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2021 (12) TMI 577 - HC - VAT and Sales TaxMaintainability of reassessment under Section 43 of the OVAT Act - absence of completion of assessment under Sections 39, 40, 42 or 44 of the OVAT Act - HELD THAT - A comparison of the language used in the amended Section 43 (1) of the OVAT Act with its version prior to 1st October, 2015 makes it clear that a new system has been put in place as far as reopening of returns filed as self-assessment is concerned. Now such reopening is permitted even if there was no formal acceptance of the return originally filed. The concept of a deemed acceptance of the return has been introduced for the first time since 1st October, 2015. This is not a mere procedural change. Further, the amending statute itself makes it clear that the amendments are with effect from 1st October, 2015 and not with retrospective effect from an earlier date. Therefore, the Court is precluded from presuming that the amendment to Sections 39 (2) and 43 (1) of the OVAT Act and correspondingly to Rule 50 of the OVAT Rules are either merely clarificatory or retrospective. The picture that emerges is that if the self-assessment under Section 39 of the OVAT Act for tax periods prior to 1st October, 2015 are not accepted either by a formal communication or an acknowledgment by the Department, then such assessment cannot be sought to be re-opened under Section 43 (1) of the OVAT Act and further subject to the fulfillment of other requirements of that provision as it stood prior to 1st October, 2015. The reopening of the assessment sought to be made in the present case under Section 43 (1) of the OVAT Act is held to be bad in law - Revision petition disposed off.
Issues Involved:
1. Validity of reassessment under Section 43 of the OVAT Act without completion of initial assessment under Sections 39, 40, 42, or 44. Issue-wise Detailed Analysis: 1. Validity of Reassessment under Section 43 of the OVAT Act: Background: The revision petition arises from an order by the Odisha Sales Tax Tribunal, which affirmed the Joint Commissioner’s decision, upholding a demand of ?3,92,434/- against the Petitioner for the period 1st April 2010 to 31st March 2011 under Section 43 of the OVAT Act. The Petitioner’s original return for the period was not acknowledged by the Department, and the assessment was reopened based on a fraud case report. Arguments by Petitioner: The Petitioner contended that no reassessment could be made unless the initial assessment was completed. They relied on precedents, including the Supreme Court’s decision in Ghanashyam Das v. Regional Assistant Commissioner of Sales Tax, and the Full Bench decision in M/s. Jaynarayan Kedarnath v. Sales Tax Officer, arguing that the unamended Section 43 should apply, which required a formal assessment under Section 39 before invoking Section 43. Arguments by Opposite Party: The Opposite Party argued that post-2010 amendments mandated online filing of returns, making physical acceptance unnecessary. The returns filed were deemed accepted unless found defective. They cited the decision in Nilachal Ispat Nigam Ltd. v. State of Odisha, asserting that the amendments effective from 1st October 2015 clarified that formal acceptance of the return was unnecessary for reopening assessments. Court’s Analysis: The Court noted significant changes brought by the amendments effective from 1st October 2015. Prior to this, Section 39(2) required returns to be found in order and accepted as self-assessed, subject to arithmetical adjustments. Section 43(1) before the amendment required a formal initial assessment before reopening under Section 43(1). Post-amendment, Section 43(1) allowed reopening based on any information indicating escaped assessment without requiring formal acceptance of the initial return. Key Points: - The pre-amendment Section 43(1) necessitated an initial assessment under Sections 39, 40, 42, or 44. - The post-amendment Section 43(1) allowed reopening based on information without formal acceptance of the return. - The amendments effective from 1st October 2015 introduced the concept of "deemed" self-assessment and were not retrospective. Conclusion: The Court concluded that for periods prior to 1st October 2015, without formal acceptance or acknowledgment of the self-assessment under Section 39, reassessment under Section 43(1) was unsustainable. The reopening of the assessment in the present case was held to be bad in law. The Tribunal’s order and corresponding orders of the JCST and STO were set aside, and the revision petition was disposed of in favor of the Petitioner. Final Judgment: The Court held that in the absence of completion of the assessment under Sections 39, 40, 42, or 44, reassessment under Section 43(1) of the OVAT Act is unsustainable in law. The impugned orders were set aside, and the revision petition was disposed of accordingly.
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