2013 (4) TMI 199 - HC - VAT and Sales Tax

Arrangement for storage of Oil - Inter State Sale or Not under Central Sales Tax (CST) - reassessment - change of opinion - transfers of HSD and SKO in question from the Lighterage Terminal at Paradeep to outside the State, i.e., Haldia First Factual aspect is regarding whether the the completed assessment has been reopened by mere change of opinion - Held that - The reassessment proceedings initiated for the self-same year cannot be said to be without jurisdiction on the ground of change of opinion unless and until it is established that the turnover brought to tax in the reassessment was subject matter of earlier assessment and no tax was levied by the assessing officer by taking a particular view. Therefore, the first ground of challenge that the completed assessment has been reopened under Rule 12(8) of the C.S.T (O) Rules by mere change of opinion, fails the same being misconceived. Second is as to whether reasonable opportunity of hearing was afforded to the petitioner - Held that - The Assessing Officer has extracted the report of Paradeep Port Trust and Ocean Loss Report submitted by the IOCL in reassessment order only for the purpose of better appreciation of the alleged transactions effected by the petitioner dealer which has been informed to the petitioner vide letter dated 30.12.2006 (Annexure-3). The information of Paradeep Port Trust or IOCL has not been utilized by the Assessing Officer against the petitioner-dealer to enhance the turnover alleged to have been escaped from assessment in notice dated 30.12.2006 under Annexure-3. What is taxed in the impugned reassessment order was exactly the same transaction shown in the letter dated 30.12.2006 (Annexure-3) communicated to the petitioner much before passing the impugned order of reassessment. Therefore, it cannot be said that the petitioner was not aware of the materials on the basis of which the reassessment proceeding has been made. Third is as to whether the Assessing Officer has passed the impugned assessment order on the dictate of his higher authority - Held that - Further perusal of the assessment order passed under Rule 12(8) of the CST (O) Rules also reveals that on receiving report from the Additional Commissioner, the Assessing Officer applied his mind, examined the case of the assessee with reference to the copy of the hospitality arrangement between BPCL and HPCL and the statement of inter-state sale of petroleum products dispatched by HPCL from Lighterage Terminal at Paradeep to other oil companies outside the State filed by the petitioner, documents and previous order of assessment and referring to all the relevant provisions of the CST Act came to the conclusion that there has been evasion of tax by the petitioner-assessee. Fourth is whether notice for reassessment proceeding under Rule 12(8) of the CST(O) Rules has been issued on 29.12.2006 whereas initiation of the reassessment proceeding was made on 30.12.2006 and therefore the entire reassessment proceedings are vitiated in law - Held that - It reveals that no date is put under signature of the STO. In view of the order sheet entry dated 30.12.2006 and that notice under Rule 10 of CST(O) Rule has been issued on 30.12.2006, it can be safely concluded that the date 29.12.2006 appearing on the left side bottom portion of the notice (Anneuxre-2) is a mistake occurred inadvertently. Therefore, the allegation that opposite party issued notice prior to initiation of proceedings under Rule 12(8) and the entire reassessment proceedings are vitiated, is not sustainable in law. Fifth is as to whether the issue involved in the present case are similar/identical to that of the case of Indian Oil Corporation Limited vs. State of Orissa and Others - Held that - So far as the present case is concerned, the petitioner has neither disclosed the transactions in question in its return much less furnished any declaration in Form-F to prove that the transfer of goods from Lighterage Terminal at Paradeep to outside the State, i.e., Haldia was otherwise than by way of sale. Sixth is as to whether dispatch is either by way of inter-state sale or branch transfer - Held that - There was no movement of goods resulting completed sale, system and procedure adopted by BPCL and other Companies cannot be treated as inter-state sale in the process of trade and commerce and based on presumption. In the fact situation, it is open to the petitioner to approach the First Appellate Authority challenging the impugned assessment order (Annexure-5), if so advised, taking all its contentions with regard to alleged transfers of HSD and SKO in question from the Lighterage Terminal at Paradeep to outside the State, i.e., Haldia and that the petitioner is not liable to pay tax under the CST Act. If any such appeal is filed within two weeks from today, the Appellate Authority is directed to adjudicate that issue, after affording opportunity of hearing to the petitioner, and pass order in accordance with law - With the aforesaid observations and directions, the writ petition is dismissed

