TaxTMI 
TaxTMI 
2008 (5) TMI 606
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....ving its registered office at G-9 Ali Yaver Jung Marg, Bandra (East), Mumbai-400 051 and Orissa State Office at 304, Bhoi Nagar, Bhubaneswar in the district of Khurda, Orissa. The petitioner-company is engaged in the business of refining and selling of petroleum products like motor spirt (petrol), High-speed Diesel (HSD), Light diesel Oil (LDO), Superior Kerosene Oil (SKO), furnace oil, bitumen, ATF and AV Gas, etc. The petitioner is a registered dealer under the Central Sales Tax Act, 1956 (hereinafter referred to as "the CST Act") having registration certificate No. CUC-IE-38 within the jurisdiction of the assessing officer. 4. For the assessment year 2001-02, the petitioner in its original return disclosed its gross turnover and net turnover at Rs. 4,05,53,559 and Rs. 3,98,93,806, respectively, which were subsequently revised to Rs. 3,94,97,379 and Rs. 3,79,78,249, respectively, in its revised return. During the year, the petitioner also claimed stock transfer of HSD and SKO from Paradeep terminal to Haldia, Budge Budge and Port Blair. Before the assessing officer the dealer-assessee furnished declaration in form C for inter-State transaction to the tune of Rs. 3,65,45,455, b....
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....product such as HSD and SKO as follows: Product Received Qty. in KL Despatched in KL HSD 261565 228535 SKO 356381 310550 But on verification of the assessment record and returns filed under both OST and CST Act for the period under question revealed that the transactions under question have not been reflected in the return submitted and also at the time of assessment, but on the other hand the dealer-company has dispatched huge quantity of goods from Paradeep terminal showing the same as stock transfer. On verification of the returns filed for the year 2001-02 it is found that the dealer has furnished annual revised return as follows: Inter-State sale - Rs. 3,93,47,379 Stock transfer - Rs. 8,50,53,19,480 Net turnover of inter-State Sale - Rs. 3,74,78,249 Thus the transaction as disclosed in the annual revised return in respect of inter-State sale is for value of Rs. 3,93,47,379 and the amount of Rs. 8,50,53,19,480 shown as stock transfer from Paradeep to outside the State of Orissa. But on the other hand information received from the documents furnished by the dealer before the reporting official revealed that despatches of goods by IOCL through Paradeep port are mos....
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....n as inter-State sales. 7. Mr. Sanjit Mohanty, learned Senior Counsel, appearing for the petitioner raised preliminary question regarding jurisdiction of assessing officer in reopening the assessment for the year 2001-02 by issuing notice under Rule 12(8) read with Rule 10 of the CST (O) Rules. He submitted that the assessing officer lacks jurisdiction in issuing the notice of reassessment and in passing the reassessment order on the basis of such notice for the year 2001-02. 8. He submitted that Paradeep Port is a lighterage point for berthing of high-capacity vessels from other countries which bring SKO and HSD as well as indigenous products from refineries situated near the coastal ports in the western section and also in the eastern section like Vizag and Chennai for subsequent loading/despatches in smaller vessels to Haldia Port. Big ocean tankers which bring the goods from outside the State of Orissa cannot be sent to Haldia Port in view of low draft condition prevailing at Haldia Port. Hence, the entire load of SKO and HSD is unloaded at Paradeep terminal of Indian Oil Corporation Ltd., and all such companies like Hindustan Petroleum Corporation have their own terminat....
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....taken care of by the appellate authorities for the purpose of enhancement. In that view of the matter, initiation of reassessment proceeding under Rule 12(8) of the CST (O) Rules during pendency of the second appeal is without jurisdiction. 11. In support of his contention he relied on the following judicial pronouncements: (a) Tel Utpadak Kendra v. Deputy Commissioner of Sales Tax . (b) State of Tamil Nadu v. Arulmurugan and Company . 12. He also relied on the decision of the honourable Supreme court in the case of Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax and in the case of Jay-anarayan Kedarnath v. Sales Tax Officer reported in [1988] 68 STC 25 (Orissa)[FB] : [1987] 64 CLT 705 (Ori)[FB] in support of his contention that a turnover cannot be said to escape assessment if proceeding in respect of assessment is pending and no final order of assessment was made therein. He further contended that reassessment is nothing but a fresh assessment of turnover which is comprehensive and results in nullifying the results of the earlier assessment order. In support of this contention, he relied on the followin....
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.... the above questions, it is necessary to appreciate what is contemplated in Rule 12(8) of the CST (O) Rules and the reason on the basis of which the assessing officer initiated reassessment proceeding and reopened the completed assessment. Rule 12(8) of the CST (O) Rules is reproduced below: (8) If for any reason the turnover of a dealer for any period has escaped assessment or has been under-assessed, the Commissioner may, at any time within five years from the expiry of the year to which the period of assessment relates, call for a return after complying with the provisions of Rule 10, assess the amount of tax due from the dealer and may also direct, in cases where such escapement or underassessment is due to the dealer having concealed particulars of his turnover or having without sufficient cause furnished incorrect particulars thereof, that the dealer shall pay, by way of penalty, in addition to the tax assessed under this sub-rule, a sum not exceeding one-and-a-half times of the said tax so assessed: Provided that the period of limitation fixed in Sub-rule (7) shall not apply to assessments under this sub-rule or to enhancement of assessment or ....
