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TMI Blog2013 (4) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... g or demanding the amount of tax and penalty involved in the ex parte order of reassessment dated 24.12.2008 along with demand notice under Annexure-5; (iv) Issue any such other writ(s) or pass such order(s) as would be deemed just and proper in the interest of justice; (v) Allow this petition with cost" 2. Petitioner's case in a nutshell is that it is a Government of India Undertaking engaged in refining, receiving and selling of petroleum products, namely, MS, HSD, LPG (domestic and commercial) and SKO (domestic and commercial) among other petroleum products. It is a registered dealer under the Central Sales Tax Act, 1956 (for short, 'CST Act'). Paradeep is a Lighterage point for berthing of high capacity vessels received from other countries bringing in Superior Kerosene Oil (SKO) and High Speed Diesel (HSD) as well as indigenous products from Refineries situated nearer to coastal ports in the western sector and also from eastern sector like Vizag and Chennai. The petitioner has a coastal location at Paradeep. Petroleum product is supplied from RIL Refineries, Jamnagar by tanker to Paradeep. Petroleum product is also moved from West Bengal to Paradeep by way of stock transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a. Due to shortage of storage facilities, other Oil Companies are often keeping their oil in storage tanks of BPCL as per safe keeping agreement which are moved from Paradeep as per the advice from the storing Oil Company and thus, BPCL has neither moved its own products to outside the State of Odisha in tankers nor has sold any product to other Oil Companies in this respect. In support of its submission, the petitioner placed reliance on its safe keeping agreement as well as Memorandum of Understanding between the Oil Companies which were looked into, and the order of assessment dated 31.03.2005 for the period 2001-02 under Rule 12(5) of the CST(O) Rules was passed by computing a demand of Rs. 31,46,129/- for non-submission of declaration in Form 'C' in respect of direct inter-state sales of HSD and SKO effected by the petitioner other than the matters covered under inter Oil Company arrangement and the safe keeping agreement between the Oil Companies. 4. While the matter stood thus, the petitioner has been issued with a notice dated 29.12.2006 in Form III issued under Rule 10 of the CST(O) Rules wherein the petitioner has been called upon to produce the books of accounts on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment furnished at the time of assessment, the transaction effected through Paradeep Terminal have never been reflected in the return nor disclosed at the time of assessment. The learned STO also held that the movement of goods from Paradeep in Orissa to Haldia in West Bengal having inextricable link in order to supply or sale of the goods by the receiving Oil Companies in the manner that the movement cannot be dissociated without breach of mutual understanding between the BPCL and the receiving Oil Companies and thus, the aforesaid transaction involving such goods from one State to another pursuant to the prior agreement is an inter-state sale falling under Section 3(a) of the CST Act. With the above observations, the opposite party came to the conclusion that delivery of 38,881 KL of HSD and 29,728 KL of SKO by BPCL ex-tanker at the Port of destination at Haldia to other Oil Companies, i.e., IOC/IBP/HPC though are clearly inter-state sales falling under Section 3(a) of the CST Act, have not been reflected in the return filed for the respective return period by the petitioner. Therefore, the petitioner is liable to pay tax for such inter-state transaction and accordingly the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easonable opportunity of hearing and without production of books of account. In support of his contention that the assessment has been completed in violation of principles of natural justice, Mr.Mohanty relied upon the order sheet attached to the writ petition under Annexure-6. 8. While completing the original assessment, the opposite party was aware of the fact of "safe keeping arrangement" as well as "hospitality arrangement" regarding keeping stock of one Oil Company in the tanker of other Oil Company and also sending of cargo by one Oil Company on behalf of another Oil Company, the said STO now cannot say that those are all inter-state sales. The reassessment proceeding is nothing but mere change of opinion which is not permissible as held by the Hon'ble Supreme Court in the case of Binani Industries Limited Vs. Assistant Commissioner of Commercial Taxes, reported in (2007) 6 VST 783 (SC). 9. In view of the safe keeping agreement, the alleged transaction does not fall within the ambit and/or sphere of Section 3(a) of the CST Act. In the present case, there was no contract for sale of goods between the petitioner and HPCL or the petitioner with other Oil Companies and therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity vide its letter No.5258 dated 30.12.2006 has supplied the petitioner the reasons for reopening the assessment and afforded opportunity to the petitioner to produce the books of account and the documents on which it may rely in support of its contentions. The petitioner was also required to produce tanker-wise ocean loss report, bill of lading and proration report in respect of receipt and despatch made at/from the Lighterage Terminal at Paradeep including complete accounts of receipt and disposal of goods received at the terminal and all the documents and records relating thereto. In response to the said notice, the petitioner appeared before the Assessing Officer after availing sufficient opportunities through number of adjournments and explained its case with regard to the reasons disclosed to it for initiating reassessment proceeding. 