TaxTMI 
TaxTMI 
2026 (4) TMI 859
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....e Joint Commissioner of Commercial Tax and Goods and Services Tax Circle, Paradeep (Annexure-9) for the tax periods from 01.04.2005 to 28.02.2006 in connection with Notice dated 08.09.2023 in Form E-32 [Rule 15D(1) of the OET Rules] vide Annexure-8 being questioned by way of the instant writ petition, the petitioner craves for grant of following relief(s) showing indulgence of this Court by exercise of power under Articles 226 and 227 of the Constitution of India: "That in view of the aforementioned facts and circumstances it is most humbly prayed that this Hon'ble Court may be pleased to issue writ(s): (i) Quashing the assessment order and demand notice dated 12.07.2024 in Annexure-9 (Series) as being illegal and devoid of merit and bereft of correct procedure. (ii) Quashing the Notice dated 08.09.2023 in Annexure-8 as being without application of mind and settled law. (iii) Quashing the Revision Order dated 21.08.2023 (issued on 23.08.2023) in Revision Case No. JSP-21/E/2023-24 in Annexure 7 as being passed without proper application of mind. (iv) Quashing the communication dated 31.03.2023 in Annexure-4 as being afterthought and witho....
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....tion 16 of the OET Act being preferred, the Additional Commissioner of Sales Tax (Appeal), Commissionerate of Commercial Tax and Goods and Services Tax, Odisha at Cuttack, on detailed examination of fact and appreciation of law was pleased to pass following order on 16.07.2019: "In the instant case, the appellant has neither been selected by the Commissioner for Tax Audit^2 duly approved by him nor been conducted by Audit Team constituted by the Commissioner for the purpose of Audit. It is also been held by Hon'ble Orissa High Court in case of Bhusan Power and Steel Ltd. Vrs. State of Odisha and Others, reported in (2012) 47 VST 466 (Ori) that utilisation of materials other than Audit Report is not permissible while making Audit Assessment. The Adverse materials supplied by the Intelligence Range Cuttack can only be utilized as escaped turnover to make Assessment under Section 10 of the OET act instead of resorting to Section 9C of the OET Act to make Audit Assessment. When the provisions of the statute categorically and clearly distinguish between Audit Assessment as contemplated in Section 9C and Assessment under Section 10, the statutory officer who is the creation of t....
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.... is contended that unless self-assessment returns are accepted in consonance with provisions of sub-section (1) and sub-section (2) of Section 9 of the OET Act, reassessment under Section 10 cannot be said to have triggered. 2.5. Nevertheless, a Letter dated 31.03.2023 was issued by the Joint Commissioner of Sales Tax under the caption heading "Regarding initiation of set aside proceedings for the period 01.04.2005 to 28.02.2006 under the OET Act, 1999" with reference to "Reply dated 06.02.2023" filed by the petitioner. Mentioning the dates of filing of returns for the tax periods from 01.04.2005 to 28.02.2006, it is stated in the said letter that "In view of the above, you have self-assessed under Section 9(1) and (2) of the OET Act which is accepted". Flagging impermissibility of initiation of proceeding for reassessment under Section 10, a written objection was filed by the petitioner vide Letter of Reply dated 20.04.2023, wherein it is highlighted as follows: "Now we have received the aforesaid communication, where your good office in order to overcome the Judgement of Orissa High Court in the matter of ECMAS Resins Pvt Ltd. Vrs. State of Odisha has accepted the ret....
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.... Act had been passed and only a communication of acceptance of self-assessed returns for the impugned period had been done on dated 31.03.2023, action of the dealer-company in preferring revision against the communication dated 31.03.2023 was found to be premature, For the said reason, the revision petition filed to that effect was rejected by the Commissioner of Sales Tax In order dated 23.08.2023. Thus, the objection raised on the Issue of limitation and maintainability does not hold ground." 2.8. Assailing the legality, rationality and tenability of the Reassessment Order dated 12.07.2024 (Annexure-9) passed by the Assessing Authority invoking power under Section 10 of the OET Act, the present writ petition has been filed. Hearing: 3. Counter affidavit dated 30.06.2025 has been filed being sworn to by the Deputy Commissioner of Commercial Tax and Goods and Services Tax (Law) clearly stating that the assessment impugned in the writ petition has been undertaken by not taking recourse to power conferred under sub-section (3) of Section 10 (vide paragraph 7 of the counter affidavit). Emphasising that the case would fall within the ken of Rule 34 of the OET Rules re....