Summary

Issues Involved:
1. Whether the completed assessment has been reopened by mere change of opinion.
2. Whether reasonable opportunity of hearing was afforded to the petitioner and the materials utilized against the petitioner-assessee were confronted to him before passing the order of reassessment under Rule 12(8) of the CST (O) Rules.
3. Whether the Assessing Officer has passed the impugned reassessment order on the dictate of his higher authority, i.e., the Assistant Commissioner of Commercial Taxes, without applying his own mind.
4. Whether notice for reassessment proceeding under Rule 12(8) of the CST(O) Rules has been issued on 29.12.2006 whereas initiation of the reassessment proceeding was made on 30.12.2006 and therefore the entire proceedings are vitiated in law.
5. Whether the issues involved in the present case are similar/identical to that of the case of Indian Oil Corporation Limited vs. State of Orissa and Others.
6. Whether dispatch of 38,881 KL of HSD and 29,728 KL of SKO during the year 2001-2002 has been effected by the petitioner Company from the Lighterage Terminal at Paradeep to outside State of Odisha either by way of inter-state sale or branch transfer or that the alleged dispatch of goods in question has not been effected by the petitioner either by way of inter-state sale or stock transfer.

Detailed Analysis:

Issue 1: Reopening of Completed Assessment by Mere Change of Opinion
The petitioner argued that the reassessment was initiated based on a change of opinion, which is impermissible. The court referred to the earlier assessment order dated 31.03.2005 and observed that the transactions in question were not considered in the earlier assessment. The court held that reopening the assessment was not based on a mere change of opinion but on the discovery of transactions that were not disclosed earlier. Therefore, the first ground of challenge failed.

Issue 2: Reasonable Opportunity of Hearing and Confrontation of Materials
The petitioner was informed of the reasons for reopening the assessment through a letter dated 30.12.2006. The court noted that the petitioner was given sufficient opportunity to produce relevant documents and was aware of the reasons for reassessment. The court found that the reassessment was completed after giving the petitioner reasonable opportunity of hearing and confronting the materials utilized for making the assessment. Thus, the second ground of challenge failed.

Issue 3: Reassessment Order Passed on Dictate of Higher Authority
The petitioner contended that the reassessment was initiated based on the direction of the Additional Commissioner of Commercial Taxes. The court examined the order sheet dated 30.12.2006 and the reassessment order, concluding that the Assessing Officer had applied his mind and was satisfied that the alleged turnover had escaped assessment. The court held that the Assessing Officer did not mechanically reopen the completed assessment and did not act on the dictate of the higher authority. Therefore, the third ground of challenge failed.

Issue 4: Validity of Notice for Reassessment Proceeding
The petitioner argued that the notice for reassessment was issued on 29.12.2006, whereas the initiation of the reassessment proceeding was made on 30.12.2006. The court found that the notice under Rule 10 of the CST(O) Rules was issued on 30.12.2006, and the date 29.12.2006 appearing on the notice was a mistake. The court held that the reassessment proceedings were not vitiated by this mistake. Therefore, the fourth ground of challenge failed.

Issue 5: Similarity with Indian Oil Corporation Case
The petitioner claimed that the issues in the present case were similar to those in the Indian Oil Corporation case, where the Supreme Court had remanded the matter to the Assessing Officer. The court found that the petitioner had not furnished any declaration in Form-F to prove that the transfer of goods was otherwise than by way of sale. The court held that the issues in the present case were not identical to the Indian Oil Corporation case and therefore, there was no need to remand the case. Therefore, the fifth ground of challenge failed.

Issue 6: Nature of Dispatch of Goods
The petitioner claimed that the dispatch of goods from Paradeep to Haldia was not by way of inter-state sale or stock transfer. The court referred to Section 6A of the CST Act, which places the burden of proving that the movement of goods was otherwise than by way of sale on the dealer. The court noted that the petitioner had not furnished any Form-F declarations. The Assessing Officer had concluded that the transactions were inter-state sales based on the facts and materials available. The court held that the petitioner should approach the First Appellate Authority to adjudicate this factual controversy. Therefore, the sixth ground of challenge failed.

Conclusion:
The writ petition was dismissed, and the petitioner was directed to approach the First Appellate Authority for appropriate relief, if so advised, within two weeks. The Appellate Authority was directed to adjudicate the issue after affording an opportunity of hearing to the petitioner and pass an order in accordance with law.