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TMI Blog2023 (4) TMI 1147X X X X Extracts X X X X X X X X Extracts X X X X ..... everse/set aside/annul the second appellate order dated 31.12.2013 (Annexure-13) by declaring that it is not liable to pay tax and penalty, as assessed and demanded by the revenue. 2. The factual matrix leading to filing of the revision petition, as reveals from the record, is that previously the petitioner was a registered dealer under the OST Act, 1947 bearing Registration No. GAI-6142 dated 04.05.1988, but the same was cancelled under Section 9(3-f) with effect from 01.04.1997. Consequentially, the petitioner closed its business since the date of cancellation of registration certificate and had no business up to March, 2004. The reasons for non-carrying on the business are that its proprietor met with an accident and faced serious health hazards, for which, due to paucity of funds and financial constraints, it could not start its business. Thereafter, the petitioner purchased one electronic weighing machine and obtained Weights and Measures License on 10.07.2000 and also obtained license under the Odisha Shops and Commercial Establishments Act, 1956 on 17.07.2002. Said licenses were renewed each year but could not revive its business. Thereafter, the petitioner restarted its bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment, as well as without extending due opportunity of hearing to the petitioner. The years and dates of the orders of assessment are extracted hereunder: Year Date of order of assessment Issue No. & date Received by the petitioner 2001-02 02.11.2008 10989 dt. 15.12.08 11.8.2009 2002-03 17.10.2009 5272 dt. 04.06.10 09.06.2010 2003-04 15.11.2010 2388 dt. 04.05.11 10.10.2011 2004-05 15.11.2010 2390 dt. 04.05.11 10.10.2011 2.4. The petitioner, being aggrieved by the ex-parte orders of assessment referred to above, filed first appeals before the Assistant Commissioner of Sales Tax (re- designated as Joint Commissioner of Sales Tax) Ganjam Range, Berhampur on 28.08.2009 for the year 2001-02, on 29.06.2010 for the year 2002-03 and on 27.10.2011 for the years 2003-04 and 2004-05, which were numbered as AA 15/2009-10, AA 02/2010-11, AA 01/2011-12 and AA 02/2011-12. The said four appeals were heard analogously on 02.08.2012 and 07.08.2012 by the Deputy Commissioner of Sales Tax, Ganjam Range, Berhampur and disposed of vide order dated 25.10.2012 confirming the orders of assessment passed by the assessing officer. The first appellate orders passed on 25.10.2012 were is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on certificate of the petitioner had been cancelled in the year 1997 and due to personal difficulties of the proprietor of the petitioner, it could not continue with the business, but basing on the turnover for the year 1997-98 to 2000-01 wherein it has been said that the liability was 'nil', without determining and fixing the date of liability afresh, imposition of tax cannot be sustained in the eye of law. It is further contended that on the date of inspection, the sale figures were found to be Rs. 180/- and the detailed inventories counting as undertaken by the vigilance was of Rs. 80,072/- as per the sale price of the petitioner and MRP value of the same was determined at Rs. 82,455/- by the vigilance officials. Thereby, brushing aside the factual determination of fact and adoption of daily sales at Rs. 2,000/- and having a running stock of Rs. 5,00,000/-, the assessment made by the assessing officer, which has been confirmed in first appeal by the 1st appellate authority and in the second appeal by the Tribunal, cannot be sustained in the eye of law. It is further contended that if the petitioner is an unregistered dealer, solely on the basis of the dictates of the vigilance a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealer could not produce any sale bill or sale invoice before the officials. If it is the case of the petitioner that after cancellation of registration certificate he had stopped the business and could not revive the same, the Assessing Officer should not have drawn a presumption, on the basis of weighing machine said to have been purchased and obtained Weights and Measures License on 10.07.2000 and available in the premises, and the electronic machine said to have been installed at the shop since 27.03.2000, and come to a conclusion on the basis of best judgment assessment that the petitioner was engaged in clandestine nature of business during 2001-02 and accepted the Gross Turnover estimated by the Inspector of Sales Tax (Vigilance) at Rs. 6,20,000/-. If the assessing officer has not issued any notice to the petitioner to substantiate its contention by affording opportunity of hearing and consequentially made best judgment assessment for the year 2001-02, the same cannot be sustained in the eye of law. More so, even though the ex-parte order dated 31.03.2006 pertaining to Assessment Year 2000-01 passed by the Assessing Officer under Section 12(5) of the OST Act, 1947 had been se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arging provision, i.e., Section 4 and Section 12(5) of the OST Act: "4. Incidence of taxation.