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2023 (1) TMI 247 - HC - VAT and Sales TaxValidity of assessment order passed by the Additional Sales Tax Officer, Kendrapara Circle, Kendrapara under Section 42 of the OVAT Act - Assessing Officer (AO) did not calculate any VAT on sale of de-oiled cake because it was exempted from VAT - short levy of purchase tax - instead of quashing the reassessment order, the JCST choose to remit the matter to the AO for a fresh hearing and a decision - HELD THAT - The factual finding by the JCST was that the reopening of the assessment was done by the AO by simply accepting the objection of the AG (Audit) without forming independent opinion on whether such objection by the AG (Audit) was correct or not. There was no recording by the Addl. STO about being satisfied independently then there was escapement of taxable turnover. The legal position in this regard has been explained by this Court in INDURE LIMITED VERSUS COMMISSIONER OF SALES TAX, CUTTACK, ORISSA AND OTHERS 2006 (7) TMI 572 - ORISSA HIGH COURT where it has been held that an objective opinion has to be formed by the STO and that he cannot totally abdicate or surrender his discretion to the objection of the audit party by mechanically reopening assessment under Section 12(A) as has been done in this case. It may be noticed here that the above observation was made in the context of Section 12(8) of the OST Act which corresponds to Section 43 of the OVAT Act. Thus, simply remanding the matter to the STO as has been done by the JCST would serve no purpose since in no way would that alter the factual position namely, that in the record sheet there would be no recording of the objective opinion of the STO about escapement of taxable turnover. This Court disposes of the revision petition by answering the question framed in the negative i.e. in favour of the Dealer and against the Department.
Issues:
1. Assessment under Section 43 of the Orissa Value Added Tax Act, 2004 (OVAT Act) requiring to be set aside. 2. Validity of assessment order passed by the Additional Sales Tax Officer. 3. Reopening of assessment based on objection of AG (Audit) without forming an independent opinion. 4. Legal position regarding the discretion of the Sales Tax Officer (STO) in reopening assessments. 5. Effectiveness of remanding the matter to the STO for fresh hearing and decision. Analysis: 1. The revision petition before the Orissa High Court challenged the assessment under Section 43 of the OVAT Act, seeking to set it aside. The petition stemmed from an order passed by the Orissa Sales Tax Tribunal, which upheld the Additional Sales Tax Officer's assessment order. The Tribunal's decision was based on the dealer's appeal against the assessment raising a demand and penalty amounting to Rs.2,35,352.00. The Tribunal remitted the matter to the AO for fresh consideration, a decision that was affirmed in further appeal. 2. The dealer, engaged in manufacturing ground nut oil and de oiled cake, had undergone original assessment under Section 42(4) of the OVAT Act, which raised a demand of Rs.2120.00. The AO initiated proceedings for reassessment based on the AG (Audit) report on short levy of purchase tax, resulting in the increased demand and penalty. The JCST, in its order, highlighted procedural discrepancies in the reassessment process, emphasizing the need for the AO to independently form an opinion before reopening the assessment. 3. The High Court, in its analysis, referred to precedents like Indure Ltd. v. Commissioner of Sales Tax, emphasizing the importance of the STO forming an objective opinion rather than mechanically accepting objections from audit parties. The Court reiterated this legal position in the context of Section 43 of the OVAT Act, emphasizing the need for the STO to exercise discretion in reassessment proceedings. 4. Despite the Tribunal's decision to remit the matter for fresh consideration, the High Court found that such remand would not address the fundamental issue of the lack of an independent opinion by the STO regarding the escapement of taxable turnover. Therefore, the Court set aside the Tribunal's order, the JCST's decision, and the corresponding assessment order, ruling in favor of the dealer and against the Department. 5. The High Court's judgment concluded by directing the issuance of an urgent certified copy of the order. The detailed analysis of the legal issues surrounding the assessment under the OVAT Act underscored the significance of the STO's independent assessment and the procedural requirements for reassessment, ultimately leading to the Court's decision in favor of the dealer.
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