2010 (8) TMI 867 - HC - VAT and Sales Tax

Correctness of the assessment order dated June 19, 2010 passed by the Assessing Authority, Bhubaneswar III Circle, Bhubaneswar, without availing of the alternative remedy of appeal provided under section 77 of the Orissa Value Added Tax Act, 2004 questioned Held that - The tax deducting author- ities are liable to issue certificates in favour of the contractors from whom tax was deducted at source and to send a copy thereof to the assessing authority within whose jurisdiction the works contract is executed and the said rule also contemplates that the tax deducting authorities are also required to furnish a consolidated statement of tax deducted during a month in form VAT 605A on or before 14th day of the succeeding month to the concerned Assistant Commissioner or Sales Tax Officer having juris diction. In that view of the matter the assessing officer is justified in asking for verification of certificates for the purpose of passing the assessment order. That has not been done in the present case. The impugned order of assessment, annexure 2 and the consequent demand is bad in law and is, therefore, quashed. The matter is remitted back to the assessing officer for fresh assessment .

Summary

Issues:
Assessment order correctness challenged without availing appeal remedy under OVAT Act, 2004. Benefit of T.D.S. payment not given due to format issues with certificates. Assessing officer's duty to cross-verify T.D.S. certificates. Original T.D.S. certificates not produced affecting assessment. Justification of assessment order by Revenue standing counsel. Examination of assessment order by court. Non-production of T.D.S. in prescribed format and originals led to rejection of benefit. Assessing officer's failure to await verification from Assistant Commissioners. Observations on the powers of the Commissioner under OVAT Rules, 2005. Quashing of assessment order and demand. Remitting matter for fresh assessment with proper verification.

Analysis:
The judgment by the Orissa High Court involved a challenge to an assessment order under the OVAT Act, 2004, where the petitioner questioned the correctness of the order without availing the appeal remedy provided. The main contention was the non-acceptance of a significant T.D.S. payment benefit due to issues with the format and non-submission of original certificates. The court examined the documents, circulars, and the duty of the assessing officer to cross-verify T.D.S. certificates in absence of originals. The Revenue standing counsel justified the assessment order citing non-production of originals and format issues with certificates. However, the court found the assessing officer's actions lacking as proper cross-verification was not conducted, leading to a premature assessment order due to the impending time limit under the OVAT Act.

The court highlighted the importance of following the procedures outlined in the OVAT Rules, 2005, regarding T.D.S. certificates and the responsibilities of tax deducting authorities. It noted the assessing officer's failure to await proper verification before passing the assessment order, which was deemed as a procedural error. Consequently, the court quashed the assessment order and demand, remitting the matter back to the assessing officer for a fresh assessment with the requirement of proper verification, including the production of original T.D.S. certificates or filing a declaration if originals are unavailable. The petitioner was directed to appear before the assessing officer within a specified timeframe for the inquiry to be completed within eight weeks. Ultimately, the writ application was allowed in favor of the petitioner.