2021 (9) TMI 205 - HC - VAT and Sales Tax

Reopening of concluded assessments - Second round of litigation - Earlier, the Court set aside the impugned orders on the sole ground of violation of the principle of natural justice - The Court directed that notice be issued to the Petitioner and after affording it an opportunity of being heard, a fresh reasoned order should be passed by the Dy. CST, Balasore. - HELD THAT - Under Rule 26-A of the OST Rules, a registered dealer is expected to preserve books of account and other documents including bills, credit and cash memoranda, invoices and vouchers, etc. relating to the business of any year for a period of three years thereafter or for a period of 12 months after finalization of the order of assessment or penalty in appeal, revision or reference for the year to which it relates, whichever is later - As far as the present case is concerned, even if the aforementioned periods of limitation have been crossed, there is no legal basis for the Department in the present case to have sought to re-compute the tax, surcharge and interest payable by the Petitioner for the aforementioned periods. Once the assessment for a period has attained finality, and has not been re-opened by the Department in accordance with law, it is not possible for the amount of the tax, surcharge and interest payable for that period to be re-computed - In the present case too appears to be no scope for re-opening of the concluded assessments or re-computation of the amount of tax and surcharge payable for the aforementioned periods 2000- 2001, 2001-2002, 2002-2003 and 2003-2004. This Court finds the impugned re-computation orders to be unsustainable in the eye of law and therefore they are hereby set aside - Petition allowed.

Summary

Issues:
Challenge to recomputation orders under the Odisha Sales Tax Act, 1947 for the periods 2000-2001, 2001-2002, 2002-2003, and 2003-2004.

Analysis:
The petitioner challenged recomputation orders passed by the Deputy Commissioner of Sales Tax, CT & GST Circle, Balasore. The High Court had earlier set aside similar orders due to a violation of natural justice and directed fresh orders to be passed after affording the petitioner an opportunity to be heard. The current petitions raised issues regarding the recomputation of tax, surcharge, and interest payable for the mentioned periods. The Tribunal's order in the petitioner's case, based on a specific decision, had attained finality. The Department's attempt to recompute taxes after a significant time had no legal basis, as there were specific provisions for reopening assessments within limited periods under the OST Act. The Court emphasized the importance of finality in assessments and the limitations for revising orders.

The Department's reliance on a letter for recomputation was rejected by the Court, emphasizing that once an assessment is final and not reopened in accordance with the law, recomputation is not permissible. The Court referred to a Supreme Court decision regarding revisional jurisdiction and reasonable periods for exercising such powers. The judgment highlighted that concluded assessments should not be reopened or recomputed without valid legal grounds, emphasizing the importance of respecting finality in legal proceedings.

The Court dismissed the Department's argument that recomputation could be based on the date of a subsequent Supreme Court judgment, emphasizing that assessments closed based on existing laws should not be reopened due to later legal developments. The Court cited a Tripura High Court decision to support the principle that closed proceedings should not be reopened based on subsequent legal developments. Ultimately, the Court found the recomputation orders unsustainable in law and set them aside, allowing the writ petitions in favor of the petitioner without costs.