2021 (10) TMI 245 - HC - VAT and Sales Tax

Court upholds re-computation orders, except for interest on surcharge. Department to issue fresh orders. Writ petitions disposed.

The Court upheld the re-computation orders and notice, except for interest on surcharge. The Department was directed to issue fresh orders considering the ... Calling upon the Petitioner to appear for the purposes of re-computation of tax for the year 2002- 03 - Orissa Sales Tax Act, 1947 - HELD THAT:- The present Assessee could not have been taken by surprise when it received notices for re-computation of tax following the judgment of the Supreme Court in COMMISSIONER OF COMMERCIAL TAXES & OTHERS VERSUS M/S BAJAJ AUTO LTD. & ANOTHER [2016 (11) TMI 31 - SUPREME COURT]. This is because the Petitioner was a party to that judgment. The decision in its writ petition by this Court in Bajaj Auto (HC-1) was common to the Petitioner and Bajaj Auto Ltd. and was the subject matter of the challenge before the Supreme Court - As regards interest on surcharge, the Petitioner is entitled to the same benefit that was granted to a similarly placed Assessee in Bajaj Auto (HC-2). This Court upholds the impugned re-computation orders of the Department as well as the notice dated 11th January, 2017 except to the extent of interest on surcharge. A direction is therefore issued to the DCST to issue fresh orders re-computing the amount payable on the basis of the limited modification as regards interest, not later than 1st November, 2021. It is made clear that it would not be open to the Petitioner to again challenge the said order as long there is in conformity with the directions issued in the present judgment of this Court. Petition disposed off. Issues Involved:1. Challenge to re-computation of tax for the year 2002-03.2. Challenge to notice and re-computation order for the period 2000-01.3. Challenge to notice and re-computation order for the period 1st April 2001 to 31st December 2001.4. Validity of reopening assessments based on Supreme Court judgment.5. Limitation period for reopening assessments.6. Interest on surcharge.Issue-wise Detailed Analysis:1. Challenge to re-computation of tax for the year 2002-03:The petitioner, M/s. Sky Automobiles, challenged a notice dated 11th January 2017 issued by the Deputy Commissioner of Sales Taxes (DCST), Cuttack-II Circle, Cuttack for the re-computation of tax for the year 2002-03 under the Orissa Sales Tax Act, 1947 (OST Act). The Court noted that the petitioner was assessed for the year 2000-01 by the Sales Tax Officer (STO) and the assessment was confirmed by the Assistant Commissioner of Sales Tax (ACST). The Orissa Sales Tax Tribunal directed the Department to re-compute the tax liability after setting off the entry tax from the tax due and levy surcharge accordingly. However, the Supreme Court in Commissioner of Commercial Taxes v. Bajaj Auto Ltd. reversed the High Court's judgment, leading to the current re-computation notices.2. Challenge to notice and re-computation order for the period 2000-01:The petitioner also challenged a notice dated 27th December 2016 regarding payment of surcharge under the OST Act for the period 2000-01 and a re-computation order dated 28th January 2017 demanding Rs. 31,05,765/- towards OST and surcharge. The Court observed that the Department began issuing re-computation orders following the Supreme Court's judgment in Bajaj Auto (SC), which mandated that surcharge under Section 5-A of the OST Act is to be levied before deducting the amount of entry tax paid by the dealer.3. Challenge to notice and re-computation order for the period 1st April 2001 to 31st December 2001:A similar challenge was raised for the period 1st April 2001 to 31st December 2001, where the demand for OST and surcharge was Rs. 16,79,686/-. The Court noted that the petitioner had admitted in the petitions that the Supreme Court's judgment in Bajaj Auto (SC) also applied to their case for the period 2003-04.4. Validity of reopening assessments based on Supreme Court judgment:The petitioner argued that the Department could not reopen the computation of surcharge for the periods 2000-01, 2001-02, and 2002-03 based on the Supreme Court's judgment in Bajaj Auto (SC), as the earlier orders granting refunds had attained finality. The Court, however, held that since the petitioner was a party to the Supreme Court judgment, they could not be surprised by the re-computation notices. The Court also distinguished between cases where the Department did not appeal the High Court's decision and those where it did, noting that the present case fell into the latter category.5. Limitation period for reopening assessments:The petitioner contended that the limitation period for reopening assessments under Section 28-B of the OST Act had been crossed. The Court rejected this argument, stating that the re-computation orders were issued not long after the Supreme Court's decision, and there was no specific period of limitation prescribed for re-computation.6. Interest on surcharge:The Court agreed with the petitioner that interest on the differential tax amount should only be payable for the period subsequent to the Supreme Court's judgment on 28th October 2016. The Court directed the DCST to issue fresh orders re-computing the amount payable, considering this modification regarding interest.Conclusion:The Court upheld the impugned re-computation orders and the notice dated 11th January 2017, except for the interest on surcharge. The DCST was directed to issue fresh orders re-computing the amount payable based on the limited modification regarding interest by 1st November 2021. The writ petitions were disposed of with no order as to costs.