TaxTMI 
TaxTMI 
2022 (8) TMI 637
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....e context of the Orissa Value Added Tax Act, 2004 (OVAT Act), a similar question was considered by this Court in its decision in M/s. Keshab Automobiles v. State of Odisha (decision dated 1st December 2021 in STREV No.64 of 2016) which holds, in the context of Section 43 read with Section 39 (2) of the OVAT Act, prior to their amendment with effect from 1st October 2015, that unless there is a communication of the acceptance of the return filed in the first instance by way of self assessment, there cannot be a reopening of the assessment. The aforementioned decision of this Court in M/s. Keshab Automobiles (supra) has been affirmed by the Supreme Court of India in its order dated 13th July 2022 in SLP (Civil) No.9912 of 2022 (Deputy Commissioner of Sales Tax v. M/s. Rathi Steel and Power Ltd. etc. and batch) by the following order: "We have gone through the impugned order (s) passed by the High Court. The High Court has passed the impugned order (s) on the interpretation of relevant provisions, more particularly Section 43 (1) of the Odisha Value Added Tax Act, 2004, which was prevailing prior to the amendment. We are in complete agreement with the view taken by the High C....
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....o corresponding amendment to the OET Act in 2015. Also, the wording of Section 10 of the OET Act which pertains to reopening of assessment is not in pari materia with its counterpart Section 43 of the OVAT Act. Nevertheless Section 9 (2) of the OET Act which pertains to self-assessment and is a counterpart of Section 39 of the OVAT Act does contemplate 'acceptance' of the return filed by way of self-assessment. Therefore, the question whether without the communication of the acceptance of such self-assessment, there can be a re-opening of the assessment would still arise for consideration. 5. Having considered the legal position on the question of 'acceptance' of a return filed by way of self-assessment as discussed in Keshab Automobiles (supra), although it was in the context of the OVAT Act, this Court is of the view that the correctness of the opinion expressed by the co-ordinate Bench of two learned judges of this Court in para 12 of the decision in Nilachal Ispat Nigam Ltd. v. State of Odisha (supra) interpreting Section 9 (2) read with Section 10 of the OET Act requires to be reconsidered. 6. Accordingly, the present petition is directed to be placed before the lar....
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.... in the CPP cannot be treated as raw material for the manufacturing of sponge iron. Thus, it was held that the dealer was not entitled to avail concessional levy of entry tax on purchase of coal used to generate electricity in the CPP. 7. On the basis of the above decision in Bhushan Power and Steel Limited (supra), the Assistant Commissioner of Sales Tax (ACST), Sambalpur II Circle issued a notice to the Petitioner under Section 10 (3) of the OET Act seeking to reopen the assessment for the period 1st April, 2005 to 31st December, 2012. On 23rd February 2013, the Assessing Officer (AO) i.e. the ACST reopened the assessment for the period from 1st April, 2005 to 31st December, 2012 and denied the exemption on payment of entry tax @1% on the coal used for production of electricity. Accordingly, a demand of Rs.1,67,62,329/- was raised. 8. Aggrieved by the above re-assessment order, SMEL filed W.P.(C) No.7296 of 2013 in this Court seeking the quashing of not only the re-assessment order, but also the consequential demand notice. While directing notice to issue in the present petition on 4th January 2016, this Court passed an interim order that no coercive action would be taken again....
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.... (OET Rules) and thereafter, undertake a comparative assessment of the provisions of the OET Act and OVAT Act. 16. Under Section 2(q) of the OET Act, words and expressions used in the OET Act and not defined therein and yet defined in the OVAT Act would have same meaning assigned to them under the OVAT Act. 17. Section 9 of the OET Act talks of "self assessment" and reads as under: "9. Self assessment (1) Subject to provisions of sub-section (2), the amount of tax due from a registered dealer or a dealer liable to be registered under this Act shall be assessed in the manner hereinafter provided, for each tax period or periods during which the dealer is so liable. (2) If a registered dealer furnishes the return in respect of any tax period within the prescribed time and the return so furnished is found to be in order, it shall be accepted as self-assessed subject to adjustment of any arithmetical error apparent on the face of the said return." 18. The critical words as far as Section 9 (2) is concerned is the requirement that the return furnished "shall be accepted as self-assessed" subject to adjustment of any arithmetical error apparent on the face of the return. What co....