14. Decision of the Hon'ble Supreme Court in the case of M/s Indian Oil Corporation Limited (supra) (Civil Appeal No.2438 of 2009) has no application to the present case. The issue involved in the earlier writ petition of IOCL is different from the issue involved in the present case. In that case, the Hon'ble Supreme Court has directed for ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 38,881 KL of HSD and 29,728 KL of SKO during the year 2001-2002 has been effected by the petitioner Company from the Lighterage Terminal at Paradeep to outside State of Odisha either by way of inter-state sale or branch transfer or that the alleged dispatch of goods in question has not been effected by the petitioner either by way of inter-state sale or stock transfer? 16. Question No.(i) is as to whether the completed assessment has been reopened by mere change of opinion. Mr. Sanjit Mohanty, learned Senior Advocate appearing on behalf of the petitioner submitted that the Hon'ble Supreme Court in the case of Indian Oil Corporation Limited (supra) has been pleased to set aside the judgment dated 16.05.2008 of this Court passed in W.P.(C) No.3691 of 2007, inter alia, with the observation that the High Court has failed to consider the challenge to the order of reassessment by the petitioner-Corporation on the ground that it was a case for change of opinion. According to Mr. Mohanty, in the instant case also the impugned order of reassessment is not sustainable in law as the completed assessment has been reopened by mere change of opinion. Referring to Annexure-1, which is the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that earlier assessment order not to levy tax on those transactions. On the other hand, the earlier assessment order dated 31.03.2005 (Annexure-1) shows that the dealer-assessee failed to appear along with the books of account and requisite declaration forms for which the assessment was completed on the basis of materials available on record. The gross turnover in respect of inter-state sale disclosed in its return was accepted and the entire turnover was brought to tax as the petitioner-dealer failed to furnish declaration forms against claims of concessional rate of tax. In course of hearing, Mr.Mohanty, learned Senior Advocate for the petitioner has not brought to our notice any material in support of his contention that in earlier regular assessment the transaction in question was subject matter of consideration of Assessing Officer who after considering the nature of transaction with reference to MOU of Companies took a view that no tax is leviable on those transactions except saying that the reassessment proceedings has been initiated on change of opinion. The reassessment proceedings initiated for the self-same year cannot be said to be without jurisdiction on the ground o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the same period you have dispatched 38881 KI of HSD and 29728 KL of SKO to outside the State of Orissa. (b) Information received further shows that during the year, you have sold goods in course of inter-state trade or commerce from Paradeep Lighterage Terminal to other oil companies. (c) The returns for the year 2001-02 under the CST Act do not appear to reflect these transactions of Lighterage Terminal. The same were also not disclosed during the assessment completed for the year. The aforesaid position indicates that there is escapement of assessment during the year. Besides the books of accounts and documents on which you may rely in support of the contentions, you are required to produce the "tanker-wise ocean loss report", bill of lading and "proration report" in respect of all receipts/dispatches made at/from the Lighterage Terminal at Paradeep including complete accounts of receipt and disposal of goods received at the terminal and all the documents and records relating thereto. Sd/- Sales Tax Officer, Cuttack 1 East Circle, Cuttack" 22. The above letter shows that in the return filed for the year 2001- 2002 under the C.S.T. Act, the alleged transactions, i.e., dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment. It is only on verification/examination of the returns filed by the dealer under OST Act and CST Act for the period of under assessment as well as the documents/statements furnished by the petitioner at the time of reassessment proceedings, the Assessing Officer came to the conclusion that the transactions in question effected from Paradeep Lighterage Terminal to other Oil Companies have neither been reflected in the return nor disclosed at the time of assessment. 25. The Assessing Officer has extracted the report of Paradeep Port Trust and Ocean Loss Report submitted by the IOCL in reassessment order only for the purpose of better appreciation of the alleged transactions effected by the petitioner dealer which has been informed to the petitioner vide letter dated 30.12.2006 (Annexure-3). The information of Paradeep Port Trust or IOCL has not been utilized by the Assessing Officer against the petitioner-dealer to enhance the turnover alleged to have been escaped from assessment in notice dated 30.12.2006 under Annexure-3. What is taxed in the impugned reassessment order was exactly the same transaction shown in the letter dated 30.12.2006 (Annexure-3) communicated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that audit objection may be a relevant consideration but the Sales Tax Officer has to form his objective opinion taking that objection into consideration. But the Sales Tax Officer has totally abdicated or surrendered his discretion to the objection of the audit party by mechanically reopening the assessment. Therefore, this Court in the said case has held that the exercise of power under Rule 12(8) of the CST (O) Rules has been vitiated and accordingly quashed the impugned notice of reassessment. 