TaxTMI 
TaxTMI 
2015 (4) TMI 529
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....ner at the relevant time was a registered dealer under the provisions of the OVAT Act. For the tax period 01.04.2006 to 30.03.2011, the petitioner had been assessed under Section 42 of the OVAT Act vide assessment order dated 30.03.2011. The petitioner has not been assessed under the OVAT Act under Sections 39, 40, 42 and 44 for the period 01.04.2011 to 25.05.2011. Opposite Party No.2, STO, Investigation Unit, Rourkela Circle-2, Panposh visited the place of business of the petitioner- Company on 20.05.2011. On the date of inspection, without carrying on weighment of the physical stock, Investigating Officer alleged suppression of sale/purchase turnover. Opposite party No.2 without actual verification of the books of account and physical stock at the time of visit wanted production of accounts at his office for which notice in Form VAT 401 was issued to the petitioner fixing the date to 27.05.2011. In course of inspection, opposite party No.2 seized note books, files, documents vide seizure list dated 20.05.2011. Opposite party No.2 submitted the ex-parte report alleging suppression of purchase/sale turnover against the petitioner suggesting assessment of escaped turnover and tax fo....
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....t the Assessing Officer ought to have communicated the reasons for initiating reassessment proceeding. It was further argued that the learned Assessing Officer has reproduced various figures submitted by opposite party No.2 and without any deliberation and application of judicial mind, as required under Rule 50(4) of OVAT Rules, the Assessing Officer endorsed the allegation raised in the report. Opposite party No.1 has simply noted the seized documents and number of written pages consisting dispatch/sale of sponge iron, iron ore fines, coal fines and accepted the report. 4. The petitioner in the present case cooperated with the Inspecting Officer. The action of opposite party No.1 in retaining seized documents for more than six months is in violation of provisions of Section 73(7) of the OVAT Act. The impugned assessment order has been passed in violation of principles of natural justice as no reason has been assigned for raising such demand. Such action of the Assessing Officer is contrary to the law laid down by the Hon'ble Supreme Court in CCT Vs. Shukla and Brothers, (2010) 4 SCC 785. Placing reliance on the judgment of the Hon'ble Supreme Court in the case of Steel Authorit....
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....ting Officer as well as by opposite party No.1-Assessing Officer. But the petitioner did not avail the same by producing the books of account on some plea or other which is not legally sustainable. The petitioner having not approached this Court with clean hands it is not entitled to any discretionary relief. The averments made in the writ petition are misleading. 6. On the rival contentions of the parties, following questions fall for consideration by this Court. (i) Whether in the facts and circumstances of the case, the Assessing Officer is justified in insisting production of books of account before supplying the certified copy of seized document and reason for reopening the assessment? (ii) Whether reasonable opportunity of hearing has been afforded to the petitioner and thereby the principle of natural justice has been duly complied with before passing the impugned order of assessment? (iii) Whether opposite party No.1-Assessing Officer is justified in passing the impugned order ex parte? (iv) Whether the Assessing Officer has passed the impugned assessment order assigning basis/reasoning for determination of the escaped turnover and tax due thereon and t....
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....maintained were not produced before the Inspecting Officer. Subsequently, on receiving a fraud case report from the Deputy Commissioner of Commercial Taxes, Enforcement Range, Sambalpur (hereinafter referred to as "Inspecting Officer"), a proceeding under Section 43 of the OVAT Act was initiated by issuing notice dated 28.03.2012 for assessment of tax on escaped turnover in Form VAT 307 for the above tax period. In the said notice dated 28.03.2012, the petitioner was informed that the whole/part of sale and purchase for the aforesaid tax period has escaped assessment for which the dealer was required to appear before the opposite party No.1-Deputy Commissioner of Sales Tax, Rourkela Circle, Panposh, Sundargarh on 10.05.2012 with the books of account relating to his business maintained as per OVAT Act and Rules framed there-under. By the said notice, the dealer-petitioner was further informed that in the event of its failure to comply with the terms of that notice, the opposite party No.1 shall proceed to assess the petitioner under Section 43 of the OVAT Act to the best of his judgment. The petitioner-dealer was also directed to show cause as to why in addition to the amount of ....
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....ted upon production of the books of account time and again without issuing certified copy of the seized documents and intimating the reason for reopening the assessment. Let us also examine whether the Assessing Officer is justified in insisting upon production of regular books of account before supplying the copy of the seized documents and the reasons for reopening the assessment. 11. At this juncture, it would be appropriate to refer to the judgment of this Court in the case of Lakhiram Jain and Sons (supra), wherein, the question that fell for consideration before this Court was whether the Assessing Officer is justified in insisting upon production of the books of account for verification before issuing certified copies of the seized documents. This Court in the said case, taking note of several judgments of this Court and Hon'ble Supreme Court including judgment in the case of Kanak Cement Pvt. Ltd. vs. Sales Tax Officer, [1997[ 105 STC 112 (Orissa) and G.K.N. Driveshafts (India) Ltd. vs. Income Tax Officer, (2003) 259 ITR 19 (SC), held as follows: "...Needless to say that an assessing authority is entitled to collect the materials behind the back of the assessee.....
