by numerous precedents, including Kiran Singh v. Chaman Paswan AIR 1954 SC 340, which held that a decree passed without jurisdiction is a nullity and can be challenged at any stage. The court also differentiated between orders that are null and void and those that are merely irregular or illegal but curable (Deepak Agro Foods v. State of Rajasthan [2008] 16 VST 454 (SC)).

4. Discretionary Nature of Writ Relief and Equitable Considerations:
The court highlighted that writ relief is discretionary and should not favor those who seek to delay proceedings and withhold public funds. The petitioner's failure to raise jurisdictional objections timely and its attempt to avoid the pre-deposit condition of 20% of the assessed amount under section 77 of the OVAT Act were seen as dilatory tactics. The court emphasized that equitable relief should not be granted to those who act in bad faith or seek to exploit procedural loopholes (H.V. Nirmala v. Karnataka State Financial Corporation [2008] 7 SCC 639).

5. Directions for Fresh Audit Assessment and Compliance Requirements:
The court set aside the assessment order dated June 16, 2007, and directed the petitioner to deposit 20% of the assessed tax and interest before the assessing authority, Range, Cuttack, within four weeks. The assessing authority, Range, was instructed to issue a fresh notice for a new audit assessment and complete the proceedings within three months. The court clarified that this decision should not prejudice either party's case. Additionally, the court noted the recurring issue of assessment orders being passed by unauthorized officers and urged the Commissioner of Sales Tax to take appropriate action to prevent such violations.

Conclusion:
The petition was allowed, and the assessment order was set aside due to the lack of inherent jurisdiction of the assessing authority. The petitioner was directed to comply with the pre-deposit requirement and a fresh audit assessment was ordered. The court stressed the importance of raising jurisdictional objections timely and the duty of assessing authorities to ensure compliance with statutory provisions.