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....ispute the facts as unfurled in the writ petition, submitted that the assessment under Section 9C of the OET Act based on Intelligence Report being not in consonance with the procedure established in the statute, the Appellate Authority having directed the Assessing Authority to do the assessment by adhering to correct procedure, no fault can be attributed in passing the Assessment Order dated 12.07.2024. The Assessing Authority having accepted the self-assessment returns by following the interpretation of this Court in ECMAS Resins Pvt. Ltd. Vrs. State of Odisha, 2022 (II) ILR-CUT 817 (Full Bench) proceeded to assess the tax liability under Section 10(1). Thus, no infirmity can be imputed against such action of the Assessing Authority in adopting correct procedure in order to appropriately determine the tax liability. 5.1. Referring to the stand taken by the Revenue in the counter affidavit and the scope of proceeding with Section 10(1) of the OET Act in view of Bhusan Power and Steel Ltd. Vrs. State of Odisha and Others, reported in (2012) 47 VST 466 (Ori), the learned Standing Counsel has sought to support the action of the Authority concerned. Consideration of arguments a....
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....igence was not in consonance with the modalities provided in Section 9B of the OET Act read with Section 41 of the OVAT Act and the Rules framed thereunder, treating it to be "Audit Visit Report", the Assessing Authority proceeded with the Audit Assessment under Section 9C. The jurisdiction and authority of such assessment being assailed in the statutory appeal under Section 16, stemming on ratio laid down in Bhusan Power and Steel Limited Vrs. State of Odisha, (2012) 47 VST 466 (Ori) the Additional Commissioner of Sales Tax (Appeal) set aside the Assessment Order dated 02.08.2006 passed under Section 9C of the OET Act with further direction "to initiate proper proceedings strictly in accordance with the provisions of OET Act and Rules made thereunder". 6.2. As if the Appellate Order is an order of remit, and the same proceeding under Section 9C revived, the Deputy Commissioner of Sales Tax vide Letter dated 09.12.2019 directed the petitioner to produce books of account and other documents relating to the tax periods from 01.04.2005 to 28.02.2006. Opposing such action, the petitioner cited that Section 10 of the OET Act contemplates reassessment under certain cases which does no....
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....ial demand notice (Annexure-3) are hereby quashed." 6.5. After such an authoritative enunciation of law, it seems wisdom dawned and the Assessing Authority taking advantage of Appellate Order dated 16.07.2019 setting aside the Assessment Order passed under Section 9C, undertook exercise of "acceptance" of self-assessment returns which were furnished at the relevant point of time, i.e., during 2005-06. Since tax periods under assessment are covered within 01.04.2005 to 28.02.2006, end of the year would be 31.03.2006. "Five years from the end of the year to which the tax period relates" as it existed prior to 01.07.2012, i.e., prior to date of effect of the OET (Amendment) Act, 2012, would lapse on 31.03.2011. By the date the amendment came into force on 01.07.2012, the five years period from 31.03.2006 had already expired. Therefore, even for the purpose of reassessment, jurisdiction to initiate proceeding under sub-section (1) of Section 10 of the OET Act lapsed by the date the Appellate Order set aside the Audit Assessment Order under Section 9C. Admittedly on the said date of Appellate Order self-assessment returns were not scrutinised and/or accepted and no communication ther....
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....n Form E-32 on 08.09.2023 (Annexure-8), which depicts the following: "You have been assessed under Section 9 of the Orisha Entry Tax Act 1999 for the tax period(s) 01.04.2005 to 28.02.2006 on and communicated to that effect have been made on 31.03.2023." It is, thus, emerged that abandoning the reason ascribed for initiation of the proceeding by issue of earlier Notice in Form E-32, dated 24.04.2023 (Annexure-6), the above fresh Notice in Form E-32, dated 08.09.2023 was issued citing a different reason. The aforesaid factual position as obtained in record manifests that the self-assessment returns were never accepted. There has been change of opinion and/or manipulation of record to camouflage that the initiation for reassessment under Section 10 has been made after acceptance of returns in tune with mandate of sub-section (1) and sub-section (2) of Section 9. 6.9. Minute scrutiny of both the Notices in Form E-32, viz., Notice dated 24.04.2023 (Annexure-6) and Notice dated 08.09.2023 (Annexure-8), would show that whereas the former notice purported to have been issued on the premise of Appellate Order being passed so as to engulf within it the initiation of proceedin....
