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TMI Blog2022 (11) TMI 998X X X X Extracts X X X X X X X X Extracts X X X X ..... n the dealer to proceed with the reassessment, if on the basis of any information in his possession he is of the opinion that the whole or any part of the turnover of the dealer in respect of any period(s) has escaped assessment, or has been under-assessed, or has been assessed at a rate lower than the rate at which it is assessable or that the dealer has been allowed wrongly any deduction from his turnover or exemption under the Act or has been wrongly allowed set off of input tax credit in excess of the amount admissible under clause (c) of sub-rule (3) of Rule 7 - In the instant case, scrutiny of Order Sheet at Annexure-7 shows that vide Order dated 24.08.2013 the Assessing Authority merely directed for issue of notice in Form IVA without forming any opinion much less ascribing reason . This is indicative of non-application of mind and mechanical application of mind. In absence of power of review conferred by or under the statute, in the garb of reassessment, the concluded assessment could not be reopened by the Assessing Authority. As the material available on record does not show independent application of mind of the Assessing Authority having regard to the mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hip firm, approached this Court assailing Order dated 28.01.2014 passed by the Sales Tax Officer, Barbil Circle, Barbil, who framed assessment under Section 9(2) of the Central Sales Tax Act, 1956 (for brevity, CST Act ), read with Rule 12(4) of the Central Sales Tax (Odisha) Rules, 1957 (in short, (CST(O) Rules), raising a demand to the tune of Rs.39,68,397/- pertaining to the tax periods from 01.07.2007 to 31.03.2010. This apart, the petitioner also questioned the rejection of petition vide Order dated 28.01.2014 declining to exercise power under Section 81 of the Odisha Value Added Tax Act, 2004, for rectification of aforesaid Assessment Order under the CST Act. The writ petition and contention of the counsel for the petitioner: 2. The Audit Assessment under Rule 12(3) of the CST(O) Rules had been concluded vide Order dated 05.08.2011 by the Sales Tax Officer, Barbil Circle, Barbil for the tax periods from 01.07.2007 to 31.03.2010, wherein the claim of exemption of penultimate sale in course of export under Section 5(3) of the CST Act was allowed on appreciation of Certificate of Export in Form H required to be furnished under Rule 12(10) of the Central Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the way of export sale to avail exemption of tax on export sale. Without production of relevant docuemnts the total export sale to be taxed @4% comes to 50,56,027.28 plus penalty two times comes to Rs.1,01,12,054.56, total comes to Rs.1,51,68,081.84 dealer is liable to pay as per provision of law. This is also admitted by the dealer. ii. During the course of Audit Assessment under Rule 12(3) of the CST(O) Rules, books of account was produced along with required documents and statements. Being satisfied, the Assessing Authority has recorded the following fact in the Assessment Order dated 29.07.2011 (Annexure-4) passed under Rule 12(3): *** The dealer has disclosed the gross turnover at Rs.27,34,38,227/- as per the revised return filed. The dealer is allowed deduction of Rs.34,87,547/- towards collection of tax and Rs.12,23,71,036/- towards export sale supported by Form H, the balance turnover is determined at Rs.14,75,79,644/- *** iii. Having not applied independent mind and formed opinion, the Sales Tax Officer is not competent to invoke power under Rule 12(4) of the CST(O) Rules by surrendering to the objection raised by the A.G., Odisha. As the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t turnover of Rs.12,23,71,036/- has been treated to be exempted under Section 5(3) of the CST Act as the same is supported by Certificate of Export in Form H as prescribed under Rule 12(10) of the CST(R T) Rules and the same was allowed as deduction from total turnover disclosed by the petitioner-assessee. On the basis of objection raised by the A.G., Odisha to the effect that said exemption/deduction was wrongly allowed by the Sales Tax Officer, Barbil Circle, Barbil while concluding Audit Assessment under Rule 12(3), proceeding under Rule 12(4) was initiated by undertaking re-assessment. While passing Reassessment Order dated 28.01.2014, the said Assessing Authority, not only reversed the already allowed claim of exemption of penultimate sale under Section 5(3) of the CST Act, but also varied with the figure of Rs.1,36,25,062/- and recomputed said figure as Rs.3,07,82,938/-. Question raised for adjudication: 5. WHETHER the exercise of power under Rule 12(4) of the CST(O) Rules by the Sales Tax Officer is legally tenable basing on the objection raised by the A.G., Odisha on the ground that no documentary evidence is available in original record relating to Audit Assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s indicative of fact that the Assessing Authority sought to review the Order dated 29.07.2011 passed under Rule 12(3) in the garb of exercise of power under Rule 12(4) of the CST(O) Rules. In the certified copy of Order Sheet enclosed to writ petition as Annexure-7, the following is recorded by the Sales Tax Officer on 24.08.2013: Issue notice for assessment of tax in Form IV-A of CST(O) Rules fixing date of hearing on 25.09.2013. 7.1. Neither any reason is assigned prior to issue of said notice contemplating initiation of proceeding under Rule 12(4) of the CST(O) Rules nor the record of proceeding indicated independent application of mind. Such a course is not approved by this Court in the case of Indure Limited Vrs. Commissioner of Sales Tax Ors., (2006) 148 STC 61 (Ori). 