2013 (4) TMI 199 - HC - VAT and Sales Tax

Dismissed petition challenging reassessment order based on new transactions & fair hearing. Procedural mistake not fatal.

The court dismissed the writ petition challenging the reassessment order, ruling that the reassessment was not based on a mere change of opinion but on ... Reopening of assessment - change of opinion - principles of natural justice - reason to believe - Rule 12(8) of the CST(O) Rules - abdication of jurisdiction - burden of proof under Section 6A - inter-state sale - Form F / declaration for stock transferChange of opinion - reopening of assessment - Completed assessment was not reopened merely by change of opinion. - HELD THAT: - The Court explained that reopening on the ground of change of opinion is impermissible only where the earlier assessment had considered the same turnover and the Assessing Officer had formed an opinion not to tax it. The earlier assessment of 31.03.2005 did not show that the transactions now sought to be taxed were earlier considered and held not taxable; the original assessment was completed on available materials because the dealer failed to produce books and declaration forms. In absence of any material demonstrating that the Assessing Officer earlier formed a view and declined to tax these transactions, the contention of reopening by mere change of opinion is misconceived and fails. [Paras 17, 18, 19]The challenge that reassessment was a mere change of opinion is rejected.Principles of natural justice - Rule 12(8) of the CST(O) Rules - reason to believe - Whether the petitioner was afforded reasoned notice and adequate opportunity of hearing and whether materials relied upon were confronted to it. - HELD THAT: - The Court reproduced the letter dated 30.12.2006 which disclosed the reasons for reopening and specific documents the Assessing Officer required. The reassessment was completed on the basis of the same transactions communicated in that letter. The Assessing Officer gave multiple opportunities, the proceedings extended over two years, and the petitioner was informed of the nature of the evidence sought. References to information from Paradeep Port Trust and IOCL were extracted in the reassessment order; the petitioner did not demonstrate any resulting prejudice. On these facts the Court held that reasons were communicated and reasonable opportunity was afforded. [Paras 22, 23, 24, 25, 26]Reassessment was preceded by disclosure of reasons and the petitioner was afforded adequate opportunity; principles of natural justice were not violated.Abdication of jurisdiction - audit report - Whether the Assessing Officer mechanically acted on a report of the higher authority and surrendered his discretion. - HELD THAT: - The ordersheet and reassessment record show that on receipt of the Additional Commissioner's report the Assessing Officer applied his mind, examined the hospitality arrangement, the returns, documents and earlier assessment and reached an independent conclusion of escapement of turnover. The Court distinguished earlier authority where mechanical reopening was found and held that here the Assessing Officer did not merely act as a mouthpiece of the higher authority but formed his own satisfaction before reopening and completing reassessment. [Paras 30, 31, 32, 33]No abdication of jurisdiction; reassessment was not mechanically dictated by the higher authority.Procedural irregularity - Whether an apparent discrepancy in dates on the notice vitiates the reassessment proceedings. - HELD THAT: - The Court noted the ordersheet entry dated 30.12.2006 recording reopening under Rule 12(8) and that the Rule 10 notice was in fact issued on 30.12.2006. The appearance of the date 29.12.2006 on a corner of the notice was held to be an inadvertent mistake. On that basis the Court held the contention that the notice preceded initiation of proceedings is unsustainable. [Paras 34]The inadvertent date error on the notice does not vitiate the reassessment proceedings.Precedent distinction - Whether the present case is identical to the Indian Oil Corporation matter so as to require remand. - HELD THAT: - The Court observed that the IOCL decision remitted the matter for verification of Form F declarations and jurisdictional factors; in the present case no Form F was furnished and the transactions in question were not disclosed in returns. Given these material distinctions and the Court's finding that the earlier assessment was not reopened by change of opinion, the IOCL precedent was held not to be applicable. [Paras 35, 36]The issues are not identical to IOCL; remand on that ground is not required.Burden of proof under Section 6A - inter-state sale - Form F / declaration for stock transfer - Whether the dispatches from Paradeep to Haldia constituted inter-state sales or transfers otherwise than by way of sale. - HELD THAT: - The Court summarised Section 6A placing the burden on the dealer to prove that movement was otherwise than by sale and recognized that Form F is an enabling but not exclusive mode of discharge. The Assessing Officer examined the hospitality/safe keeping arrangement, documentary material and returns and recorded findings that a substantial part of the consignments were inter-state sales by BPCL and had not been reflected in returns. Having recorded those factual findings the Court declined to remand the issue for fresh adjudication and observed that the petitioner has an efficacious statutory remedy by way of appeal to challenge the factual conclusions. [Paras 36, 37, 38, 39, 40]The Assessing Officer has recorded findings that the consignments constituted