2015 (1) TMI 177 - HC - VAT and Sales Tax

Invalid assessment notice overturned due to lack of statutory compliance, fresh assessment ordered

M/s. Patitapabana Bastralaya Proprietor Sri Debendra Mohapatra Versus The Sales Tax Officer (Head of The Audit Team) And Others

The court held that the assessment notice issued without allowing the mandatory 30 days period for the production of books of account was invalid. As a ... Notice for assessment of tax issued for production of books of account and documents without complying with section 9C(2) - Held that:- When the statute requires to do certain thing in certain way, the thing must be done in that way or not at all - other methods or mode of performance are impliedly and necessarily forbidden - the legal proposition is based on a legal maxim 'Expressio unius est exclusion alteris', meaning thereby that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner and following other course is not permissible - the same has been decided in Y. Narayana Chetty -vs- Income-tax Officer, [1958 (10) TMI 10 - SUPREME Court] - notice for assessment of tax as a result of audit in Form E-30 dated 19.06.2009 was issued requiring the petitioner to appear in person or through his authorized agent before the AO on 06.09.2009 at 11 A.M. to produce or cause to be produced books of account for the period 2005-06 to 2009-10 - Thus, notice in Form E-30 itself shows that minimum thirty days’ time as provided under sub-section (2) of Section 9C of OET Act has not been granted to the petitioner - Thus, it is a case of clear violation/infraction of the mandatory provisions of Section 9C of the OET Act and proceedings initiated by the AO in pursuance of such invalid notice would be illegal and void. Scope of the powers of AO - Whether the AO who is the creature of the OET Act can act contrary to or de hors the provisions of the Act – Held that:- The Assessing Authority who has issued the notice for assessment of tax as a result of audit in Form E-30 is the creature of the OET Act - he cannot in any manner act contrary to or de hors the provisions of the OET Act - Since sub-section (2) of Section 9C of the OET Act mandates that the dealer shall be allowed time for a period of not less than thirty days for production of relevant books of account and documents, the assessing officer being the creature of the statute cannot allow time less than thirty days - On this score, the notice issued under Annexure-2 for assessment of tax as a result of audit is invalid – the same has been held in COMMISSIONER OF CUSTOMS, MUMBAI Versus VIRGO STEELS [2002 (4) TMI 53 - SUPREME COURT OF INDIA]. Validity of assessment order u/s 9C of the Orissa Entry Tax Act, 1999 - Whether the order of assessment dated 06.07.2009 passed u/s 9C of the OET Act for the period 01.04.2005 to 31.05.2009 is sustainable in law – Held that:- Order of assessment passed in pursuance of notice in Form E-30 issued in violation of requirement of Section 9C(2) of the OET Act is not sustainable in law – thus, the order passed under Section 9C of the OET Act for the period 01.04.2005 to 13.05.2009 is set aside and the matter is remitted back to the AO for fresh assessment – Decided in favour of petitioner. Issues Involved:1. Validity of the notice for assessment of tax issued without complying with the mandatory 30 days period under Section 9C(2) of the OET Act.2. Jurisdiction of the Assessing Officer to pass the order of assessment based on an invalid notice.3. Authority of the Assessing Officer to act contrary to the provisions of the OET Act.4. Sustainability of the order of assessment dated 06.07.2009 under Section 9C of the OET Act.5. Final order and directions.Issue-wise Detailed Analysis:1. Validity of the Notice for Assessment of Tax:The petitioner challenged the validity of the assessment notice dated 19.06.2009, arguing it was issued without allowing the mandatory 30 days period for the production of books of account as required under Section 9C(2) of the OET Act. The court examined subsections (1) and (2) of Section 9C, which mandate that the dealer must be allowed a minimum period of 30 days to produce relevant books of account and documents. The court emphasized that the use of the word 'shall' indicates the mandatory nature of this provision. The court cited several precedents to support the principle that statutory requirements must be strictly followed, and any deviation renders the notice invalid.2. Jurisdiction of the Assessing Officer:The court held that the issuance of a valid notice under Section 9C(2) is a condition precedent to the jurisdiction of the Assessing Officer to pass an assessment order. An invalid notice vitiates the entire assessment proceeding. The court referred to various judgments, including the Supreme Court's decision in Y. Narayana Chetty vs. Income-tax Officer, which established that non-compliance with statutory notice requirements invalidates subsequent proceedings.3. Authority of the Assessing Officer:The court reiterated that the Assessing Officer, being a creature of the statute, cannot act contrary to the provisions of the OET Act. Any action taken de hors the statutory provisions is invalid. The court cited the Supreme Court's judgment in Sukhdev Singh and others vs. Bhagatram Sardar Singh Raghuvanshi and another, which held that statutory authorities must adhere strictly to statutory provisions.4. Sustainability of the Order of Assessment:Given the invalidity of the notice, the court concluded that the assessment order dated 06.07.2009 was not sustainable in law. The court emphasized that participation or acquiescence by the petitioner in the assessment proceedings does not cure the defect of an invalid notice. Thus, the assessment order and the consequential demand notice were set aside.5. Final Order and Directions:The court set aside the impugned order dated 06.07.2009 and the consequential demand notice. The matter was remanded to the Assessing Officer with a direction to complete the assessment afresh, ensuring compliance with the statutory requirement of allowing a minimum of 30 days for the production of books of account. The petitioner was directed to appear before the Assessing Officer on 14.10.2014, and the assessment proceeding was to be completed within four weeks thereafter.Conclusion:The writ petition was allowed to the extent indicated, and the court emphasized the importance of strict adherence to statutory provisions, particularly the mandatory 30 days period under Section 9C(2) of the OET Act. The court's decision underscores the principle that statutory authorities must operate within the bounds of the law, and any deviation renders their actions invalid.