1963 (10) TMI 17 - SC - VAT and Sales Tax

Whether the Orissa Sales Tax Act 1947 sets a time-limit for making an order under section 23(3) of the Act revising an order of assessment? Held that - Appeal dismissed. As reached the conclusion that the impugned orders of assessment were barred by limitation having been made more than 36 months after the expiry of the period for which the tax was assessed. We hold therefore that the High Court was right in quashing the several orders of assessment.

Summary

Issues Involved:
1. Time-limit for revising an order of assessment under the Orissa Sales Tax Act, 1947.
2. Interpretation of section 23(3) and section 12(6) of the Orissa Sales Tax Act.
3. Applicability of the 36-month limitation period to orders of assessment made in revision.
4. Distinction between original orders of assessment and revisional orders.

Detailed Analysis:

1. Time-limit for Revising an Order of Assessment:
The primary issue in these appeals is whether the Orissa Sales Tax Act, 1947, imposes a time-limit for making an order under section 23(3) revising an order of assessment. This question hinges on the interpretation of the relevant provisions of the Act.

2. Interpretation of Section 23(3) and Section 12(6):
The respondents were initially assessed to sales tax by a Sales Tax Officer, which they appealed against, and the Assistant Collector allowed their deductions. Following a judgment by the Orissa High Court indicating the Assistant Collector's error, the Collector of Sales Tax revised these orders under section 23(3), increasing the taxable turnover. The respondents challenged these revisions in the High Court of Orissa under Article 226 of the Constitution, arguing that the revisions were illegal as they were made more than 36 months after the original assessments.

The High Court agreed with the respondents, holding that the revisions were essentially reassessments of escaped or under-assessed turnover, which under section 12(7) of the Act, could not be made after 36 months from the end of the relevant period. However, it was contended that the High Court erred by relying on section 12(7), which only prescribes a time-limit for calling for a return, not for making the reassessment order.

3. Applicability of the 36-Month Limitation Period:
The second proviso to section 12(6) specifies that no order assessing the amount of tax due from a dealer for any period shall be passed later than 36 months from the expiry of such period. The key issue was whether this limitation applied to orders made under section 23(3). The majority judgment held that the Act does not consider an order made under section 23(3) as an "order assessing the amount of tax due" under section 12. The Act only expressly provides for assessment of tax under section 12, and section 23(3) deals with revising such orders, not making original assessments.

The judgment highlighted that if the second proviso to section 12(6) were to apply to orders under section 23(3), it would lead to adverse consequences for taxpayers, such as the possibility of their revision applications being rendered infructuous by the expiry of the 36-month period. The Act does not impose a time-limit for disposing of revision applications, and thus, the interpretation that the 36-month limit applies to revisional orders was rejected.

4. Distinction Between Original Orders and Revisional Orders:
The judgment clarified that the powers of the appellate or revisional authority under section 23 do not include independent powers of assessment. Instead, these authorities act under the powers conferred by section 12. Therefore, any order of assessment made by an appellate or revisional authority must be considered as made under section 12, and thus subject to the 36-month limitation.

The judgment also addressed the potential anomaly that could arise if the limitation period applied to appellate or revisional orders, noting that the Legislature did not intend for the period of limitation to apply only to original orders of assessment. The Act itself does not prescribe a specific limitation period for appellate or revisional orders, further supporting the view that the 36-month limit applies to all orders of assessment.

Conclusion:
The appeals were dismissed, affirming the High Court's decision that the impugned orders of assessment were barred by limitation, having been made more than 36 months after the expiry of the period for which the tax was assessed. The judgment emphasized that the 36-month limitation period applies to all orders of assessment under the Orissa Sales Tax Act, 1947, including those made in revision.