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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 ..... chase since 2000-01 and also at the time of inspection the dealer 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/-. On perusal of the orders passed by the assessing officer, first appellate authority and also the second appellate authority, namely, the Tribunal, it appears that no material relevance was indicated to justify the assessment of daily sales for the assessment years 2001-02, 2002-03 and 2003-04. Thereby, fixing of liability by the Assessing Officer on surmises and conjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 - Revision allowed. - STREV NO. 67 OF 2014 - - - Dated:- 25-4-2023 - HONOURABLE DR. JUSTICE B.R. SARANGI AND HONOURABLE MR. JUSTICE M.S. RAMAN For the Petitioner : M/s. Rudra Prasad Kar, Madhablal Agarwalla and Mukesh Agarwal, Advocates For the Opposite party : Mr. Sunil Mishra, Standing Counsel (CT GST Organisation) DR. B.R. SARANGI,J. The petitioner is a proprietorship concern of Sri A. Baikuntha Rao Subudhi. As an unregistered dealer under the Odisha Sales Tax Act, 1947 (for short referred to as OST Act ), it started its business from April, 2004 in retail and semi-wholesale trade at Big Bazar, Berhampur and dealt in general merchandise, i.e., plastic goods, salt, rubber band, disposable glasses and plates etc. within the jurisdiction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng dealership of M/s. Savana Traders and Service, Cochin and others. The inspecting officials recorded the statement unilaterally of their own and made the proprietor of the petitioner to sign the same. 2.1. The Sales Tax Officer, Ganjam Circle, Berhampur, relying upon the Vigilance Report bearing No. 8 dated 29.11.2004, which was forwarded to him, passed an ex-parte order of assessment on 31.03.2006 under Section 12(5) of the OST Act, 1947 for the year 2000-01, issued in Memo No. 11023 dated 05.09.2007, determining the G.T.O. T.T.O. at Rs. 6,20,000/- and raised demand of Rs. 1,70,500/-. 2.2. Aggrieved by the said ex-parte order of assessment dated 31.03.2006, the petitioner preferred appeal and the first appellate authority by its order dated 26.05.2009 in appeal bearing No. AA 207/2007-08 allowed the appeal of the petitioner by annulling the order of assessment. As such, the first appeal order passed by the Assistant Commissioner of Sales Tax, Ganjam Range, Berhampur was received by the petitioner on 22.07.2009. Thereby, it has reached its finality as not disputed by either of the parties. 2.3. After disposal of the first appeal for the year 2000-01, the assessing offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner and behind the back of the petitioner. Its further contention before the Tribunal was that no liability ensued for payment of tax as per Section 4 of the OST Act, 1947 and, as such, it had no business till April, 2004. More so, relying upon the vigilance report, the assessments made by the assessing officer cannot be sustained in the eye of law. Even though the petitioner raised such objection, but the Tribunal disposed of the aforesaid four second appeals by a common order dated 31.12.2012 upholding the order of the forums below by holding that the STO is justified in his action in completing the assessment for the impugned periods. Consequentially, the Tribunal dismissed the second appeals preferred by the petitioner confirming the orders of the Deputy Commissioner of Sales Tax in first appeals. Hence, this revision. 3. The petitioner has formulated as many as nine questions of law, as indicated in paragraph 32 of the revision petition. But, while entertaining the revision petition, this Court, vide order dated 15.07.2015, admitted the revision petition on the following questions of law: (II) Whether on the facts and in the circumstances of the case, the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.J.C. No. 1 of 1986 disposed of on 23.09.1991 reported at (1993) 88 STC 489 (Ori). 5. Mr. Sunil Mishra, learned Standing Counsel appearing for the revenue vehemently contended that since the weighing machine was available in the business premise, that presupposes that the petitioner was carrying on its business and as the petitioner is an unregistered dealer while the vigilance authority found on inspection that there was stock available amounting to Rs. 82,455/-, on that basis best judgment assessment has been made by the assessing officer. Thereby, no illegality or irregularity has been committed by the authority in making such assessments, which have been confirmed in first appeals as well as in the second appeals. Thereby, the claim made by the petitioner cannot be sustained in the eye of law. It is further contended that reliance placed by the petitioner in J. Gopal Rao (supra) has no application to the present context. 