TaxTMI 
TaxTMI 
2011 (9) TMI 882
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....c limited company incorporated under the Companies Act, 1956 and carries on business in manufacturing and selling of sponge iron at Beleipada, Joda in the District of Keonjhar. It is registered as a dealer with opposite-party No. 3-Sales Tax Officer, Barbil Circle, Barbil, under the provisions of the OVAT Act, Orissa Entry Tax Act/1999 (for short; "the OET Act") and Central Sales Tax Act, 1956 (for short, "the CST Act"). On November 5, 2008, tax audit was conducted for the period 2007-08 and again oh May 16, 2009 tax audit was conducted for the period April 1, 2006 to March 31, 2008. The audit visit report in form 303 was prepared on December 5, 2009. Opposite-party No.2-Joint Commissioner of Safes Tax has approved the said audit visit report on January 18, 2010: Pursuant to the notice issued in form VAT 306 for assessment of tax as a result of audit prescribed under rule 49(1) of the Orissa Value Added Tax Rules, 2005 (for short, "the OVAT Rules"), the petitioner produced the relevant books of account as well as the documents before opposite-party No. 2 and submitted its written note of submission. The assessment proceeding was concluded on July 7, 2010. The petitioner received t....
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....n January 21, 2011. As per the, requirement of section 42(6) of the OVAT Act, the orders of assessment; were, required to be passed on or before July 17, 2010. Though the proviso to sub-section (6) of section 42 of the OVAT Act provided, that if for, any reason the assessment is not completed within the time specified in this provision, the Commissioner, may on the merits of each case, allow such further time not exceeding six months for completion of the assessment proceedings. No such extension of time has ever been brought to the notice of the petitioner. The orders of assessment are silent about such extension of time granted by opposite-party No. 1. Placing reliance upon the judgment of the honourable Supreme Court in the case of Commissioner of Income-tax, West Bengal III v. Oriental Rubber Works [1984] 145 ITR 477 (SC); [1984] 1 SCC 700, Mr. Mahanti submitted that opposite-party-Revenue are obliged to expeditiously communicate the Commissioner's approval as well as recorded reasons of the authorized officer on which such approve based to the petitioner. It was alternatively argued that even if assuming that there has been extension of time by opposite-party No. 1, the or....
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.... account, the SION method adopted, in order to find out the suppression, is not supported by any justified reason. There is nothing on record to show that there has been any sale suppression. Short production of finished goods out of raw materials depends on various factors, namely, skill of employees, quality of raw materials, use of the machinery, load of electricity, etc. They cannot be said to be uniform all through the year. Variations in production are bound to occur. Since the SION method, has not been statutorily provided, no sanctity can be attached to it while assessing the turnover of the petitioner as if the said method is sacrosanct. In absence of any material whatsoever, the adoption of SION method is without rationality. There has not been proper appreciation as well as consideration of facts involved. The petitioner has produced the relevant materials correlating the entries in books of account with regard to input-tax credit availed of in respect of HSD. The petitioner also placed invoices showing purchase of HSD from outside the State as well as inside the State. No attempt was made by opposite-party No. 2 to find out the component of input credit which could be a....
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....of time as provided under the proviso to section 42(6) of the OVAT Act. Opposite-party No.1-Commissioner of Sales Tax, Orissa, extended the time for a period of six months and directed the assessing authority to complete the audit assessment by February 9, 2011 positively. Since the audit visit report was received by the dealer on February 22, 2010 so the Commissioner of Sales Tax could have extended the time till February 21, 2011, i.e., one year from the date of receipt of the audit visit report by the dealer-assessee. It is submitted that unless the audit visit report is actually served on the dealer, the assessment proceedings cannot commence as per law. In support of his contention, Mr. Kar, learned standing counsel, placed reliance upon an unreported judgment of this court dated October 9, 2007 passed in the case of (Lalchand Jewellers Pvt. Ltd. v. Asst. Commissioner of Sales Tax, Puri Range, Puri in W. P. (C) No. 11864 of 2007) and, submitted that since in the said case the order of assessment had been passed within six Months from the date of receipt of the audit visit report by the dealer the same was treated to be valid and within the period of limitation. Mr. Kar, furthe....