29. In Maharaja Dharmandar Prasad Singh' case (supra), the Hon'ble Supreme Court held that when the State Government alleged to have directed the Authority to initiate the proceedings to cancel the permission for construction given in respect of lease land on the ground that the lessee had violated the terms of the lease. However, since no casual connection was shown between the Government's directives and the proceedings initiated for cancellation of the permission, it could not be said that the cancellation of permission was vitiated by a surrender of discretion on the part of the Vice- Chairman. 30. In the present case, order sheet dated 30.12.2006 (Annexure-6) reveals as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd correct picture of the business transactions although it has been so declared in the returns itself. The declarations furnished don't also appear to have been truthfully made. 32. From the order dated 30.12.2006 and observations of the Assessing Officer in the impugned order, it is clear that the learned Assessing Officer has not mechanically reopened the completed assessment and abdicated and surrendered to the report of the Additional Commissioner. Hence, the decision of this Court in the case of Indure Limited (supra) has no application to the present case and the decision of the Hon'ble Supreme Court in the case of Maharaja Dharmandar Prasad Singh (supra) on the other hand supports the case of the Assessing Officer. 33. In view of the above, we are of the considered opinion that on receipt of report of the Additional Commissioner of Commercial Taxes, the learned Assessing Officer applied his mind and initiated the reassessment proceedings and after examining the documents, returns etc. filed by the petitioner has passed the impugned reassessment order. 34. Question No.(iv) is whether notice for reassessment proceeding under Rule 12(8) of the CST(O) Rules has been i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporation and also to decide the question of jurisdiction on the ground of change of opinion. So far as the present case is concerned, the petitioner has neither disclosed the transactions in question in its return much less furnished any declaration in Form-F to prove that the transfer of goods from Lighterage Terminal at Paradeep to outside the State, i.e., Haldia was otherwise than by way of sale. The completed assessment has also not been reopened by change of opinion. Therefore, the issue involved in present case is not identical / similar to that of the case of Indian Oil Corporation referred to supra and therefore there is no need to remand the case to the Assessing Officer to redo the assessment. We find substantial force in the contention of Mr. Raman. Moreover, we have already held that in the instant case the completed assessment has not been reopened by mere change of opinion. 36. Question No.(vi) is as to whether dispatch of 38,881 KL of HSD and 29,728 KL of SKO during the year 2001-2002 has been effected by the petitioner Company from the Lighterage Terminal at Paradeep to outside State of Odisha either by way of inter-state sale or branch transfer or that the al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the ambit and/or sphere of Section 3(a) of the CST Act. In the reassessment proceeding the petitioner filed one Memorandum of Understanding (MOU) with other Oil Companies for safe keeping of their petroleum products and contended that on the basis of such MOU stock of HSD and SKO kept with the petitioner-Company were transferred to outside State on their request. The goods in question had never moved from Paradeep to Haldia pursuant to any contract of sale and no sale was concluded at any point of time at Haldia. There was no movement of goods resulting completed sale, system and procedure adopted by BPCL and other Companies cannot be treated as inter-state sale in the process of trade and commerce. The movement of goods from Paradeep to Haldia cannot be linked to any supply or sale of goods and the said finding of the opposite party is based on surmise and presumption. 38. The above claim of the petitioner with regard to transfer of the goods in question from Lighterage Terminal at Paradeep to Haldia has not been accepted by the Assessing Officer and he came to the conclusion that the said transactions are by way of interstate sale, inter alia recording the following findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal which is a substantive statutory right. Under the CST Act read with OST Act and Rules framed thereunder, there is provision for First Appeal and Second Appeal. The First Appellate Authority being the fact finding Authority the factual controversy involved in the case can be effectually adjudicated by the said Appellate Authority. Needless to say that appeal is continuation of assessment and appellate authority is empowered to re-appreciate the facts and material evidence available on record. Therefore, it is a fit case where the petitioner should approach the First Appellate Authority for appropriate relief. 40. In the fact situation, it is open to the petitioner to approach the First Appellate Authority challenging the impugned assessment order (Annexure-5), if so advised, taking all its contentions with regard to alleged transfers of HSD and SKO in question from the Lighterage Terminal at Paradeep to outside the State, i.e., Haldia and that the petitioner is not liable to pay tax under the CST Act. If any such appeal is filed within two weeks from today, the Appellate Authority is directed to adjudicate that issue, after affording opportunity of hearing to the petitioner, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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