2023 (1) TMI 930 - HC - VAT and Sales Tax

Jurisdiction for re-opening of the assessment under Rule 17 (8) of the CST (O) Rules, 1967 for the years 1986-87 and 1987-88 - transaction of dispatch of goods from Rourkela Steel Plant to different branches outside the State of Odisha according to the Demand Registration Scheme - time bound supply scheme as inter-State sales within the purview of Section 3 (a) of the Central Sales Tax Act (CST Act) - HELD THAT - Considering that the law itself was amended thereafter with effect from 8th May 2010 by inserting Section 6 (A) (3) of the CST Act, it is obvious that during the time when the reassessment orders were passed in the present case, the AO did not have the power of re-assessment. Consequently, the above question is required to be answered in the negative i.e, in favour of the Assessee and against the Department. In that view of the matter, the impugned reassessment orders of the AO are hereby set aside and the original assessment orders which were interfered with by the Tribunal are restored to file. It must be added here that in the original assessment orders, the AO had accepted the case of the Assessee that the inter-branch transfers were in fact not inter-State sales. Revision petition disposed off.

Issues:
1. Jurisdiction of Assessing Officer to reopen assessment under Rule 17 (8) of the CST (O) Rules for AY 1986-87 and 1987-88.
2. Determination of inter-branch transfers as inter-State sales under Section 3 (a) of the CST Act.
3. Validity of reassessment orders in absence of power of reassessment with the Assessing Officer.

Analysis:
1. The revision petitions by the Assessee, M/s. Steel Authority of India Limited (SAIL), were brought before the Orissa High Court following a reference by the Orissa Sales Tax Tribunal regarding the legality of reopening assessments under Rule 17 (8) of the CST (O) Rules for the years 1986-87 and 1987-88. The jurisdiction of the Assessing Officer to reopen assessments was questioned, leading to a detailed analysis by the Court.

2. The Tribunal had to determine whether the transactions of dispatch of goods from Rourkela Steel Plant to different branches outside the State of Odisha constituted inter-State sales under Section 3 (a) of the CST Act. This issue was crucial in establishing the tax implications and the correct categorization of the transactions for the relevant assessment years.

3. An additional issue arose concerning the validity of reassessment orders in the absence of the Assessing Officer's power of reassessment during the years in question. The Court highlighted the importance of addressing whether the Assessing Officer could have legally reopened the assessments under Rule 10 of the CST (O) Rules, considering the limitations in place at that time.

4. The Court referenced the judgment in Ashok Leyland Limited v. State of Tamil Nadu, where the Supreme Court clarified that assessments could only be reopened in specific circumstances such as fraud, collusion, misrepresentation, or suppression of material facts. The absence of the power of reassessment with the Assessing Officer during the relevant years played a significant role in determining the legality of the reassessment orders.

5. Ultimately, the Court concluded that the Assessing Officer did not have the authority to reassess the cases under the given circumstances, as the power of reassessment was only granted later through an amendment in 2010. As a result, the impugned reassessment orders were set aside, and the original assessment orders, which had not categorized the inter-branch transfers as inter-State sales, were reinstated by the Court.

6. The Court disposed of the two revision petitions accordingly, emphasizing the need for urgent certified copies of the order to be issued as per rules. The detailed analysis of the issues surrounding the jurisdiction of the Assessing Officer, the categorization of transactions, and the validity of reassessment orders provided clarity on the legal aspects of the case.

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