TaxTMI 
TaxTMI 
2006 (7) TMI 572
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....arpali (Address) Whereas it appears to me that your gross 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 t....
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....) While the notice in form VI was issued on September 23, 1998 the S.T.O. passed order for issuance of such notice under section 12(8) of the OST Act only on October 24, 1998. In other words 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 th....
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....e its statutory discretionary power in favour of a non-statutory authority and completely act under the dictate of such an authority? (iii) Whether the issuance of the statutory notice of the reopening of assessment can precede the recording of anything 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 appl....
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....re the State Legislature in view of the provisions of section 29-A of the said Act. So the Rules are part of the Act. That is the clear statutory dispensation. 8. While the court is scrutinising the exercise of power by the authorities under section 12(8) of the OST Act, the entire gamut of statutory provisions contained in the Rules 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 s....
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....seology between "for any reason" and "if the sales tax authority has reasons to believe" does not make much of a difference. But unfortunately the attention of the division Bench which rendered the judgment in Bindlish Chemical [1993] 89 STC 102 (Orissa) was not drawn to the decision in Uttareswari Rice Mills [1972] 30 STC 567. 10. In Bindlish Chemical [1993] 89 STC 102 (Orissa) 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 ap....
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....TC 25 (Ker). 13. The main point of controversy in the Madras Full Bench decision in the case of Louis Dreyfus [1955] 6 STC 318 (Mad) was "whether rule 14 of the Madras General Sales Tax Rules, 1939 is valid and if so, whether the powers of revision thereunder can be exercised in cases to which rule 17 relating to escaped assessment is applicable". This question is not even remotely connected with the issues in this 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 wit....
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....oint, this court feels bound by the interpretation given to section 12(8) of the OST Act by the apex Court in Uttareswari Rice Mills [1972] 30 STC 567 and which was subsequently followed in Ugratara Bhojanalaya [1993] 91 STC 76 (Orissa). Following the aforesaid ratio this court reiterates that the difference in phraseology between "for any reason" and "where the Sales Tax Officer has reasons to believe" does not make any material difference in view 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 Uttaresw....
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....the Supreme Court in the case of Mahadayal Premchandra v. Commercial Tax Officer reported in [1958] 9 STC 428; AIR 1958 SC 667. In that case the Commercial Tax Officer assessed the dealer under the Bengal Finance (Sales Tax) Act, 1941 on the instruction of the Assistant Commissioner. The court did not approve of such procedure as it found that in the orders which were passed by the Commercial Tax Officer he was "merely voicing the opinion of the Assistant Commissioner without any conviction 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, Justic....