- (1) Subject to the provisions of Sections 3-B, 5, 6, 7 and 8 with effect from such date, as the State Government may by notification, in the Gazette, appoint, being not earlier than 30 days after the date of the said notification, every dealer whose gross turnover during the year immediately preceding the date of commencement of the Orissa Sales Tax (Amendment) Act, 1991 exceeded the limit specified in sub-section (7) shall be liable to pay tax under this Act on sales and purchases effected after the date so notified. (2) Every dealer to whom sub-section (1) does not apply shall be liable to pay tax under this Act on sales and purchases with effect from the day immediately following a period not exceeding 12 months during which his gross turnover exceeded the limit specified in sub-section (7). (3) Every dealer who has become liable to pay tax under this Act shall continue to be so liable until the expiry of three consecutive years during each of which has gross turnover has failed to exceed the limit specified in sub-section (7) and such further period after the date of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n sales and/or purchases with effect from the day immediately following a period not exceeding 12 months during which his gross turnover exceeded the limit specified in sub-section (7). Thus, once liability accrues, the obligation to pay tax under the OST Act cannot be disputed and the date of grant of certificate of registration cannot arrest or shift that liability. The liability to pay tax under Section 4 of the OST Act accrues as and when the conditions laid down therein are satisfied. 8.1. From the facts as discussed in the Order-in- Second Appeals it is transpired as follows: "*** Cancellation of registration certificate does not cease the liability of the dealer from payment of tax. From the statement of the dealer it is coming forward that he started his business with effect from 01.09.1997 to 31.03.2000; his business was closed due to health hazard and accident. If at all the contention of the appellant is accepted, the dealer cannot be made free from the clutches of continuing liability as the same is not in consonance with the provision of Section 4(3) of the OST Act. Under the above factual position when the dealer has the continuing liability to pay tax, fixation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner-unregistered dealer for the first period, i.e., 2000-01, has been nullified by the Appellate Authority which stood unchallenged by the Revenue in further proceeding. Therefore, in absence of fixation of liability for the purpose of assessment under Section 12(5) the Tribunal erred in sustaining the liability determined for the subsequent periods, i.e., 2001-02 to 2004-05. This Court in the case of B.K. Parida v. State of Odisha, O.J.C. No. 933 of 1973, decided on 11th December, 1974, observed as follows: "The other contention raised by the assessee seems to have force. Admittedly the assessment is one under Section 12(5) of the Act on the footing that the assessee was liable to pay tax under the Act and had nevertheless without sufficient cause failed to apply for registration. Liability to pay tax arises under Section 4 of the Act and before an assessment under Section 12(5) thereof can be made, the Assessing Officer has certainly to determine as to with effect from which period the liability accrues. ***" 8.5. It may also be relevant to take note of the fact that the inspection of the premises being conducted on 11.08.2004, and no scrap of paper showing transaction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom which a reasonable inference can be drawn that the assessee has not correctly declared or disclosed the consideration received by him and there is understatement or concealment of the consideration in respect of the transfer. Sub-section (2) has no application in case of an honest and bona fide transaction where the consideration received by the assessee has been correctly declared or disclosed by him, and there is no concealment or suppression of the consideration." 25. Taking a cue from Varghese case, (1981) 4 SCC 173, we therefore, hold that Section 143(1-A) [of the Income Tax Act, 1961] can only be invoked where it is found on facts that the lesser amount stated in the return filed by the assessee is a result of an attempt to evade tax lawfully payable by the assessee. The burden of proving that the assessee has so attempted to evade tax is on the Revenue which may be discharged by the Revenue by establishing facts and circumstances from which a reasonable inference can be drawn that the assessee has, in fact, attempted to evade tax lawfully payable by it. ***" 8.7. It is the "sale", but not the "stock", which attracts charge/liability under the OST Act which is manifest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee and estimated the price of short fall by adopting prevailing Government rate and raised an additional demand. In the reference after considering the material on record, this Court held that there is no material at all in the assessment record to support the fact that there has been any clandestine purchase of paddy or similar sale of rice. The only basis was shortage report of the Quality Inspector of Food Corporation of India. In the absence of supporting evidence, merely on the report of the Inspector jumping to the conclusion that there had been purchase and sale making the assessee liable to tax and resorting to best judgment assessment is untenable. In the case of M/s. Lachminarayan Sawalram (supra), this Hon'ble Court held that, before any tax can be levied, there must be a finding that the quantity of petrol and diesel oil which fell short with reference to the stock account had been sold; without such a finding the tax cannot be levied. 