2016 (12) TMI 1203 - HC - VAT and Sales Tax

Court directs petitioner to pursue appeal independently under Act & Rules, emphasizing on factual review.

The court disposed of the writ petition, directing the petitioner to seek redressal through the appellate forum under the relevant provisions of the Act ... Self-assessment and reassessment - Concessional rate and conditions of Form E16 - Reassessment period and prospectivity of amendment - Judicial review versus appellate fact findingSelf-assessment and reassessment - Whether acceptance of a dealer's self-assessment under Section 9 requires a separate communication before reassessment may be initiated - HELD THAT: - The Court held that a return furnished and accepted as self-assessed under Section 9 does not require an express communication of acceptance to the dealer. Section 7(10)/(11) contemplates scrutiny of returns and issuance of notice only upon detection of mistakes in scrutiny; absent any notice under Section 7(11), the self-assessment is to be regarded as accepted. Reassessment under Section 10 may thereafter be initiated where the authority has reason to believe a dealer has escaped assessment, and such reassessment proceeds after serving notice and affording an opportunity of hearing. [Paras 12]No separate communication of acceptance of self-assessment is required; reassessment can be initiated in accordance with statutory provision where reason to believe escapement exists.Concessional rate and conditions of Form E16 - Whether the assessing authority erred in not applying the second proviso to Rule 3(4) granting relaxation when the petitioner did not furnish Form E16 - HELD THAT: - The Court found no infirmity in the assessing authority's approach because the benefit under the second proviso to Rule 3(4) is expressly conditioned on furnishing a declaration in Form E16 by the buying manufacturer. The petitioner did not demonstrate that such declaration was submitted; where a statutory provision prescribes the manner and condition for obtaining a concession, the condition must be complied with and the Court will not read into the statute. Hence the authority was justified in denying the concessional treatment. [Paras 13, 16]Benefit under the second proviso to Rule 3(4) requires submission of Form E16; absence of such declaration disentitles the petitioner to the relaxation.Reassessment period and prospectivity of amendment - Whether the extension of the reassessment period from five years to seven years (w.e.f. 1.7.2012) operates retrospectively so as to permit reopening of periods prior to 1.7.2012 - HELD THAT: - The Court acknowledged that prior to 1.7.2012 the statute permitted reassessment within five years and that by amending the period to seven years the legislature has extended the time-limit prospectively. Although the legal proposition regarding prospectivity was accepted, the Court declined to adjudicate the issue on merits because the petitioner had not raised this point before the assessing officer; accordingly the Court left the question to the appellate authority for consideration if the petitioner raises it in the statutory appeal. [Paras 17]Issue as to applicability of extended reassessment period to pre-amendment years is left to the appellate forum for fresh consideration.Judicial review versus appellate fact finding - Whether the High Court should re-examine the arithmetical and factual calculations underlying the tax demand in exercise of writ jurisdiction - HELD THAT: - The Court refrained from entering into the merits of factual and arithmetical calculations underlying the demand, observing that such matters are essentially questions of fact and computation and that the petitioner has an efficacious statutory remedy of appeal. The scope of judicial review under Article 226 is limited to examining the decision making process and not to substitute the court's own fact finding for that of the statutory authority or appellate forum. The Court therefore declined to decide the quantitative correctness of the demand and directed that these factual/contentionary points be raised before the appellate authority, which shall decide them uninfluenced by the present order. [Paras 18, 19, 20]Court will not adjudicate factual/arithmetic disputes in writ jurisdiction; petitioner may raise such contentions in the statutory appeal and the appellate forum shall decide them on merits.Final Conclusion: Writ petition disposed of: the Court upheld the assessing authority's procedural power to reassess without a separate communication of acceptance of self-assessment and accepted that denial of concessional benefit was lawful in absence of Form E16; questions concerning retrospective application of extended reassessment period and the factual/arithmetic correctness of the demand are left to the appellate authority to decide, and the petitioner is permitted to avail the alternative statutory remedy. Issues Involved:1. Validity of the tax demand notice and assessment order.2. Whether the assessment was reopened within the statutory period.3. Compliance with procedural requirements for issuing the assessment order.4. Consideration of the second proviso of Rule 3(4) of the Odisha Entry Tax Act.5. Availability of alternative remedy.Detailed Analysis:1. Validity of the Tax Demand Notice and Assessment Order:The petitioner challenged the order dated 6.11.2015, directing the deposit of Rs. 42,32,13,642.00 under the Odisha Entry Tax Act. The petitioner argued that the tax was paid correctly, but the authorities issued a notice alleging tax evasion for the period from 1.4.2008 to 31.7.2015 without proper consideration of the defense statement. The assessment order, dated 16.11.2014, imposed a penalty amounting to Rs. 42,32,13,642.00, which the petitioner contested as being passed without proper notice or opportunity to respond.2. Whether the Assessment was Reopened within the Statutory Period:The petitioner contended that the assessment was reopened for the period from 1.4.2008 to 31.7.2015 without considering the statutory limitation period. Prior to 1.7.2012, the reassessment period was five years, which was later extended to seven years. The petitioner argued that the authorities did not consider this aspect, thus reopening the assessment beyond the permissible period.3. Compliance with Procedural Requirements for Issuing the Assessment Order:The petitioner claimed that the assessment order was passed without issuing a proper show cause notice and without providing a reasonable opportunity to file a reply, which prejudiced the petitioner. The petitioner submitted a reply on 6.11.2015, and the hearing was concluded on the same day, suggesting that the hearing was merely a formality.4. Consideration of the Second Proviso of Rule 3(4) of the Odisha Entry Tax Act:The petitioner argued that the relaxation under the second proviso of Rule 3(4) was not granted. However, the court found that the petitioner did not furnish the necessary declaration in Form E16 to avail the benefit of the concessional rate of tax. The court emphasized that statutory provisions must be followed as prescribed, referencing the Supreme Court's judgment in Babu Verghese and others v. Bar Council of Kerala and others.5. Availability of Alternative Remedy:The opposite party-State argued that the writ petition should not be entertained as the petitioner had an efficacious and alternative remedy available under the statute. The court agreed, noting that the petitioner could raise factual disputes before the appellate authority. The court refrained from entering into the merits of the case, emphasizing that the appellate forum should decide the factual aspects without being influenced by the court's observations.Conclusion:The court disposed of the writ petition, allowing the petitioner to approach the appellate forum under the relevant provisions of the Act and Rules. The appellate forum was directed to decide the factual aspects without being prejudiced by the court's order in this writ petition.