2022 (12) TMI 1138 - HC - VAT and Sales Tax

Validity of suo-motu revision order dated 12th July, 2018 passed by the Addl. Commissioner of Sales Tax (Addl.CST), Cuttack-II Range, Cuttack - jurisdiction of the Addl. CST to pass an order in suo-motu revision - HELD THAT - In terms of Rule 5(2) of the OVAT Rules, the CST cannot delegate to an officer appointed under Section 3(2) of the OVAT Act, which includes the Addl. CST and the JCST, the powers of CST under Section 79(1) of the OVAT Act without the prior approval of the Government . The mandatory nature of the requirement of prior approval is evident from the fact that all the delegation notifications including the one dated 15th May, 2009 specifically mentioned the prior approval obtained from the Government. However, when one peruses the notification dated 5 th June, 2018 in terms of which the CST delegated his power under Section 79(1) of the OVAT Act to the Addl. CST, reference is made only the earlier approval obtained on 30th April, 2009. That approval was not for delegation of the powers of the CST to the Addl. CST but delegation of the powers of the CST to the JCST. The observation of the CST in the impugned order that the Addl. CST, at the time when the suo motu revision order was passed on 6 th December 2018, was still exercising the powers of the JCST is also not factually correct. The notification promoting the JCST as Addl. CST and posting him on promotion was issued on 2nd May, 2018 itself. Therefore, at the time when the impugned suo motu revisional power was passed by the Addl. CST he was functioning as Addl. CST and not as JCST. Even in terms of the notification dated 5 th June, 2018 the Addl. CST could have exercised the suo motu revisional power only if the order under revision was passed by the JCST or Dy. CST - Admittedly, in the present case, it is the STO who has passed the assessment order under Section 42 of the OVAT Act which was sought to be revised by the Addl. CST. Therefore, even in terms of the notification dated 5th June, 2018 the Addl. CST lacked the jurisdiction to revise the order of the STO. The Court is of the view that the suo motu revisional power passed by the Addl. CST on 6 th December, 2018 was entirely without jurisdiction and beyond the powers of the Addl. CST. Consequently, the suo motu revisional order, and the impugned order of the CST affirming it in the appeal, are hereby set aside - Petition allowed.

Summary

Issues: Challenge to order of Commissioner of Sales Tax under OVAT Act, Jurisdiction of Addl. CST in suo-motu revision, Validity of delegation of powers, Gazetting of notification, Jurisdiction of Addl. CST in revising order of STO, Consequential demand raised by AA.

Challenge to Order of Commissioner of Sales Tax under OVAT Act:
The petitioner, a registered dealer under the OVAT Act, challenged an order passed by the Commissioner of Sales Tax dismissing the appeal against a revision order raising a tax demand. The petitioner dealt in wood products and had deductions allowed in the original assessment order. The Joint Commissioner and Additional Commissioner of Sales Tax revised the assessment order, leading to the appeal before the CST. The High Court previously disposed of a related writ petition concerning a preliminary issue.

Jurisdiction of Addl. CST in Suo-Motu Revision:
The petitioner raised jurisdictional issues regarding the Addl. CST's power to revise the assessment order. The petitioner argued that the delegation of powers to the Addl. CST lacked prior government approval and was not gazetted. Additionally, it was contended that the Addl. CST could not revise an order passed by the Sales Tax Officer. The CST rejected the plea, citing an earlier approval, but the High Court found the delegation invalid due to lack of proper approval and gazetting.

Validity of Delegation of Powers and Gazetting of Notification:
The Court analyzed Section 5 of the OVAT Act and Rule 5(2) of the OVAT Rules, emphasizing the requirement of prior government approval for delegation. The notification delegating powers to the Addl. CST did not meet this requirement, rendering it contrary to the law. Moreover, the notification was never gazetted, further undermining its validity.

Jurisdiction of Addl. CST in Revising Order of STO:
The High Court determined that the Addl. CST, at the time of passing the revision order, was functioning as the Addl. CST and not the JCST. The Addl. CST lacked jurisdiction to revise the order of the Sales Tax Officer, as per the notification criteria. Therefore, the revisional order was deemed without jurisdiction, leading to its setting aside.

Consequential Demand Raised by AA:
Given the invalidity of the suo-motu revision order, the consequential demand raised by the Assessing Authority was also quashed by the Court. Both writ petitions were allowed, with no costs imposed. The High Court's detailed analysis of the jurisdictional issues and the legal requirements for delegation highlighted the importance of adherence to statutory provisions in tax matters under the OVAT Act.

This comprehensive summary provides an in-depth analysis of the judgment, covering all the relevant issues and legal intricacies involved in the case.