2021 (10) TMI 294 - HC - VAT and Sales Tax

High Court quashes sales tax assessment over surcharge calculation error.

M/s. Seetal Automobiles Versus The Commissioner of Commercial Taxes, Orissa and others

The High Court quashed the sales tax assessment order and demand notice for the period 2002-03, based on the incorrect computation of surcharge. The court ... Validity of assessment order - computation of surcharge - calculation was done before setting off of the entry tax against the OST payable - HELD THAT:- After the decision of the Supreme Court in COMMISSIONER OF COMMERCIAL TAXES & OTHERS VERSUS M/S BAJAJ AUTO LTD. & ANOTHER [2016 (11) TMI 31 - SUPREME COURT], whereby it was held that surcharge is payable on the amount of the tax due under the OST Act before adjustment of the tax paid under the Entry Tax Act, the impugned order dated 20th February, 2017 was passed re-computing the surcharge payable in terms of the said judgment. It was re-computed as ₹ 17,00,448/- and together with interest ₹ 18,63,971/-. The total amount payable was determined for the year 2002-03 as ₹ 35,64,419/-. A demand of that date under Section 13(6) of the OST Act was also raised. In identical circumstances, this Court has in M/S. NEELAM MOTORS VERSUS DEPUTY COMMISSIONER OF SALES TAX, CT & GST CIRCLE, BALASORE AND ANOTHER [2021 (9) TMI 205 - ORISSA HIGH COURT] quashed similar orders of re-computation of surcharge and the corresponding demand particularly when the orders pertaining to an Assessee were not challenged by the Department before the Supreme Court. In the said order this Court has held that the order in M/S. BAJAJ AUTO LTD. VERSUS THE DEPUTY COMMISSIONER OF SALES TAX, SAMBALPUR-II CIRCLE AND ANOTHER [2021 (3) TMI 1265 - ORISSA HIGH COURT] is inapplicable as the factual position there was different. Demand set aside - petition disposed off. Issues:Challenge to sales tax assessment order and demand notice for the period 2002-03 based on surcharge calculation. Interpretation of surcharge computation in relation to Orissa Sales Tax Act and Entry Tax Act. Validity of re-computation of surcharge following a Supreme Court judgment.Analysis:1. The petition challenged an order dated 20th February, 2017 by the Deputy Commissioner of Sales Tax regarding a sales tax assessment for the period 2002-03, specifically concerning the computation of surcharge. The initial assessment calculated surcharge before setting off entry tax against the Orissa Sales Tax (OST) payable.2. Subsequently, a reassessment order was issued on 25th May, 2007 following a court decision that surcharge should be calculated after adjusting entry tax against OST payable. This reassessment order became final as it was not further challenged by the Department.3. A Supreme Court judgment in 2017 clarified that surcharge is payable on the tax amount due under the OST Act before adjusting tax paid under the Entry Tax Act. Based on this, a new order was passed on 20th February, 2017 re-computing the surcharge to be paid, resulting in a demand for a total amount for the year 2002-03.4. In a similar case, the High Court in a recent order quashed re-computation of surcharge and corresponding demands when the Department did not challenge the original orders before the Supreme Court. The Court differentiated this case from a previous judgment, emphasizing the importance of factual distinctions.5. Consequently, the High Court in the present case quashed the impugned order dated 20th February, 2017, and the corresponding demand, based on the legal principles established in recent judgments. The writ petition was disposed of accordingly, and an urgent certified copy of the order was directed to be issued.