2016 (12) TMI 1203 - HC - VAT and Sales Tax

Validity of order of assessment - Orissa Entry Tax Act - escapement of assessment of tax for the tax period from 1.4.2008 to 31.7.2015 - petitioner claim that no tax under the heading of Odisha Entry Tax has been evaded by it for the period in question but the authorities without appreciating the defence statement filed by it has passed order on the same date i.e. on 6.11.2015 putting liability of penalty on the petitioner - Held that - Under the Taxation Rule the assessee is required to furnish self assessment and the authority is required to assess the same and there is no provision provided under the Act to communicate in case of acceptance of the assessment. Although under the provision of Orissa Value Added Act under Section 38 read with Section 7(10) each and every return in relation to any tax period furnished by a registered dealer shall be subject to scrutiny by the assessing authority to verify the correctness of the calculation application of correct rate of tax and interest etc. and in case of any mistake detected in course of scrutiny the assessing authority shall serve a notice in the prescribed form as we find even from the provision of section 7 or subsection (11) and as such if the authorities have not issued any notice under Section 7(11) then the assessment made by the registered dealer under the provisions of Section 9 will be said to be accepted. Whether the the order impugned of demand has been passed mechanically and without consideration of the second proviso to Rule 3(4) of the Rules? - Held that - the second proviso stipulates a provision of relaxation in making payment of tax liability where declaration in Form E16 from the buying manufacturer is furnished. The contention of the petitioner is that while passing the order the assessing authority has not appreciated the second proviso to Rule 3(4) of the Rules 1999 but we are not in agreement with the said contention for the reason that the petitioner nowhere has stated as to whether it has given declaration in Form E16 so as to avail the benefit as provided under the second proviso to Rule 3(4) of the Rules 1999 which is the condition stipulated in the said statutory provision. Prior to 1.7.2012 reassessment for the period of five years was provided under the statute but after 1.7.2012 the period of five years has been extended to seven years. Petition disposed off - petitioner free to approach appellate forum if he so wishes.

Summary

Issues Involved:
1. Validity of the tax demand notice and assessment order.
2. Whether the assessment was reopened within the statutory period.
3. Compliance with procedural requirements for issuing the assessment order.
4. Consideration of the second proviso of Rule 3(4) of the Odisha Entry Tax Act.
5. Availability of alternative remedy.

Detailed Analysis:

1. Validity of the Tax Demand Notice and Assessment Order:
The petitioner challenged the order dated 6.11.2015, directing the deposit of ?42,32,13,642.00 under the Odisha Entry Tax Act. The petitioner argued that the tax was paid correctly, but the authorities issued a notice alleging tax evasion for the period from 1.4.2008 to 31.7.2015 without proper consideration of the defense statement. The assessment order, dated 16.11.2014, imposed a penalty amounting to ?42,32,13,642.00, which the petitioner contested as being passed without proper notice or opportunity to respond.

2. Whether the Assessment was Reopened within the Statutory Period:
The petitioner contended that the assessment was reopened for the period from 1.4.2008 to 31.7.2015 without considering the statutory limitation period. Prior to 1.7.2012, the reassessment period was five years, which was later extended to seven years. The petitioner argued that the authorities did not consider this aspect, thus reopening the assessment beyond the permissible period.

3. Compliance with Procedural Requirements for Issuing the Assessment Order:
The petitioner claimed that the assessment order was passed without issuing a proper show cause notice and without providing a reasonable opportunity to file a reply, which prejudiced the petitioner. The petitioner submitted a reply on 6.11.2015, and the hearing was concluded on the same day, suggesting that the hearing was merely a formality.

4. Consideration of the Second Proviso of Rule 3(4) of the Odisha Entry Tax Act:
The petitioner argued that the relaxation under the second proviso of Rule 3(4) was not granted. However, the court found that the petitioner did not furnish the necessary declaration in Form E16 to avail the benefit of the concessional rate of tax. The court emphasized that statutory provisions must be followed as prescribed, referencing the Supreme Court's judgment in Babu Verghese and others v. Bar Council of Kerala and others.

5. Availability of Alternative Remedy:
The opposite party-State argued that the writ petition should not be entertained as the petitioner had an efficacious and alternative remedy available under the statute. The court agreed, noting that the petitioner could raise factual disputes before the appellate authority. The court refrained from entering into the merits of the case, emphasizing that the appellate forum should decide the factual aspects without being influenced by the court's observations.

Conclusion:
The court disposed of the writ petition, allowing the petitioner to approach the appellate forum under the relevant provisions of the Act and Rules. The appellate forum was directed to decide the factual aspects without being prejudiced by the court's order in this writ petition.