6. On the above backdrop of the case, the questions of law, which have been formulated and basing upon which the revision petition has been admitted, are to be taken into consideration. As a matter of fact, the Assessing Officer in support of start of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hine on 27.03.2000, no presumption can be drawn that the petitioner had carried out the business and on that basis the assessment is to be made. As such, mere presumption cannot be the basis for any assessment. Furthermore, the material discovered relating to any particular assessment year cannot be used for making assessment for other years, unless their relevance to any other period is established by the assessing officer. On perusal of the orders passed by the assessing officer, first appellate authority and also the second appellate authority, namely, the Tribunal, it appears that no material relevance was indicated to justify the assessment of daily sales for the assessment years 2001-02, 2002-03 and 2003-04. Thereby, fixing of liability by the Assessing Officer on surmises and conjectures cannot be sustained in the eye of law. More so, if the Vigilance Officials conducted inspection in April, 2004, that material can be utilized for the assessment made in same year, i.e., 2004-05 but the same cannot be used for the assessment years 2001-02, 2002-03 and 2003-04, particularly when the petitioner had not carried out any business due to reason beyond its control. Needless to say, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnover again exceeds the limit specified in sub-section (7). *** (7) For the purposes of this section, the limit shall be (a) in relation to a dealer who is an importer, Rs. 20,000/-; (b) in relation to a dealer who manufactures any goods (other than such goods as the State Government may, by notification, specify from time to time in this behalf), Rs.1,00,000/-; (c) in relation to a dealer engaged in the execution of works contract and in execution thereof supplies goods (whether as goods or in some other forms), Rs. 1,00,000; And (d) in relation to any other dealer not covered by clauses (a), (b) and (c), Rs. 2,00,000/- Provided that nothing in this section shall apply in respect of a casual dealer. 12. Assessment of tax. (5) If upon information which has come into possession, the Commissioner is satisfied that any dealer has been liable to pay tax under this Act in respect of any period and has nevertheless, without sufficient cause, failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, the learned ACST in his order observed that since there is no basis on continuing liability and the learned STO has simply accepted the allegation as made in the new case report without making any enquiry on the business activities of the dealer and passed the ex-parte order, the order passed by the learned STO being not supported with any documentary evidence towards the continuing liability is not sustainable in law. *** 8.2. The aforesaid observation of the Tribunal is not correct view of the matter as, the liability of the assessee has been determined by the Sales Tax Officer accepting the observations contained in the very same report. As it appears from the above narration that the liability determined in respect of Assessment Year 2000-01 was nullified on the material fact that there was no evidence of liability being subsisted for the years 2000-01, and there was no enquiry as to business activities of the dealer. For the same reason being available during the period from 2001-02 to 2003-04, the Tribunal should have decided the case accordingly. 8.3. It may be pertinent to make observation that the inspection of the business premises was made on 11.08.2004 by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in J. Gopal Rao (supra), wherein it has been observed as follows: 6. The prime question is whether there can be backward and forward projection of materials detected which are relevant to a particular assessment for the purpose of making assessment for some other year. However, if the assessing officer wants to do so, some material has to be brought on record to justify just projection. Mere presumption cannot be the basis for any assessment. The date when material was discovered is not relevant. What is material is the nature of evidence or material discovered during inspection. If materials discovered relate to any particular assessment year, those cannot be utilised for making assessment for other years, unless their relevance to any other period is established by the assessing officer. Similar view was expressed by the Allahabad High Court in Babu Ram Vishnoi Vrs. Commissioner of Sales Tax, [1972] 29 STC 392 and Hukam Chand Mahendra Kumar Vrs. Commissioner of Sales Tax, [1972] 29 STC 394. In the case at hand, no material of relevance has been indicated to justify the estimation of daily sales for assessment years 1979 80 and 1980 81. Therefore, the fixation of liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of items declared to be taxed under Section 3B, i.e., Goods liable to purchase tax . Therefore, unless the Revenue is in a position to demonstrate that consideration has been received in connection with sale effected, no sales tax could be levied by analogy. Noteworthy here to refer to a Division Bench decision of this Court rendered in the case of Bansi Tyre Services v. Orissa Sales Tax Tribunal, (2009) 20 VST 475 (Ori) where the goods being not subject to tax at purchase point, it has been observed that, 12. *** To a query made to the learned counsel for the Revenue as to whether any purchase tax is payable on the purchase of tyres. Shri Kar submitted that purchase tax was not payable on tyres. Therefore, we fail to understand as to how suppression of purchase by a dealer would have any bearing on the question of suppression of sales . It is obvious therefore, that the purchase of 16 tyres and not accounting the same, cannot have nexus with the suppression of sales and therefore, to this extent it must be held that the authorities have failed to substitute any nexus between the same. *** Obviously non-disclosure of expenditure is of no relevance to suppress ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessee, there cannot be an automatic enhancement of the taxable turnover. 