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....r any deduction has been allowed wrongly, the assessing authority, on the basis of information in his possession, may, within a period of seven years from the end of the year to which the tax period relates, serve a notice on the dealer in such form and in such manner as may be prescribed and after making such enquiry as he considers necessary and after giving the dealer a reasonable opportunity of being heard, proceed to assess the dealer accordingly. (2) If the assessing authority is satisfied that the escapement or under assessment of tax on account of any reason (s) mentioned in sub-section (1) above is without any reasonable cause, he may direct the dealer to pay in addition to the tax assessed under sub-section (1), by way of penalty, a sum equal to twice the amount of tax additionally assessed under this section. (3) Where any order passed by the assessing authority in respect of a dealer for any period is found to be erroneous or prejudicial to the interest of revenue consequent to, or in the light of, any judgment or order of any Court or Tribunal, which has become final and binding, then, notwithstanding anything contained in this Act, the assessing authority may proc....
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....s case. (5) The assessing authority shall, after hearing the dealer in the manner specified in sub-rules (2), (3) and (4), assess the tax due from that dealer accordingly, in respect of a tax period or tax periods, for which the assessment proceeding has been initiated, and impose penalty under sub-section (5) of Section 9C of the Act. (6) In the event of default by a dealer to comply with the requirement of the notice referred to in sub-rule (1), the assessing authority may make to the best of judgment, an ex parte assessment of the tax payable by such dealer in respect of such tax period or tax periods and pass an order of assessment, in writing, recording the reasons therein and shall impose penalty under sub-section (5) of Section 9C" Provisions of the OVAT Act and Rules 20. At this stage, it is necessary to refer to the corresponding provisions of the OVAT Act. Section 39 (2) of the OVAT Act is in pari materia with Section 9 (2) of the OET Act. Likewise, Rule 48 of the Orissa Value Added Tax Rules 2005 (OVAT Rules) talks of self assessment and is in pari materia with Rule 15 of the OET Rules. Section 39 (2) of the OVAT Act and Rule 48 of the OVAT Rules read as under: Se....
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....ection 43 of the OVAT Act (as it stood prior to 1st October 2015): "43. Turnover escaping assessment.- (1) Where, after a dealer is assessed under Section 39, 40, 42 or 44 for any tax period, the assessing authority, on the basis of any information in his possession, is of the opinion that the whole or any part of the turnover of the dealer in respect of such tax period or tax periods has- (a) escaped assessment, or (b) been under-assessed, or (c) been assessed at a rate lower than the rate at which it is assessable; or that the dealer has been allowed- (i) wrongly any deduction from his turnover, or (ii) input tax credit, to which he is not eligible, the assessing authority may serve a notice on the dealer in such form and manner as may be prescribed and after giving the dealer a reasonable opportunity of being heard and after making such enquiry as he deems necessary, proceed to assess to the best of his judgment the amount of tax due from the dealer. (2) If the assessing authority is satisfied that the escapement or under assessment of tax on account of any reason(s) mentioned in sub-section (1) above is without any reasonable cause, he may direct the dealer to p....
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....unication of an acceptance of return or even an acknowledgment by the Department in terms of Section 39 (2) of the OVAT Act as it stood prior to 1st October, 2015. The position underwent a change after 1st October 2015. This was noticed in M/s. Keshab Automobiles (supra) where after comparing Section 39 (2) as it stood prior to 1st October 2015 (which corresponds to Section 9 (2) of the OET Act) and the provision as it stood after its amendment in 1st October 2015, this Court observed as under: "11. ... The concept of 'deemed' self assessment was introduced only with effect from 1st October, 2015. Prior thereto, if such return filed by the dealer under Section 39 of the OVAT Act and was "found to be in order" and within the prescribed time, then it was to be accepted as self assessed subject to adjustment of arithmetical errors." 25. Likewise, in M/s. Keshab Automobiles (supra) a comparison was undertaken of Section 43 (1) of the OVAT Act (as it stood prior to 1st October 2015 and which corresponds to Section 10 of the OET Act) and Section 43 (1) of the OVAT Act as it stood after 1st October, 2015. Analyzing both the amended and unamended Section 43 (1) of the OVAT Act, this Cou....
