2021 (11) TMI 653 - HC - VAT and Sales Tax

Rejection of books of accounts - stock discrepancy - corroborative evidence to establish the suppression of sales or not - HELD THAT - On a careful reading of the orders of the assessing authority, the appellate authority the Court finds that there is no reference therein to any additional material other then the fraud report which was common to both the years i.e. 1991-92 and 1992-93. Moreover, in the impugned order of the Tribunal relating to the year 1992-93, the Tribunal does not refer to any such additional material other than the fraud report. The Tribunal proceeded to accept the fraud report only on the ground that the earlier order of the Tribunal pertained to the year 1991-92 whereas the year in question was 1992- 93. A co-ordinate Bench of the same Tribunal had in its order dated 14th May, 2002 already disbelieved the same fraud report and concluded that there was no basis for raising the demand. In terms of the decision of the Supreme Court in COLLECTOR OF CENTRAL EXCISE, KANPUR VERSUS MATADOR FOAM 2005 (1) TMI 107 - SUPREME COURT the Tribunal was bound by the earlier order of the co-ordinate Bench involving the very same Assessee. The question framed by the Court is answered in negative i.e. in favour of the Assessee and against the Department - the revision petition disposed of.

Summary

Issues:
- Interpretation of law regarding following earlier orders by the Tribunal
- Assessment of sales suppression based on stock register entries
- Reopening of assessment under Section 12(8) of the OST Act
- Application of Supreme Court decision on binding nature of earlier orders by the Tribunal

Interpretation of law regarding following earlier orders by the Tribunal:
The High Court considered whether the Division Bench of the Orissa Sales Tax Tribunal was legally correct in not following an earlier order passed by another Division Bench on identical facts and between the same parties. The Court analyzed if such an order was legally sustainable in light of the law laid down by the Supreme Court in the case of Collector of Central Excise v. Matador Eoam and others. The Court concluded that the Tribunal was bound by the earlier order of a co-ordinate Bench involving the same Assessee, as per the decision of the Supreme Court. Therefore, the Court answered the question in favor of the Assessee and against the Department.

Assessment of sales suppression based on stock register entries:
The case involved a Government undertaking engaged in manufacturing and sale of cement. The Sales Tax Department suspected sale suppression based on discrepancies found during a visit to the company's godown. The Sales Tax Officer quantified excess stock for two years, leading to a fraud report and reassessment under Section 12(8) of the OST Act. The Tribunal allowed an appeal for one year, stating lack of conclusive evidence for sale suppression and highlighting the absence of corroborative evidence to establish the suppression of sales. However, the Tribunal rejected appeals for the other year, claiming additional material justified the reassessment. The Court observed that the Tribunal did not refer to any additional material in the impugned order and accepted the fraud report solely based on the distinction of the years involved.

Reopening of assessment under Section 12(8) of the OST Act:
The Assessing Officer completed reassessment confirming a demand, which the Assessee appealed before the Tribunal. The Tribunal allowed the appeal for one year but rejected appeals for another year, stating the existence of additional material justifying the reassessment. However, the Court found no reference to additional material in the orders of the assessing authority or the appellate authority. The Court noted that the Tribunal's acceptance of the fraud report was solely based on the distinction of the years involved, contrary to the earlier order disbelieving the same fraud report.

Application of Supreme Court decision on binding nature of earlier orders by the Tribunal:
The Court emphasized the binding nature of earlier orders by a co-ordinate Bench of the Tribunal involving the same Assessee. Referring to the Supreme Court decision, the Court held that the Tribunal was obligated to follow the earlier order that disbelieved the fraud report and concluded there was no basis for raising the demand. Consequently, the Court set aside the impugned order of the Tribunal and disposed of the revision petition in favor of the Assessee.