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....ssessing Officer, though several opportunities were provided to the petitioner. On the other hand, it imposed a precondition that only after receiving copy of the seized documents and reason of reopening it will produce the books of account. Such a plea has no legal support. 13. So far as supply of reason for reopening of assessment is concerned, it may be noted here that vide notice dated 28.03.2012 in Form VAT-307 issued under Sub-rule (1) of Rule 50 for initiating reassessment proceeding, the petitioner was intimated that it appeared to the Assessing Officer that its whole/a part of turnover of sales/purchases for the tax period 01.04.2008 to 20.05.2011 has (i) escaped assessment, (ii) has been under assessed. Needless to say that the petitioner is entitled to be intimated the detailed reason as to why it appeared to the Assessing Office that its turnover of sales/purchases for the aforesaid tax period has escaped assessment and/or has been under assessed. Such detailed reason is nothing but the contents of the seized documents which were seized in course of inspection. In the preceding paragraphs a detailed discussion has been made as to why the contents of the seized docume....
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....purpose of producing before the Sales Tax Officer in reassessment proceeding under Section 12(8) and in second case for tax audit, this Court directed release of those books of account after keeping authenticated copy of the same. In the instant case, the regular books of account have not been seized by the Department and the same are lying with the petitioner. 18. Questions No.(ii) and (iii) being interlinked, they are dealt with together. The questions are whether reasonable opportunity of hearing has been afforded to the petitioner and thereby principle of natural justice has been complied with before utilizing the incriminating materials seized from its business premises against the petitioner and Assessing Officer is justified in passing the impugned order ex parte. 19. When a proceeding under Section 43 of the OVAT Act is initiated on the basis of a report submitted by any agency, the assessee is entitled to be heard at two stages, i.e., (i) in course of inspection of the business premises till submission of the report by the inspecting officer, (ii) after commencement of the re-assessment proceeding by issuance of notice for assessment of tax on escaped turnover til....
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....15 P.M. as per U/s 73(4) of the O.V.A.T. Act, 2004. At the time of visit, to the manufacturing unit, Sri Sanjay Kumar Ladia, Asst. General Manager Commercial of the Company was present in the factory premises and extend all required co-operation to conduct enquiry into the details business activities of the firm, to examine the detail stock of finished product, raw materials and to verify the complete books of account for the tax period from 01.04.2008 to 20.05.2011. Exhaustive stock of Ms Ingot available in the factory premises are recorded in a separate sheet of paper as dictated, counted and reported by the factory supervision who has signed on it and later on validated by the Asst. General Manager Commercial of the company. In course of inquiry 10 sets of written documents, indicating the materials received and dispatched were found in the business premises. In the event of not explained the written contents of the said documents by the Asst. General Manager Commercial of the company on the date of visit, these were seized as per U/s. 73(6) of the OVAT Act and detail copy of it was handed over to him for future reference for production of books of account and for verification o....
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....ar before the Assessing Officer to produce the books of account. Thereafter, the impugned ex parte assessment order was passed. Thus, it may be seen that though several opportunities were given by the Assessing Officer for hearing, the petitioner-dealer did not produce the books of account on some plea or other, which is not legally sustainable and/or contrary to law. 24. In the above facts situation, we are of the considered view that reasonable opportunity of hearing has been afforded to the petitioner and thereby principle of natural justice has been duly complied with before passing the impugned assessment order and the Assessing Officer is fully justified in passing the said order ex parte. 25. Question Nos.(iv) and (v) being interlinked, they are dealt with together. The questions are whether any basis/reason has been assigned for determination of the escaped turnover and levy of tax thereon in the impugned assessment order and the Assessing Officer is justified in accepting the allegations raised in the report. 26. Law is well-settled that the Assessing Officer has to assign reasons in support of its determination of escaped turnover and the tax sought to be l....
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....he dealer has failed to appear before the under signed and not produced the books of accounts for verification. It is clear that, the intention of the dealer is not to cooperate for completion of assessment proceedings. Hence looking no other way, the assessment is completed to the best of judgment. Considering the allegation contained in the tax evasion report submitted by D.C.C.T., Enforcement, Sambalpur as true and correct, the re-assessment order is decided on ex parte basing on the information and materials available in the record on merit." (underlined for emphasis) 29. There is no quarrel over the legal proposition that there should be some reasoning recorded for declining or granting relief. The Hon'ble Supreme Court in the case of Shukla and Brothers (supra) held that requirement of recording of reasoning necessarily does not mean a very detailed or lengthy order. In the instant case, the Assessing Officer has given the basis/reasons in support of determination of the escaped turnover and tax due thereon. 30. As stated above, in course of inspection on 20.05.2011, the petitioner failed to explain 10 sets of documents found by the inspecting team in its place of....
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.... of legitimate tax due to the State, simply by not producing the books of account /documents for verification with reference to the incriminating materials collected and refraining themselves from participating in the assessment proceeding on some plea or other. 35. Needless to say that all ex parte orders need not be set aside by higher court/authority for giving further opportunity of hearing to the party against whom ex parte order has been passed. Whether an ex parte order is to be set aside for giving further opportunity of hearing or not, it always depend on facts and circumstances of each case. There are certain cases where if ex parte orders are set aside to give an opportunity of hearing to the aggrieved parties that may amount to granting a boon to such parties, as they would be able to achieve their unholy purpose and in that case the very purpose of passing ex parte order is frustrated. For example, in the instant case, the petitioner-dealer did not only fail to produce the regular books of account during inspection of its business premises nor before the Assessing Officer and instead offered to produce the same only after receiving copies of the seized documents and....