Intra-State sale finding on DEPB transactions failed where authorities relied on a set-aside tribunal observation and lacked independent material.

Assessment of DEPB sale as an intra-State transaction could not be sustained where the revisional and assessing authorities relied mainly on an Andhra Pradesh Sales Tax Tribunal observation that had already been set aside by the Supreme Court. With no independent material and no fresh examination of the relevant facts, the finding that the sale occurred within Orissa was held untenable. The notice issued under rule 80 and the assessment under section 12(4) were therefore vulnerable, and both the assessment order and revisional order were set aside. The matter was remitted for fresh assessment after giving the dealer an opportunity to produce documents and requiring independent consideration of the materials.

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Issues: Whether the assessment and revisional orders treating the DEPB sale as an intra-State sale could be sustained when they were based only on the earlier Andhra Pradesh Sales Tax Tribunal observation, and whether the matter required fresh assessment.

Analysis: The revisional and assessing authorities proceeded on the footing that the sale of DEPBs was an intra-State sale within Orissa, but their conclusion rested substantially on the Andhra Pradesh Sales Tax Tribunal's observation. That observation had already been set aside by the Supreme Court, which held that the Tribunal had gone beyond the limited question before it and that no sufficient material had been examined to support a finding that the transactions were intra-State sales in Orissa. In the absence of independent material and fresh consideration of the relevant facts, the findings recorded by the authorities could not stand. The notice under rule 80 and the resulting assessment under section 12(4) were therefore vulnerable.

Conclusion: The writ petition succeeded. The assessment order and revisional order were set aside and the matter was remitted for fresh assessment after giving the petitioner an opportunity to produce documents and after the authority considered the materials independently.

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