inter-state sales; the Court declined to re-adjudicate the factual controversy and directed the petitioner to pursue first appeal.Final Conclusion: Writ petition dismissed. The Court found no error in reopening or in procedure, held that the Assessing Officer applied his mind and recorded factual findings that the disputed dispatches were inter-state sales; petitioner permitted to file appeal within two weeks and the appellate authority directed to decide the matter after hearing. Issues Involved:1. Whether the completed assessment has been reopened by mere change of opinion.2. Whether reasonable opportunity of hearing was afforded to the petitioner and the materials utilized against the petitioner-assessee were confronted to him before passing the order of reassessment under Rule 12(8) of the CST (O) Rules.3. Whether the Assessing Officer has passed the impugned reassessment order on the dictate of his higher authority, i.e., the Assistant Commissioner of Commercial Taxes, without applying his own mind.4. Whether notice for reassessment proceeding under Rule 12(8) of the CST(O) Rules has been issued on 29.12.2006 whereas initiation of the reassessment proceeding was made on 30.12.2006 and therefore the entire proceedings are vitiated in law.5. Whether the issues involved in the present case are similar/identical to that of the case of Indian Oil Corporation Limited vs. State of Orissa and Others.6. Whether dispatch of 38,881 KL of HSD and 29,728 KL of SKO during the year 2001-2002 has been effected by the petitioner Company from the Lighterage Terminal at Paradeep to outside State of Odisha either by way of inter-state sale or branch transfer or that the alleged dispatch of goods in question has not been effected by the petitioner either by way of inter-state sale or stock transfer.Detailed Analysis:Issue 1: Reopening of Completed Assessment by Mere Change of OpinionThe petitioner argued that the reassessment was initiated based on a change of opinion, which is impermissible. The court referred to the earlier assessment order dated 31.03.2005 and observed that the transactions in question were not considered in the earlier assessment. The court held that reopening the assessment was not based on a mere change of opinion but on the discovery of transactions that were not disclosed earlier. Therefore, the first ground of challenge failed.Issue 2: Reasonable Opportunity of Hearing and Confrontation of MaterialsThe petitioner was informed of the reasons for reopening the assessment through a letter dated 30.12.2006. The court noted that the petitioner was given sufficient opportunity to produce relevant documents and was aware of the reasons for reassessment. The court found that the reassessment was completed after giving the petitioner reasonable opportunity of hearing and confronting the materials utilized for making the assessment. Thus, the second ground of challenge failed.Issue 3: Reassessment Order Passed on Dictate of Higher AuthorityThe petitioner contended that the reassessment was initiated based on the direction of the Additional Commissioner of Commercial Taxes. The court examined the order sheet dated 30.12.2006 and the reassessment order, concluding that the Assessing Officer had applied his mind and was satisfied that the alleged turnover had escaped assessment. The court held that the Assessing Officer did not mechanically reopen the completed assessment and did not act on the dictate of the higher authority. Therefore, the third ground of challenge failed.Issue 4: Validity of Notice for Reassessment ProceedingThe petitioner argued that the notice for reassessment was issued on 29.12.2006, whereas the initiation of the reassessment proceeding was made on 30.12.2006. The court found that the notice under Rule 10 of the CST(O) Rules was issued on 30.12.2006, and the date 29.12.2006 appearing on the notice was a mistake. The court held that the reassessment proceedings were not vitiated by this mistake. Therefore, the fourth ground of challenge failed.Issue 5: Similarity with Indian Oil Corporation CaseThe petitioner claimed that the issues in the present case were similar to those in the Indian Oil Corporation case, where the Supreme Court had remanded the matter to the Assessing Officer. The court found that the petitioner had not furnished any declaration in Form-F to prove that the transfer of goods was otherwise than by way of sale. The court held that the issues in the present case were not identical to the Indian Oil Corporation case and therefore, there was no need to remand the case. Therefore, the fifth ground of challenge failed.Issue 6: Nature of Dispatch of GoodsThe petitioner claimed that the dispatch of goods from Paradeep to Haldia was not by way of inter-state sale or stock transfer. The court referred to Section 6A of the CST Act, which places the burden of proving that the movement of goods was otherwise than by way of sale on the dealer. The court noted that the petitioner had not furnished any Form-F declarations. The Assessing Officer had concluded that the transactions were inter-state sales based on the facts and materials available. The court held that the petitioner should approach the First Appellate Authority to adjudicate this factual controversy. Therefore, the sixth ground of challenge failed.Conclusion:The writ petition was dismissed, and the petitioner was directed to approach the First Appellate Authority for appropriate relief, if so advised, within two weeks. The Appellate Authority was directed to adjudicate the issue after affording an opportunity of hearing to the petitioner and pass an order in accordance with law.