TaxTMI 
TaxTMI 
2006 (7) TMI 572
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....ss turnover in the year immediately preceding the commencement of the Orissa Sales Tax Act, 1947 during the period not exceeding 12 months ending on . . . . . . has exceeded Rs. 25,000/- but that you have nevertheless without sufficient cause failed to apply for registration under section 9 of the Act. Whereas it appears to me that in accordance with the provisions of subsection (5) of section 4 of the Orissa Sales Tax Act, you have become liable to pay tax on sales and/or purchases from the date of commencement of the business but that you have nevertheless without sufficient cause failed to apply for registration under section 9 of the Act. Whereas I have reason to believe that your turnover of sales and/or purchases for the quarter/year ending 1994-95 on which tax payable under the Orissa Sales Tax Act, 1947 has escaped assessment/has been underassessed/has not been assessed due to the tax having been compounded when composition is not permissible. You are hereby required to submit within one calendar month from the date of receipt of this notice a return in form IV (enclosed) showing the particulars of your turnover for the quarter ending . . . . . You are also hereby r....
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....rds the impugned notice was issued even prior to the necessary directions being issued for such purpose by the S.T.O. (iii) The notice of assessment was issued under the dictates of the audit party and there has been no independent application of mind by the S.T.O. nor any reason has been recorded to show any application of mind. (iv) It was also urged that since the petitioner became entitled to refund of a sum of Rs. 66,775/- as a result of the assessment order for the year 1994-95 and since the petitioner made an application for refund, the S.T.O. set in motion a proceeding for reopening the assessment. 4. In paragraph 11 of the writ petition the following averments have been made: "11. A careful scrutiny of the order sheet and the 12(8) notice brings out some interesting facts. Opposite party No. 2 on October 24, 1998, noted in the order sheet for issuance of notice under section 12(8) of the OST Act, whereas, one would find in that notice under section 12(8) of the OST Act in fact was issued much earlier, i.e., on September 23, 1998. On September 23, 1998, no reasons are given for such an action and why." While dealing with those averments the Revenue replied as under ....
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.... in the order sheet in the concerned file. In other words whether notice can be issued first and then the formation of opinion or satisfaction of the authorities can be recorded later in the file? (iv) Whether the expression "for any reason" in section 12(8) of the OST Act gives wider powers to the authorities to reopen assessment than the words "reasons to believe" and whether the exercise of power under section 12(8) of the OST Act has to be consistent with the statutory rules and in accordance with the statutory forms framed under the said Act? 7. Question No. (iv) raises some points of statutory interpretation and is taken up first for consideration. For a proper appreciation of the points involved, the provision of section 12(8) of the OST Act is set out below: "12. Assessment of tax.- x x x (8) If for any reason the turnover of a dealer for any period to which this Act applies has escaped assessment or has been underassessed or where tax has been compounded when composition is not permissible under this Act and the Rules made thereunder the Commissioner may at any time within five years from the expiry of the year to which that period relates call for return u....
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....ules and the forms are to be kept in its mind. It cannot be said and in fact it has not been said by the Revenue that any part of statutory rules and forms is redundant or that the power under section 12(8) of the OST Act can be exercised ignoring the Rules and the statutory forms. In fact, it was not so exercised and the impugned notice was issued under the statutory form, the relevant part of which has been set out previously. Certain decisions have been cited at the bar. Reliance was placed on the judgment of the Supreme Court in the case of Sales Tax Officer v. Uttareswari Rice Mills reported in [1972] 30 STC 567. The point of controversy in that case was whether in a notice under section 12(8) of the OST Act reasons for reopening are to be indicated in the notice. The court ultimately held that there is nothing in the language of section 12(8) of the OST Act which "postulates the recording of reasons in the notice which is issued to the dealer under the above provision of law". While reaching the aforesaid conclusion, the apex Court held: (a) The difference in phraseology between "if for any reason" and "if the sales tax authority has reason to believe" does not "make ma....
