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2023 (3) TMI 1331 - HC - VAT and Sales TaxRate of tax - HSD and LDO - fresh assessment under Section 12(8) of the OST Act - such reassessment is vitiated on account of change of opinion or not - disallowing set off of entry tax paid on the goods which were sold to the dealers at concessional rate of tax @ 4% as per Entry 81 of schedule appended to Notification dated 31.03.2001 issued under Section 5(1) of the OST Act - set off of entry tax - whether the petitioner is entitled to set off entry tax paid against tax payable for sale of goods? HELD THAT - Both the First Appellate Authority and the Second Appellate Authority have come to the conclusion that the petitioner, having dealt with the item(s) mentioned in Entry No.101 and sold said item(s) against declaration in Form IV at concessional rate of tax, is not entitled to get set off of entry tax paid against the amount of tax payable for sale of goods. The Item No.101 deals with the general provision, so far as HSD and LDO are concerned, and for that the dealer is liable to pay tax @ 20%. There is no dispute on that. But here is a case where the petitioner is carrying on business in HSD and LDO, which is used within the State. There is no iota of doubt that the petitioner claims concessional rate of 4% tax on the strength of Form-IV. The transaction which was done by the petitioner with the others, being on the strength of Form-IV, set off was granted to the petitioner. The assessment order issued by the Assessing Officer under Section 12(4) is very clear to that extent, but reassessment made under Section 12(8) and confirmation thereof made by the First Appellate Authority and the Second Appellate Authority cannot be sustained in the eye of law. The reopening of the assessment is based on the investigation report of the tax authorities themselves and is, therefore, founded on nothing but a mere change of opinion. As a consequence thereof, the order passed by the Assessing Authority under Section 12(8) for reassessment has no justification in view of law laid down by the apex Court in Kelvinator of India Limited 2010 (1) TMI 11 - SUPREME COURT followed by Nava Bharat Ferro Alloys v. State of Orissa, 2010 (3) TMI 1009 - ORISSA HIGH COURT . Therefore, the formation of opinion in the reassessment under Section 12(8) of the OST Act cannot have any justification and while forming such opinion, as it appears from the records, no opportunity of hearing to the petitioner was given in compliance of the principles of natural justice. It is also not in dispute that the petitioner-company has paid entry tax on procurement of HSD and LDO into the State of Orissa but has not sold any finished goods rather sold the same goods as procured. On perusal of the assessment order under Section 12(4) of the OST Act, it is made clear that the Assessing Authority has taken note of the fact that HSD and LDO, which have been utilized by different companies by furnishing the Form-IV, the same has been taken note of and assessment thereon has been made by the Assessing Authority - obviously the petitioner is liable to pay tax @ 20% as per Entry-101, ibid. In such eventuality, the petitioner is liable to discharge its liability by availing set off of entry tax paid. The issue of set off being taken into consideration while finalizing assessment under Section 12(4) of the OST Act, on account of change of opinion the reassessment under Section 12(8), ibid. is not legally tenable. HSD is one of the covered goods under Note-1(b) and, thereby, the petitioner is statutorily entitled to claim set off of entry tax against sales tax payable on sale of HSD. As the State Government has not imposed any restriction/limitation on the claim of set off of entry tax on the covered items, the reassessment made by the Assessing Authority under Section 12(8) and confirmation made thereof by the First Appellate Authority and also the Tribunal denying the benefit of set off cannot be sustained in the eye of law. The benefit statutorily permissible, vide notification dated 31.03.2001 issued by the Government, cannot be denied/disallowed without considering such notification in proper perspective. The reassessment order under Section 12(8) of the OST Act dated 27.01.2007 under Annexure-3 passed by the Assessing Officer disallowing the set off of entry tax to the petitioner, which comes under the purview of the notification dated 31.03.2001, cannot be sustained in the eye of law - Revision allowed.
Issues Involved:
1. Permissibility of fresh assessment under Section 12(8) of the OST Act based on a "change of opinion." 2. Correctness of disallowing set off of entry tax paid on goods sold at a concessional rate of tax. 3. Justification of the Sales Tax Tribunal's conclusion on the entitlement for set off of entry tax. Summary: Issue 1: Permissibility of Fresh Assessment under Section 12(8) of the OST Act Based on a "Change of Opinion" The court examined whether reassessment under Section 12(8) of the OST Act is permissible when it involves the same turnover that was previously assessed under Section 12(4). The court found that reopening the assessment based on the same materials already considered constitutes a "change of opinion," which is not permissible. The court cited precedents, including the Supreme Court's ruling in Maharaj Kumar Kamal Singh v. The Commissioner of Income Tax, which held that reassessment cannot be based on materials already determined in the original assessment. The court concluded that the reassessment was an outcome of a mere change of opinion without substantial new information, making it legally untenable. Issue 2: Correctness of Disallowing Set Off of Entry Tax Paid on Goods Sold at a Concessional Rate of Tax The court analyzed whether the reassessment order and appellate orders were correct in disallowing the set off of entry tax paid on goods sold at a concessional rate of 4%. The court noted that the petitioner had claimed set off of entry tax against sales tax payable on the turnover of sales subjected to tax at a concessional rate, as per Entry 81 on the strength of declaration in Form IV. The court found that the reassessment order was based on a change of opinion and not on new material facts. The court emphasized that the statutory allowance of set off cannot be denied based on the concessional rate of tax, as the notification dated 31.03.2001 did not impose any restriction on such set off. Issue 3: Justification of the Sales Tax Tribunal's Conclusion on the Entitlement for Set Off of Entry Tax The court examined whether the Sales Tax Tribunal was justified in concluding that the petitioner was not entitled to set off entry tax, despite acknowledging the admissibility of such set off. The court found that the Tribunal, along with the First Appellate Authority and the Assessing Officer, failed to consider the relevant notification properly. The court held that the petitioner was statutorily entitled to claim set off of entry tax against sales tax payable on the sale of HSD, as per Note-1(b) of the notification dated 31.03.2001. The court ruled that the reassessment and the subsequent appellate orders denying the set off were not legally sustainable. Conclusion: The court set aside the reassessment order dated 27.01.2007, the appellate order dated 11.12.2008, and the Tribunal's order dated 28.11.2013, disallowing the set off of entry tax paid by the petitioner. The court allowed the revision in favor of the petitioner, emphasizing that reassessment based on a change of opinion is impermissible and that the petitioner is entitled to the statutory set off of entry tax.
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