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2022 (8) TMI 637 - HC - VAT and Sales TaxRe-opening of assessment - whether a formal communication of the acceptance of the return filed by way of self-assessment under Section 9 (2) of the OET Act is a pre-requisite to the reopening of an assessment under Section 10 (1) of the OET Act? - HELD THAT - Both sets of provisions of the OVAT Act and the OET Act respectively, therefore, make it mandatory for scrutiny of every return by a dealer. The corresponding Rule under the OET Rules is Rule 15 as amended with effect from 19th October 2005 - It requires compliance with Section 7 (10) and 7 (11) of the OET Act. The same result would be reached from a collective reading of Section 39 of the OVAT Act with Rule 48 of the OVAT Rules as they stood prior to 1st October, 2015. The long and short of this discussion is that under the OET Act there is no concept of a deemed acceptance of a return filed by way of self assessment if nothing is heard from the Department after it is filed. There has to be an overt act of communication of such acceptance by the Department to the dealer. This Court is of the considered view, therefore, that the decision of the Division Bench of this Court in M/S. NEELACHAL ISPAT NIGAM LTD. VERSUS STATE OF ORISSA AND OTHERS 2016 (12) TMI 1203 - ORISSA HIGH COURT which holds that if the authorities have not issued any notice under Section 7 (11) of the OET Act, then the self assessment of the dealer under Section 9 (2) of the OET Act should be taken to have been accepted does not set down the correct legal position and to that extent, the said decision is hereby overruled. The sum total of the discussion is that as far as a return filed by way of self assessment under Section 9 (1) read with Section 9 (2) of the OET Act is concerned, unless it is accepted W.P.(C) Nos.7458 of 2015 and 7296 of 2013 Page 30 of 30 by the Department by a formal communication to the dealer, it cannot be said to be an assessment that has been accepted and without such acceptance, it cannot trigger a notice for reassessment under Section 10 (1) of the OET Act read with 15 B of the OET Rules - Petition disposed off.
Issues Involved:
1. Whether a formal communication of the acceptance of the return filed by way of self-assessment under Section 9(2) of the OET Act is a pre-requisite to the reopening of an assessment under Section 10(1) of the OET Act? Detailed Analysis: Background: 1. The common question of law in both writ petitions is whether a formal communication of the acceptance of the return filed by way of self-assessment under Section 9(2) of the Orissa Entry Tax Act, 1999 (OET Act) is a pre-requisite to the reopening of an assessment under Section 10(1) of the OET Act. 2. A similar question was considered under the Orissa Value Added Tax Act, 2004 (OVAT Act) in M/s. Keshab Automobiles v. State of Odisha, where it was held that unless there is a communication of the acceptance of the return filed by way of self-assessment, there cannot be a reopening of the assessment. This decision was affirmed by the Supreme Court of India. Referral Order: 1. The Division Bench referred the issue to the Full Bench for reconsideration in light of conflicting judgments. One judgment (M/s. Keshab Automobiles) required formal communication of acceptance, while another (M/s. Nilachal Ispat Nigam Ltd.) did not. 2. The Full Bench was to consider whether the view taken by the Division Bench in Nilachal Ispat Nigam Ltd. required reconsideration. Background Facts in W.P.(C) No.7296 of 2013: 1. The petitioner, engaged in manufacturing and sale of steel products, challenged the reopening of assessment based on a judgment that coal used in the production of electricity cannot be treated as a raw material for manufacturing sponge iron. 2. The Assistant Commissioner of Sales Tax issued a notice under Section 10(3) of the OET Act, reopening the assessment and raising a demand. Background Facts in W.P.(C) No.7458 of 2015: 1. The petitioner challenged the reopening of assessment for the period 1st April 2008 to 31st March 2014, based on a tax evasion report. 2. The assessment order raised a demand based on the classification of goods as chemicals subject to entry tax. Relevant Provisions of the OET Act and Rules: 1. Section 9(2) of the OET Act requires that the return furnished "shall be accepted as self-assessed" subject to adjustment of any arithmetical error. 2. Rule 15 of the OET Rules outlines the process for self-assessment, including the acceptance of returns and rectification of errors. 3. Section 10 of the OET Act and Rule 15B of the OET Rules pertain to reassessment in cases where goods have escaped assessment or been under-assessed. Provisions of the OVAT Act and Rules: 1. Section 39(2) of the OVAT Act and Rule 48 of the OVAT Rules are in pari materia with Section 9(2) of the OET Act and Rule 15 of the OET Rules. 2. Section 43 of the OVAT Act (as it stood prior to 1st October 2015) and Rule 50 of the OVAT Rules correspond to Section 10 of the OET Act and Rule 15B of the OET Rules. The Decision in M/s. Keshab Automobiles: 1. The Court held that there had to be a formal communication of the acceptance of the return for it to be considered self-assessed. 2. The position changed after 1st October 2015 with the introduction of the concept of "deemed" self-assessment in the OVAT Act. The Decision in Nilachal Ispat Nigam Limited Overruled: 1. The Division Bench in Nilachal Ispat Nigam Limited held that communication of acceptance of self-assessment was not required, which was inconsistent with the legal position under the OVAT Act. 2. The Full Bench overruled this decision, holding that there must be a formal communication of acceptance of the return for it to be considered self-assessed under the OET Act. Conclusion: 1. A return filed by way of self-assessment under Section 9(1) read with Section 9(2) of the OET Act must be formally accepted by the Department for it to be considered self-assessed. 2. Without such acceptance, it cannot trigger a notice for reassessment under Section 10(1) of the OET Act read with Rule 15B of the OET Rules. Judgment: 1. In W.P.(C) No.7458 of 2015, the impugned reassessment order dated 19th February 2015 and the consequential demand are quashed. 2. In W.P.(C) No.7296 of 2013, the impugned reassessment order dated 23rd February 2013 and the consequential demand notice are quashed. 3. The writ petitions are disposed of in these terms.
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