TaxTMI 
TaxTMI 
2022 (8) TMI 637
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.... 2. At the outset, it must be noticed that in the 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....
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....oted here that the said issue does not arise as far as the OET Act is concerned since there was no 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 req....
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....s Court in Bhushan Power and Steel Limited v. State of Orissa (2012) 56 VST 50 (Orissa) wherein it was held that coal used in the production of the electricity 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 n....
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....ress the question referred to the Larger Bench for its opinion, reference is first required to be made to the relevant provisions of the OET Act and the Orissa Entry Tax Rules, 1999 (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 ....
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....tion 10 of the OET Act: "10. Reassessment in certain cases.- (1) Where for any reason all or any of the scheduled goods brought by a dealer has escaped assessment of tax, or where value of all or any of the scheduled goods has been under-assessed, or 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 an....
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....ion or evidence from the dealer or any person as deemed necessary; (c) consider the objection, if any, preferred by such dealer and examine the evidence in support thereof; and (d) make such enquiry, as deemed necessary, for the purpose of such assessment: Provided that not more than three adjournments shall be granted to a dealer for hearing his 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 th....
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....stake as intimated under sub-rule (4) within the time specified in that sub-rule or the mistakes are found to be deliberate with an intention to evade tax or attempt to evade tax, the return, wherein the mistakes are found, shall be referred to audit under Section 41." 21. As far as re-assessment is concerned, the corresponding provisions of the OVAT Act are Section 43 (as it stood prior to 1st October 2015) and Rule 50 of the OVAT Rules which read as under: Section 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 ass....
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....Section 43 thereof, this Court examined the issue in M/s. Keshab Automobiles (supra). The question that arose in that case was however also about the effect of the amendment brought to Section 39 (2) after 1st October 2015, whereas that issue does not arise in the context of the OET Act. It would suffice to note that the corresponding provisions of the OVAT Act namely Section 39 (2) of the OVAT Act as it stood prior to 1st October 2015 is in pari materia with Section 9 (2) of the OET Act. 24. As was held in M/s. Keshab Automobiles (supra), there had to be a formal communication 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 th....
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....s above would, therefore, hold good for the provisions of the OET Act as well. The decision in Nilachal Ispat Nigam Limited overruled 27. However, as noted in the referral order, a different view appears to have been taken by a Division Bench of this Court in M/s. Nilachal Ispat Nigam Limited v. State of Odisha (decision dated 7th December 2016 in W.P.(C) No.22343 of 2015). It must be noted that the judgment is dated 7th December 2016, and since it was under the OET Act and Rules thereunder, there was no occasion for the Court to refer to the corresponding provisions of the OVAT Act and the position obtaining 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 sel....
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....period. (11) If any mistake is detected as a result of scrutiny made under sub-section (10), 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. 30. This has to be compared with the corresponding provision in the OVAT Act viz., Section 38 of the OVAT Act which reads as under: "38. Scrutiny of return.- (1) Each and every return in relation to any tax period furnished by a registered dealer under Section 33, shall be subject to scrutiny by the assessing authority 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." 3....
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....2. From the above discussion, the picture that emerges is that if the self-assessment under Section 39 of the OVAT Act for tax periods prior to 1st October, 2015 are not 'accepted' either by a formal communication or an acknowledgment by the Department, then such assessment cannot be sought to be re-opened under Section 43 (1) of the OVAT Act and further subject to the fulfillment of other requirements of that provision as it stood prior to 1st October, 2015. 23. For all of the aforementioned reasons, the reopening of the assessment sought to be made in the present case under Section 43 (1) of the OVAT Act is held to be bad in law. The question framed is accordingly answered in the negative 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 Automob....
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....initiated until they were terminated by a final order of assessment. Before the final order of assessment, it could not be said that the entire turnover or a part thereof of a dealer had escaped assessment, for the assessment was not completed and if, completed, it might be that the entire turnover would be caught in the net." 37. This was also be seen in the context of an order passed by this Court on 29th February 2008 in W.P.(C) No.2777 of 2008 (M/s. Jayshree Chemicals Ltd. v. State) where it was observed as under: "Apart from that, the concept of escaped assessment under Section 43 of the Orissa Value Added Tax Act comes into play only when the assessment has been made and completed. In the instant case, 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 escap....