7.2. This Court in the case of Gopalpur Port Ltd. Vrs. Assistant Commissioner of Sales Tax Ors., W.P.(C) No.17746 of 2012, disposed of vide Order 19.08.2015 recorded the following facts: In the present writ application, the petitioner has sought to challenge the order dated 31.07.2012 passed by the Sales Tax Officer, Ganjam II Circle, Berhampur under Section 10 of the Orissa Entry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having attained finality and no challenge having been made to the same, remains final and binding on all parties. In view of the aforesaid conclusion arrived at, we find that the opposite party had no jurisdiction in this matter to initiate a fresh proceeding under Section 10 of the O.E.T Act, resulting in passing of the order dated 31.07.2012 under Annexure-3. Therefore, we have no hesitation in directing quashing of Anenxure-3. This Court orders accordingly. 7.3. This Court in the case of Tree Nuts India (P) Ltd. Vrs. State of Odisha, STREV Nos.26, 27 28 of 2013, vide Order dated 13.07.2022 made the following observation by analysing the fact: 7. But the Tribunal also found the fault with the ACST for quashing the assessment orders without assigning reasons with reference to the exact objection raised by AG and according to the Tribunal, the STO and the ACST did not properly interpret the provision of law with reference to exemption allowed by the DIC and the objection raised by AG (O). As a result, the cases were remanded to the STO for a fresh adjudication. *** 12. The jurisdictional requirement of the STO having to form an independent opinion regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a valid basis for re-opening. But the Sales Tax Officer s formation of opinion cannot be dictated by audit objection. (d) In the instant case in the audit report it was objected that the tax has been under assessed. The concluding part of the audit objection states The desirability of the opening of the case under Section 12(8) of O.S.T. Act for re-assessment may be kindly re-examined under intimation to Audit . The said audit objection is dated 10.9.98. The impugned noticed of re-opening was issued on 23.9.98. But the Sales Tax Officer recorded an order for issuing the notice under Section 12(8) of O.S.T. Act only on 24.10.98. So the notice was issued mechanically even before the order for issuing the notice was actually passed. This is not permissible in law. 14. Again in pagraph-18 of the Indure Limited (supra), it was explained as under: 18. The importance of this doctrine lies in the fact that if a statutory functionary is vested with a power to act, it is that statutory authority alone who will form the necessary objective opinion for exercising its power. In doing so, it may take into consideration whatever is relevant. As in the instant case audit objecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase of paddy within the State of Uttar Pradesh and created a demand of Rs.72,408/- in addition to the demand under original assessment order. However, keeping in view the pendency of writ petition before the High Court, the demand notice was not enforced. After reviewing legal position as set forth in earlier cases, the Hon ble Apex Court in the aforesaid reported case has succinctly restated the law on the point of change of opinion in the context of reassessment as follows: 29. The standard of reason exercised by the Assessing Authority is laid down as that of an honest and prudent person who would act on reasonable grounds and come to a cogent conclusion. The necessary sequitur is that a mere change of opinion while perusing the same material cannot be a reason to believe that a case of escaped assessment exists requiring assessment proceedings to be reopened. (See: Binani Industries Ltd., Kerala vs. Respondent: Assistant Commissioner of Commercial Taxes, VI Circle, Bangalore and Ors., (2007) 15 SCC 435; A.L.A. Firm v. CIT, (1991) 2 SCC 558). If a conscious application of mind is made to the relevant facts and material available or existing at the relevant point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfillment of certain pre-conditions and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the grab of reopening the assessment, review would take place. One must treat the concept of change of opinion as an in-built test to check abuse of power by the Assessing Officer. 9. This Court too has in similar circumstances, where there was a mere change of opinion on the same materials, set aside the reassessment notice and the consequential assessment order by its judgment dated 15th February, 2022 in Writ Petition (Civil) No. 25229 of 2017 (M/s. Tuff Tubes (Orissa) Pvt. Ltd. v. The Deputy Commissioner of Income Tax, Corporate Circle-1(2), Bhubaneswar). 7.6. In the matter of Sri Jagannath Promoters Builders, Giri Road Berhampur, Ganjam Vrs. Deputy Commissioner of Income Tax, Berhampur Circle, Berhampur, Ganjam and others, W.P.