2022 (7) TMI 424 - HC - VAT and Sales Tax

Shifting of point of levy of Entry Tax - whether assessment order suffers vice of infirmity whereby the assessing authority has shifted the point of levy of entry tax, i.e. from manufacturer (karigar) to the point of selling, i.e. trader-petitioner - gross error of law in restoring the assessment order or not? - absence of service of notice in Form E30 prescribed under Rule 15B of the Odisha Entry Tax Rules accompanied with audit visit report in Form E27 by the assessing authority - assessment framed under Section 9C of the Odisha Entry Tax Act, 1999 can be held to be valid or not - HELD THAT - Without the basic material on the basis of which the demand was raised under the OET Act provided to the Assessee, it cannot be expected that the Assessee would be able to meet the queries raised on the work done by the karigars. Consequently, neither the levy of entry tax nor the consequential penalty is sustainable in law. The questions framed by this Court are answered in favour of the Assessee and against the Department by holding that the Tribunal erred in restoring the assessment order and further that in the absence of service of notice in Form E-30 in terms of Rule 15B of the OET Rules accompanied by the AVR in Form E27, the assessment framed under Section 9C of the OET Act is not valid. The revision petition is disposed of.

Summary

Issues:
1. Interpretation of Section 9C of the Odisha Entry Tax Act, 1999.
2. Validity of assessment order under Section 9C of the Odisha Entry Tax Act, 1999.
3. Compliance with procedural requirements for assessment under the Odisha Entry Tax Act, 1999.

Analysis:
1. The case involved a revision petition against an order passed by the Orissa Sales Tax Tribunal, which allowed the Department's appeal against the deletion of a demand raised under Section 9C of the Odisha Entry Tax Act, 1999. The primary issue was whether the assessment order suffered from infirmity due to the shifting of the point of levy of entry tax from the manufacturer to the trader-petitioner. The Tribunal's decision to restore the assessment order was challenged on grounds of legal errors.

2. The background facts revealed that the Assessee, engaged in the business of gold and silver ornaments, received old ornaments from customers and gave them to local karigars for re-making and repair. The assessment order was based on an audit visit report, but the Assessee contended that no statutory notice as required under the Odisha Entry Tax Act had been issued. The Deputy Commissioner of Sales Tax acknowledged procedural lapses in the assessment order, emphasizing the mandatory requirement of an audit visit report for initiating proceedings under Section 9C.

3. The Tribunal, in its impugned order, upheld the levy of entry tax and penalty, citing lack of evidence regarding the payment of entry tax on finished products by the karigars. However, the Assessee's counsel argued that without the issuance of a statutory notice under Section 9C, the Assessee was not provided with essential information to address the queries raised during assessment. The Court concluded that the absence of a proper notice and audit visit report rendered the assessment invalid, leading to the setting aside of the Tribunal's decision and restoration of the Deputy Commissioner's order.

In conclusion, the judgment highlighted the importance of procedural compliance and the necessity of providing adequate information to the Assessee during assessment proceedings under the Odisha Entry Tax Act, 1999. The decision favored the Assessee, emphasizing the significance of due process in tax assessments and setting aside the Tribunal's decision based on procedural irregularities.