8. For the aforementioned reasons, the Court is unable to sustain the reasoning of the Tribunal for restoring the order of the STO and reversing the order of the ACST. The question framed by this Court is answered in the negative by holding that the enhancement of turnover, in the absence of any material to establish that the goods found short have been sold, is neither lawful nor valid and is contrary to the law explained by the Court in Mahabir Rice Mills (supra). The question is accordingly answered in favour of the Assessee and against the Department. 8.11. In yet another case being Radhakeshav Rice Mill Pvt. Ltd. v. State of Odisha, 2022 (I) ILR-CUT 300 = (2023) 108 GSTR 157 (Ori) it has been observed as follows: In the present case, there is no material brought on record from the side of the Department to suggest that the shortage stock was sold by the Petitioner. Therefore, in absence of any such evidence, it would not be just and proper to hold that there was deficiency in stock and so the suppression of sales by the Petitioner. Apart from that, the shortage in stock is based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout any purchase bills, does it not amount to purchase suppression? Such a presumption is hard to chew. Keeping in view the aforesaid Judgments and reading Section 4 alongside definition of sale given under Section 2(g), there is no ambiguity that it is the transfer of property in goods which is subject-matter for levy of sales tax. In the case at hand, there is no evidence on record to show that the petitioner had sold goods. Detection of physical stock of Rs. 82,455/- alleged to have been available in the business premise on the date of visit by the Vigilance personnel, i.e., 11.08.2004 cannot itself be an indicator for assuming that the petitioner-dealer had been engaged in clandestine business activity since 2001- 02 or prior thereto. Admittedly, the goods found in stock are not declared to be levied with tax at purchase point. Therefore, the conclusion arrived at by the Tribunal is not only contrary to the provisions of the statute, but suffers perversity of fact. It is trite that any determination of fact by the Revenue Authorities including the Tribunal, as final-finding authority, which is not in conformity with the requirement of relevant provisions of the statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal nothing more has been enquired into by neither the Assessing Authority nor the Appellate Authority. The Tribunal also without appreciating the legal position affirmed the conclusion of the authorities below. 9.3. In this connection it may be worthwhile to refer to the following dicta as enunciated in CIT Vrs. Ashok Kumar Soni, (2007) 291 ITR 172 (Raj): 15. It is trite to say that admissions are relevant pieces of evidence and are not conclusive proof of fact. An admission can always be explained. Once this position is accepted, the question remains of appreciating evidence which is on record, which includes the evidence in the form of attending circumstances and the statements by which the previous statement is sought to be explained.*** 9.4. It is significant to notice that the entire case of the Revenue as culled out from the Order-in-Second Appeal of the Odisha Sales Tax Tribunal is that the determination of turnover for levy of tax liability cropped on the basis of admission of the petitioner that its daily sales is at Rs. 2,000/-. Taking into consideration observations made in the case of State of Odisha Vrs. Banita, 109 (2010) CLT 146 = (2010) I ILR-CUT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers the Assessing Officer to undertake assessment to the best of his judgment ; nevertheless, a mere assumption based on a visit on a particular date of inspection of the possible daily average sale cannot and ought not to form the foundation for resorting to best judgment assessment. Reference may be had to decta laid down in Laxmi Lime Centre Vrs. State of Odisha, 2017 (I) ILR-CUT 432 = (2017) 100 VST 220 (Ori). 9.6. It needs to be mentioned that Section 15 of the OST Act deals with Accounts which requires every registered dealer or other dealer on whom a notice has been served to furnish returns under sub-section (1) of Section 11 to keep true account of the value of goods bought and sold by him, and the books of accounts relating to his business. In the instant case, it is not the case of the Department that the dealer is a registered dealer nor did the Revenue contend that notice was served to furnish returns under sub-section (1) of Section 11. Therefore, non-maintenance of books of account by the present petitioner-dealer, whose registration has been cancelled under Section 9(3-f) of the OST Act with effect from 01.04.1997, cannot be taken as pointer for suppre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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