Scrutiny of nil returns under entry tax rules cannot justify unilateral disallowance of deductions without following the show-cause procedure.

Rule 10(6)(b) of the Orissa Entry Tax Rules, 1999 permits Form E24 only where scrutiny shows that the dealer has paid less tax than admitted as payable in the return; it does not authorise the assessing authority to reassess the return, reject deductions, or determine liability on a different basis without hearing the dealer. Where the demand arises from alleged inadmissibility of deductions in a nil return, the matter falls outside rule 10(6)(b) and must proceed under rule 10(5) through the show-cause mechanism. The authority therefore lacks jurisdiction to issue Form E24 and consequential Form E8 notices in such circumstances.

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Issues: Whether, on scrutiny of a dealer's return under rule 10(6)(b) of the Orissa Entry Tax Rules, 1999, the assessing authority could unilaterally disallow deductions claimed in a nil return and raise demand by issuing Form E24 and Form E8 notices, instead of proceeding under the show-cause mechanism in rule 10(5).

Analysis: Rule 10(6)(b) permits issuance of Form E24 only where, upon scrutiny of the return, the dealer is found to have paid less tax than what is payable by him as per the return furnished. The provision is confined to the differential between the tax admitted in the return and the amount actually paid with it. It does not authorise the assessing authority to reassess the return, reject claimed deductions, or determine tax liability on a different basis without hearing the dealer. If such an expansive meaning were given, the provision would permit unilateral disallowance of deductions and would offend the principles of natural justice. The statutory scheme distinguishes this situation from cases where tax shown in the return itself remains unpaid or proof of payment is absent, for which rule 10(5) provides the show-cause procedure through Forms E22 and E23. Since the petitioner had filed a nil return and the demand arose only from the authority's view that certain deductions were inadmissible, the case did not fall within rule 10(6)(b).

Conclusion: The assessing authority had no jurisdiction to issue Form E24 and consequential Form E8 notices on the footing that deductions claimed in the return were inadmissible. The proper course, if the authority considered tax due on the return to remain unpaid because of excessive or wrong deductions, was to proceed under rule 10(5) by issuing a show-cause notice.

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