(C) No. 14603 of 2014, this Court vide Order dated 26.10.2021 held as follows: 13. In the present case, the reasons for reopeni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e word change of opinion implies formulation of opinion and then a change thereof. In terms of assessment proceedings, it means formulation of belief by an assessing officer resulting from what he thinks on a particular question. It is a result of understanding, experience and reflection. *** 18. Before interfering with the proposed re-opening of the assessment on the ground that the same is based only on a change in opinion, the court ought to verify whether the assessment earlier made has either expressly or by necessary implication expressed an opinion on a matter which is the basis of the alleged escapement of income that was taxable. If the assessment order is nonspeaking, cryptic or perfunctory in nature, it may be difficult to attribute to the assessing officer any opinion on the questions that are raised in the proposed re-assessment proceedings. Every attempt to bring to tax, income that has escaped assessment, cannot be absorbed by judicial intervention on an assumed change of opinion even in cases where the order of assessment does not address itself to a given aspect sought to be examined in the reassessment proceedings. 7.8. The expression change of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on perusal of the Order Sheet at Annexure-7 finds that no reason whatsoever has been assigned in the Order dated 24.08.2013 while issuing notice for assessment of tax in Form IVA of CST(O) Rules . 7.11. This Court in the case of Essel Mining Industries Ltd. Vrs. State of Odisha, 2017 (Supp.-II) OLR 825 in the context of non-assignment of reason observed as follows: 11. Franz Schubert said- Reason is nothing but analysis of belief In Black s Law Dictionary, reason has been defined as a faculty of the mind by which it distinguishes truth from falsehood, good from evil, and which enables the possessor to deduce inferences from facts or from propositions. It means the faculty of rational thought rather than some abstract relationship between propositions and by this faculty, it is meant the capacity to make correct inferences from propositions, to size up facts for what they are and what they imply, and to identify the best means to some end, and, in general, to distinguish what we should believe from what we merely do believe. 12. In Union of India v. Mohan Lal Capoor, AIR 1974 SC 87 it has been held that reasons are the links between th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons for the order made; in other words, a speaking-out. The inscrutable face of the sphinx is ordinarily incongruous with a judicial or quasi-judicial performance. 7.13. In the case of Prabhat Agarwal Vrs. Deputy Commissioner of Income Tax, 2018 SCC OnLine Del 10598, the Hon ble Delhi High Court was in seisin of reassessment notice under Section 147/148 of the Income Tax Act, 1961 and exercised writ jurisdiction under Article 226 of the Constitution of India held as follows: 11. This Court has considered the record. The reassessment notice is based on reasons, which the revenue asserts, was recorded on 28 May, 2007. The question is whether the assesse is correct in asserting- as he does in this case, that these reasons were inserted later and did not exist, or were not reflected when the notice was issued. In other words, the veracity of the revenue s position that reasons existed on the file, before the notice was issued, is disputed. *** 16. It goes without saying that whilst the reasons shown to the court and the petitioner may ipso facto not be faulted, yet the file tells a different story; they were not recorded before the impugned notice was i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CST Act in respect of impugned turnover representing penultimate sale in course of export. By recording following reason in the said assessment order, the Assessing Authority arrived the such conclusion: On being confronted the authorized representative of the dealer submitted a statement which are verified and kept in the record. No other discrepancy is noticed from the books of account produced. In the absence of any other point of allegation in AVR, the return figures are accepted. 8.1. In absence of power of review conferred by or under the statute, in the garb of reassessment, the concluded assessment could not be reopened by the Assessing Authority. As the material available on record does not show independent application of mind of the Assessing Authority having regard to the material in his possession, if any, merely based on objection of Auditor General, Odisha issue of notice in Form IVA in exercise of power under Rule 12(4) of the CST(O) Rules for reopening Audit Assessment concluded under Rule 12(3) on examination of books of account, etc. is impermissible in law and such an action is without jurisdiction. Availability of alternative remedy: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout jurisdiction, exercise of power under Article 226 of the Constitution of India is permissible. 9.5. This Court has already found that the Assessing Authority has reviewed order of assessment dated 29.11.2011 (Annexure-4) passed under Rule 12(3) of the CST(O) Rules and passed order of reassessment dated 28.01.2014 under Rule 12(4) ibid. reconsidering same transaction. In this respect, reliance is placed on the ruling of the Hon ble Apex Court as laid down in Dr. (Smt.) Kuntesh Gupta (supra): 11. It is now well established that a quasi judicial authority cannot review its own order, unless the power of review is expressly conferred on it by the statute under which it derives its jurisdiction. The Vice-Chancellor in considering the question of approval of an order of dismissal of the Principal, acts as a quasi judicial authority. It is not disputed that the provisions of the U.P. State Universities Act, 1973 or of the Statutes of the University do not confer any power of review on the Vice-Chancellor. In the circumstances, it must be held that the Vice-Chancellor acted wholly without jurisdiction in reviewing her order dated January 24, 1987 by her order dated March ..... X X X X Extracts X X X X X X X X Extracts X X X X
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