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..... The aforesaid position indicates that there is escapement of assessment during the year. Besides the books of account and documents on which you may rely in support of the contentions, you are required to produce the 'tanker-wise ocean loss report', bill of lading and 'proration report' in respect of all receipts/dispatches made at/from the Lighterage terminal at Paradeep including complete accounts of receipt and disposal of goods received at the terminal and all the documents and records relating thereto. Sd/- Sales Tax Officer, Cuttack I East Circle, Cuttack. 19. The above letter shows that return for the year 2001-02 filed under the CST Act does not appear to reflect the transactions of inter-State sale effected by the petitioner from Paradeep terminal to other oil companies. It is further alleged that the same were also not disclosed during the assessment earlier completed for that year. For the above reasons, the assessing officer came to the conclusion that turnover relating to some inter-State sales escaped assessment from the original assessment for which action under Rule 12(8) of the CST (O) Rules was taken and notice under Rule 10 of the....
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.... and reassessment completed. Thus, the condition precedent to initiate proceeding under Rule 12(8) of the CST (O) Rules was satisfied in the present case. 23. We are of the considered view that proceeding under Rule 12(8) of the CST (O) Rules can be initiated on the basis of any new materials which was not the subject-matter before the assessing officer at the time of original assessment. 24. The second question which now falls for consideration by this Court is whether the assessing officer is justified to reopen the assessment for the year 2001-02 which was earlier completed and second appeal arising out of such assessment order is pending before the learned Tribunal. According to the learned Counsel for the petitioner, the appeal filed before the Tribunal is a continuous process of assessment. Before disposal of the second appeal by the Tribunal no proceeding under Rule 12(8) of the CST (O) Rules can be initiated for that year. In support of his contention, he relied on the judgment of the honourable Supreme Court in the case of Tel Utpadak Kendra [1981] 48 STC 248. In that case the honourable apex court held that when the appellate jurisdiction of superior authority is in....
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....scaped assessment. 26. Similarly, in Jayanarayan's case [1988] 68 STC 25 ; [1987] 64 CLT 705, the honourable Full Bench of this Court while considering Section 12(8) held that keeping the assessment proceeding incomplete the assessing officer had no jurisdiction to take recourse to power conferred upon him under Section 12(8) of the OST Act. In the said case, this Court held that the scheme of the provisions of Section 12(8) applies to case where the turnover of a dealer for any period has escaped assessment or has been underassessed. It is obvious from the language and scope of Section 12(8) that it is a special provision dealing with assessment of escaped tax even though the escapement may be the result of a mistake committed by the assessing officer himself. According to the said judgment at the first instance regular assessment has to be completed within the prescribed period of three years and thereafter proceedings under Section 12(8) could have been initiated within the period of limitation. There is no dispute regarding the proposition of the law that escapement of assessment cannot be predicted unless the original assessment is completed. Original assessment does no....
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.... authority. In the present case, as stated above, since the assessing officer has issued notice under Rule 12(8) of the CST (O) Rules on the basis of some new/fresh material alleging escapement of turnover relating to inter-State sale from the original assessment he was fully justified to take action under the said rule and issue notice under Rule 10 of the CST (O) Rules and to complete the reassessment on the basis of such notice. 30. The third question which falls for consideration by this Court is whether appellate authorities at the time of disposing of the appeal arising out of an assessment order, in exercise of their power of enhancement of assessment can take into consideration any fresh or new material which was not before the assessing officer, but it comes to light only after completion of the assessment order? The learned senior counsel appearing on behalf of the petitioner submits that since the appellate authority has the power to enhance the assessment, any material which comes to the light after completion of the original assessment by the assessing officer, can be utilised by the appellate authorities for the purpose of enhancement of the assessment. This is a f....
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....original assessment order. Therefore, this decision of the Madras High Court is of no help to the petitioner. 33. We are therefore of the considered view that the appellate authorities while disposing of the appeal arising out an assessment order cannot take into consideration any fresh or new material which was not before the assessing officer but subsequently comes to light after completion of the assessment for the purpose of enhancement of the assessment. 34. The further contention of the learned Counsel for the petitioner is that reassessment is nothing but a fresh assessment of turnover which is comprehensive and it results in nullifying the earlier assessment order. In support of his contention, he cited the decision of the honourable apex court in the case of Deputy Commissioner of Commercial Taxes v. H.R. Sri Ramulu . The question that arose for consideration before the honourable apex court was about the starting point for computing the period of four years for the purpose of limitation in the event of an order having been made under Section 12A of the Act. Whether it was the initial assessment order or the order made under Section 12A? In this context, the honourab....
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....court was whether there is reasonable nexus between the basis adopted by the assessing authority and the estimate of escaped turnover made by him. The honourable apex court held that there was such nexus. Further, a question came up for consideration as to whether in a reassessment under Section 19(1) of the Act the Sales Tax Officer was not competent to make best judgment assessment as no such power was conferred on him under the said section. In that case, on the basis of suppression of sale for continuous 19 days, i.e., September 1, 1960 to September 19, 1960, the assessing officer held that throughout the year the dealer was indulged in clandestine business activities and has estimated the turnover on best judgment for the whole year while completing reassessment. The said reassessment was held valid by the honourable apex court. In that context, the honourable Supreme Court held that what is found to be true in the assessment also must be held to be true in reassessment because reassessment is nothing but a fresh assessment. When reassessment is made under Section 19, the former assessment is completely reopened and in its place fresh assessment is made. While reassessing a de....