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....the second question which was posed namely "whether reassessment could have been started under section 12(8) of the Act on the basis of observation made in audit report" was not specifically answered. So the said decision does not have much relevance to the questions involved in the present case. 11. The subsequent division Bench judgment of the Orissa High Court in State of Orissa v. Ugratara Bhojanalaya reported in [1993] 91 STC 76, in my judgment, explains the requirement of section 12(8) of the OST Act, in consonance with the views of the apex Court in Uttareswari Rice Mills [1972] 30 STC 567 since the judgment in Uttareswari Rice Mills [1972] 30 STC 567 (SC) was cited before the division Bench. Accordingly, the division Bench held that the legislative intent in section 12(8) of the OST Act "is apparent from the words used in form VI", in which the words "Whereas I have reasons to believe" find place. Therefore, the division Bench held following the dicta of the apex Court in Uttareswari Rice Mills [1972] 30 STC 567 that the difference in phraseology between "for any reason" and "If the sales tax authority has reasons to believe" does not make any material difference. The div....
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.... case. The Full Bench held that rule 14(2) is valid, but the revisional power under rule 14(2) cannot be exercised in cases to which rule 17 applies and the court held that rule 17 only applies to cases of escaped turnover. In that context the court explained the natural meaning of the expression "turnover" which has escaped assessment in rule 17(1). There can be no dispute with the way the Full Bench explained the meaning of the expression "turnover" but the same is of very little relevance in the context of the issues raised in this case. (a) The next decision of the division Bench of the Madras High Court in the case of Dinod Cashew Corporation [1986] 61 STC 1 relied on the Full Bench judgment in Louis Dreyfus [1955] 6 STC 318 (Mad) and was concerned with the question whether cashewnut and cashew kernels are the same goods for the purpose of section 5(3) of the Central Sales Tax Act, 1956. In deciding the question, incidentally the division Bench referred to section 16(1)(a) of the Tamil Nadu General Sales Tax Act, 1959. In section 16(1)(a) of the Act, the words "for any reason" find place. The court held that power under section 16 is a wide power and the words are of wide i....
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....of the provisions in rule 23 of the said Rules which mandate that notice for reopening has to be in form VI and form VI uses the expression "where the Sales Tax Officer has reasons to believe". So the question No. (iv) is answered by holding that the words "for any reason" in section 12(8) of the OST Act do not give wider powers to the authorities to reopen assessment compared to words "reasons to believe" since the words "reasons to believe" are incorporated in the statutory form in which notice of assessment is to be issued. The court also holds that while exercising power under section 12(8) of the OST Act, the authority has to act consistently with the statutory norms prescribed under the statutory rules and the forms. In Uttareswari [1972] 30 STC 567, section 12(8) of the OST Act, the apex Court held that the Sales Tax Officer issuing the notice "should have reason to believe that the turnover of a dealer has escaped assessment or has been under-assessed". The apex Court further held that the approach has to be practical. 15. Following that judgment of the apex Court, the division Bench of the Orissa High Court held in Ugratara [1993] 91 STC 76 that some basis for reopening ....
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....onviction of his own". (page 670, para 18 of AIR; page 435 of STC). Here also by purportedly issuing notice under section 12(8) of the OST Act, the Sales Tax Officer was merely "voicing" the audit objection without recording any formation of opinion of his own. So the ratio in the case of Mahadayal [1958] 9 STC 428 (SC); AIR 1958 SC 667 squarely applies to the facts of the present case. 17. Similar views have been expressed by the apex Court in the case of Orient Paper Mills Ltd. v. Union of India reported in AIR 1969 SC 48. The court held that the directions issued by the Central Board of Revenue cannot control the exercise of power by the Collector. In paragraph 8, page 51 of the Report, Justice Hegde, speaking for the apex Court, held that "no authority however high placed can control the decision of a judicial or quasi-judicial authority" and the learned Judge found this principle as important as being of "the essence of our judicial system". 18. The importance of this doctrine lies in the fact that if a statutory functionary is vested with a power to act, it is that statutory authority alone who will form the necessary objective opinion for exercising its powers. In doing s....