8.10. This Court applying ratio of aforesaid two Judgments held in Gupta Distributors v. State of Odisha, (2023) 108 GSTR 154 (Ori) as follows: "7. The main charge against the Assessee was regarding unexplained shortage of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atutes which has been variously stated. Rowlatt J. put it in these words in Cape Brandy Syndicate v. Inland Revenue Commissioners, (1921) KB 64, 71: "In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. The re is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." The object of this rule is to prevent a taxing statute being construed "according to its intent, though not according to its words": In re: Bethlehem Hospital, LR 19 Eq 457. This Court has accepted this rule. Bhagwati J. in A.V. Fernandez Vrs. State of Kerala, (1957) SCR 837, said, "If ... the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter." It has even been said that "if the provision is so wanting in clarity that no meaning is reasonably clear, the courts will be unable to regard it as of any effect.": see Inland Revenue Commissioners Vrs. Bladnoch Distill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the course of inspection. 9.1. This Court does not find any of such reason germane to conclude that there was "transfer of property in goods" so as to fasten the liability on the petitioner under the OST Act for sale of goods for valuable consideration in terms of Section 2(g)- "Sale" and Section 2(h)- "Sale price" read with Section 4- "Incidence of tax". 9.2. Glaring from the Orders of the authorities below that liability of the dealer has been determined for the Assessment Years 2001-02 to 2004-05 basing on the allegations contained in the Report submitted by the Additional Commercial Tax Officer of Vigilance Wing which was confirmed by the Odisha Sales Tax Tribunal notwithstanding the fact that the continuing liability as per Section 4(3) of the OST Act was set aside in respect of Assessment Year 2000-01 based on same material. This aspect attained finality inasmuch as no second appeal was preferred by the State of Odisha against the Order of the Appellate Authority. The tax on estimated figures on presumed sales has been levied basing on the statement of the petitioner made before the Vigilance personnel during the inspection. Availability of cash of Rs. 180/- does not l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate of Bihar, (1957) 8 STC 770 (SC), at page 778 where Their Lordships observed: 'We find nothing in those observations which runs counter to the observations made in Dhakeswari Cotton Mills' case [(1949) 1 SCR 941]. No doubt it is true that when the returns and the books of account are rejected, the assessing officer must make an estimate, and to that extent he must make a guess; but the estimate must be related to some evidence or material and it must be something more than mere suspicion. To use the words of Lord Russell of Killowen again, 'he must make what he honestly believes to be a fair estimate of the proper figure of assessment' and for this purpose he must take into consideration such materials as the assessing officer has before him, including the assessee's circumstances, knowledge of previous returns and all other matters which the assessing officer thinks will assist him in arriving at a fair and proper estimate. In the case under our consideration, the assessing officer did not do so, and that is where the grievance of the assessee arises.' 12. With due respect to the decision, it appears that the best judgment procedure adopted by the assessing authority must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material was discovered is not relevant. What is relevant is the nature of evidence or material discovered during inspection is the most important thing. In absence of the same, the same cannot be utilized for making assessment for other years unless their relevance to any other period is established by the Assessing Officer. 11. In the above view of the matter, the orders dated 02.11.2008, 17.10.2009, 15.11.2010 and 15.11.2010 passed by the assessing officer under Annexures-1 to 4, as well as the orders passed by the first appellate authority in AA 15/2010, AA 02/2010-11, AA 01/2011-12 and AA 02/2011-12 on 25.10.2012; and the orders dated 31.12.2013 passed by the Tribunal in S.A. Nos. 75, 76, 77 and 78 of 2012-13 cannot be sustained in the eye of law and the same are liable to be quashed and are hereby quashed. The matter is remitted back to the assessing officer to make fresh assessment in adherence to the principles of natural justice and in conformity with the provisions of law. 12. As a consequence thereof, the questions of law, as formulated by order dated 15.07.2015, are answered in favour of the petitioner and against the revenue. The revision is accordingly allowed, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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