2022 (7) TMI 762 - HC - VAT and Sales Tax

Reopening of assessment - Escapement of turnover - Issuance of SCN - whether the Sales Tax Tribunal committed error of law and fact particularly when it has held that the assessing authority had mechanically issued the notice under Section 12(8) of the OST ACT? - proper interpretation of the provisions of law with reference to the exemption allowed by the DIC and objection raised by AG(O) or not - HELD THAT - The jurisdictional requirement of the STO having to form an independent opinion regarding the escapement of assessment was explained by this Court in The Indure Limited v. Commissioner of Sales Tax 2006 (7) TMI 572 - ORISSA HIGH COURT . In that case also the assessment was sought to be reopened by the STO under Section 12 (8) of the OST Act only on the basis of audit objection without forming any independent opinion himself regarding escapement of turnover. Ultimately in The Indure Limited, the impugned notice of reassessment was quashed since the Sales Tax Officer had blindly initiated the assessment proceeding on order to objection without any independent application of mind. The facts of the present case are more or less similar. Here again it is seen from the order of the ACST, that the reopening assessment was made by the STO only on the basis of an audit objection and without any independent application of mind as to whether there had been an escapement of turnover for the periods in question. Following the decision in The Indure Limited, this Court is of the view that the reassessment orders of the STO cannot be sustained in law. The Tribunal erred in remanding the matters to the STO while the jurisdictional requirement of independent satisfaction by the STO in the manner explained in The Indure Limited was not existent in the present cases. The question framed by this Court is answered in affirmative by holding that the STO had mechanically issued the notices under Section 12(8) of the OST Act - the orders of the STO and the Tribunal are hereby set aside and the order of the ACST is restored to file - revision petition disposed off.

Summary

Issues:
Challenging judgment of Orissa Sales Tax Tribunal regarding assessment orders for the years 1997-1998 to 2000-01.

Analysis:
1. The revision petitions by the Assessee were against the Tribunal's judgment reversing the ACST's order allowing the Assessee's appeal against demands raised by the STO for the years in question.
2. Questions of law framed by the Court pertained to errors in the Tribunal's decision regarding the issuance of notices under Section 12(8) of the OST Act and the interpretation of law concerning exemptions.
3. Background facts revealed that assessments were reopened based on AG Audit objections, leading to fresh assessment orders by the STO raising demands alleging an escapement of turnover.
4. The ACST allowed the Assessee's appeals, highlighting flaws in the assessment process, including stereotyped orders and lack of proper opinion formation by the STO.
5. The Tribunal agreed with the ACST on the hurried assessment process but found fault with the ACST for not providing reasons for quashing assessment orders and remanded the cases to the STO for fresh adjudication.
6. The Court analyzed Section 12(8) of the OST Act and Rule 23 of the OST Rules, emphasizing the requirement of the STO forming an independent opinion on escapement of assessment.
7. Referring to past judgments, the Court emphasized the importance of the STO's independent application of mind and discretion in reopening assessments, not solely relying on audit objections.
8. Ultimately, the Court held that the STO had mechanically issued notices under Section 12(8) without an independent application of mind, setting aside the reassessment orders and restoring the ACST's order.

This detailed analysis of the judgment showcases the Court's meticulous examination of legal provisions, past judgments, and procedural requirements, ultimately leading to the setting aside of the reassessment orders due to the lack of independent opinion formation by the STO.