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.... provisions. Therefore, the time-limit given in sub-sections (6) and (7) of section 42 of the OVAT Act should be interpreted in the manner as done by this honourable court in Lalchand's case (W.P. (C) No. 11864 of 2007 decided on October 9, 2007-Orissa High Court). The assessment of tax on the basis of fraud which comes to' forefront in course of audit assessment should not be allowed to be frustrated because of technical interpretation given by the dealer to escape the liability. The interpretation that frustrates demand and collection of tax is to be avoided in the public interest. Receipt of audit visit report by the assessing officer is a part of the "audit" process and receipt of the audit visit report by the dealer is a part of the "assessment" process. The assessment process starts with the issue/service of notice on the dealer along 'with the audit visit 'report. Therefore, in the context of assessment, "receipt of audit visit report" is envisaged under the OVAT Act to be receipt of audit visit report by the dealer. It cannot be a receipt of audit visit report by the assessing authority which is a part of the audit process, a stage prior to assessment proces....
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....arency, any officer who is involved in any manner or has acted with the process of audit and preparation of the audit report in respect of the dealer should not be the assessing officer of that dealer. Otherwise, there will be violation of cardinal principles of natural justice. Our view is fortified by the judgment of this court in National Trading Co. [2001] 122 STC 212 (Orissa) wherein this court held as follows (page 213 in 122 STC): "... Although many contentions were raised in support of the writ petition, we need not examine them as the matter can be decided on the following: short point being that the reporting officer himself cannot be the assessing officer. It is said that justice should not only be done but should manifestly be seen to be done. Justice can never be seen to be done if a person acts as a judge in his own cause or is himself interested in its outcome. This principle applies not only to judicial proceedings but also to quasi-judicial and administrative proceedings. In the case at hand, there is no dispute that the reporting officer himself took up the impugned assessment proceedings and completed the same. This he could not have done." Q....
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....s contended that it is difficult for the petitioner to satisfy the authority on the basis of voluminous documents of the audit visit report within one day, i.e., by March 13, 2007. As such, appropriate opportunity of hearing was not given to him to explain. The third point is that it is provided under section 42(6) of the Act that assessment should be completed within a period of six months from the date of receipt of audit visit report. In the instant case, the audit visit report is dated August 30, 2006 and six months from that period will expire by February, 2007. As the assessment order was passed on March 13, 2007, the same is bad in law. The learned counsel appearing for the Revenue has controverted all these points by referring to various provisions of the Act and considering the submissions of the learned counsel for the both the parties, this court is unable to accept the petitioner's contentions for the reasons discussed hereinbelow. If, we take up. the last objection of the learned counsel for the petitioner first it appears from section 42(6) of the Act, that the assessment order has to be completed within a period of six mont....
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....d be confusion in the administration of;law and respect for law would irretrievably suffer. We, therefore, hold that the law declared by the highest court in the State is binding on authorities or Tribunals under its superintendence, and that they cannot ignore it either in initiating a proceeding or deciding on the rights involved in such a proceeding ..." It is not the case of the petitioner that the assessing officer has acted contrary to the order of this court passed in the case of Lalchand Jewellers Pvt. Ltd. (W. P. (C) No! 11864 of 2007 decided on October 9, 2007-Orissa High Court). On the contrary it is submitted that no opinion oh the legal position was expressed. By quoting from the order, we conclude that the stand is untenable. As a matter of fact the" position in law has been delineated. The provisions of section 42(6) was interpreted by this court in Lalchand Jewellers (W. P. (C) No. 11864 of 2007 decided on October 9, 2007-Orissa High Court) and this court held that period of limitation of six months shall run from the date of receipt of audit visit report by the dealer. Subsequently, sub-section (6) of section 42 of the said Act was amended by the Orissa Value Ad....