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....btaining thereunder. 28. In para 12 of the judgment in Nilachal Ispat Nigam Limited (supra) it was observed as under: "12. So far as the ground taken by the petitioner that the company was assessed as per the provisions of section 9(1) of the Act and as such, it is not known to them as to whether assessment has been finalized or not or in other words, whether the authorities have accepted the self assessment made by the petitioner-company under Section 9(1) has been accepted or not is concerned, we are of the considered view that Section 9 contains a provision for self assessment, which requires the dealer to be assessed in the manner provided for each tax period or periods during which the dealer is so liable and if the registered dealer furnishes the return in respect of any tax period within the prescribed time and the return so furnished is found to be in order, it shall be accepted as self assessed subject to adjustment of any arithmetical error apparent on the face of the said return. Section 10 of the Act provides for reassessment in certain cases when the authority is of the reason to believe that the dealer has escaped assessment of tax and as such communication regardi....
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.... to verify the correctness of calculation, application of correct rate of tax and interest, claim of input tax credit made therein and full payment of tax and interest, payable by the dealer for such period. (2) If any mistake is detected as a result of scrutiny made under sub-section (1), the assessing authority shall serve a notice in the prescribed form on the dealer to make payment of the extra amount of tax along with the interest as per the provisions of this Act, by the date specified in the said notice." 31. Both sets of provisions of the OVAT Act and the OET Act respectively, therefore, make it mandatory for scrutiny of every return by a dealer. The corresponding Rule under the OET Rules is Rule 15 as amended with effect from 19th October 2005 which has already been extracted hereinabove. 32. Therefore, even Rule 15 of the OET Rules as amended requires the return to be 'accepted'. If this is read with Rule 10 (3) to (6) of the OET Rules, it is plain that self-assessment is not automatic. It requires compliance with Section 7 (10) and 7 (11) of the OET Act. The same result would be reached from a collective reading of Section 39 of the OVAT Act with Rule 48 of the OVAT ....
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....ative i.e. in favour of the Assessee and against the Department. It is accordingly, held that in the absence of the completion of the assessment under Sections 39, 40, 42 and 44, reassessment under Section 43 (1) of the OVAT Act is unsustainable in law." 34. This Court had in M/s. Keshab Automobiles (supra) distinguished M/s. Nilachal Ispat Nigam Limited (supra) when it observed in para 17 [It must be mentioned here that original para 17 of the judgment of this Court in M/s. Keshab Automobiles (supra) was corrected by a subsequent order dated 8th April 2022] which reads as under: "17. A perusal of the decision of this Court in Nilachal Ispat Nigam Ltd. (supra) reveals that it was in the context of the Orissa Entry Tax Act (OET Act). Secondly, this Court had no occasion in the said decision to discuss the effect of more or less similar amendments effected to the provisions of the OVAT Act which were brought into effect from 1st October, 2015. This is despite the fact that the decision is dated 7th December, 2016. The amendments did bring about a significant change to the OVAT Act and therefore had a direct bearing on the issues discussed in the said decision. Consequently, this C....
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....without assessment being complete, the notice of escaped assessment is misconceived and as such the said notice under Annexure-1 is quashed." 38. In the context of the Orissa Sales Tax Act, a Full Bench of this Court in M/s. Jaynarayan Kedarnath v. Sales Tax Officer, Cuttack-I West Circle (1988) 68 STC 25 followed the judgment W.P.(C) Nos.7458 of 2015 and 7296 of 2013 Page 28 of 30 of the Supreme Court in Ghanshyam Das (supra) and concluded that no escapement of income from assessment can be predicted before an assessment is complete. 39. This Court is of the considered view, therefore, that the decision of the Division Bench of this Court in M/s. Nilachal Ispat Nigam Limited (supra) which holds that if the authorities have not issued any notice under Section 7 (11) of the OET Act, then the self assessment of the dealer under Section 9 (2) of the OET Act should be taken to have been 'accepted' does not set down the correct legal position and to that extent, the said decision is hereby overruled. Court not to supply the gaps in the statute 40. Mr. Mishra, learned Standing counsel for the Department then submitted that the above interpretation which exposes a gap in the provision....