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....e Assessing Officer on 10.08.2015." 6.14. In B.D. Patnaik Vrs. Deputy Commissioner of Sales Tax, W.P.(C) No. 8802 of 2014 this Court vide Order dated 13.05.2014, it has been held as follows: "The only submission which has been pressed on behalf of the petitioner is that the impugned order of assessment relates to the period beyond the statutory limitation of seven years from the end of the tax period. The impugned Order dated 21.03.2014 could not thus cover any period prior to 1st March, 2007, while in the present case the impugned Order has covered the period from 01.04.2006 to 31.08.2009, and to the extent the impugned order covers period in respect of which assessment has become time barred, it is liable to be set aside. The above legal position is not disputed by the learned counsel for the Revenue in view of the provision of Section 43 of the OVAT Act, 2004. Accordingly, we quash the impugned order of assessment relating to the tax period prior to 1st March, 2007 with liberty to the Assessing Authority to pass a fresh order in accordance with law." 6.15. Taking cue from such view expressed by this Court, when the instant matter is examined it c....
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....ion to hold that the salaries earned by the assessees would be taxable in India." 6.19. In Reliance Industries Ltd. Vrs. Commissioner of Sales Tax, AIR 2020 Ori 55, it has been held by this Court that: "9. The case law of the Constitutional Bench, which is sought to be relied upon by the learned counsel for the petitioner in the case of Zile Singh Vrs. State of Haryana reported in (2004) 8 SCC 1 to interpret the effect of the word 'substituted' was to be given effect to retrospectively, failing which it would take away the fundamental right which was conferred. 10. But in our considered opinion, in a tax statute, the word 'substitute' is to be interpreted strictly as per the legislative intention. It cannot be given the retrospective effect unless expressly provided or intention to that effect is manifest from a bare reading of the provision. If an ordinary interpretation is made as per the case law relied by the petitioner, then if any tax is increased, it cannot be realized retrospectively, which can never be the intention of such 'substitution'. Therefore, amending provision will have prospective effect. 11. In that view of the matter, every word in....
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....n served on the petitioner on or before 31.03.2011. Since the subject-Notice in Form E-32 is served in the year 2023, the reassessment under sub-section (1) and sub-section (2) of Section 10 vide Order dated 12.07.2024 is barred by limitation. 6.22. From the aforesaid discussions looking from any angle, taking into account either pre-amendment or post amendment, it is quite obvious that on the date of initiation of proceeding for reassessment under sub-section (1) of Section 10 by issue of Notice in Form E-32, dated 08.09.2023 has been rendered time-barred. 7. In view of the analysis made in the foregoing paragraphs, having thus perceived that the reassessment framed pursuant to the Notices vide Annexures-6 and 7 does not fall within the purview of Section 10(1)/(2), being hit by limitation enshrined therein, the scrutiny of such notices take this Court to ponder upon another facet. 7.1. A cursory glance at provisions contained in sub-section (1), sub-section (2) and sub-section (3) of Section 10 of the OET Act would indicate that while sub-sections (1) and (2) are intertwined leading to indicate one contingency, sub-section (3) thereof comprehends different circumstance. ....
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....n (2) of Section 10 of the OET Act. Tax together with penalty works out to Rs. 7,71,31,963.31. The dealer-company has already paid an amount of Rs. 6,55,79,139.00 along with the returns filed. Further the dealer has paid Rs. 3,96,567.00 vide PGR No.30 dated 30.10.2006. Balance tax and penalty payable Rs. 1,11,56,257.00 which was adjusted against the refund for the period 1992-93 under GST Act vide refund adjustment order No. 1393/CT dt. 28.03.2007. Further due to less payment of Entry Tax during the filing of returns, interest under Section 7(5) of the OET Act has been levied to the tune of Rs. 12,14,133.00 which the dealer is now required to pay. Hence, the interest of Rs. 12,14,133.00 is payable by the dealer-company for the period 01.04.2005 to 28.02.2005 under Entry Tax Act, 1999 as per the terms and conditions of the demand notice enclosed." 7.4. Imposition of penalty under sub-section (2) of Section 10 of the OET Act in the impugned Assessment Order would unequivocally leads to this Court to construe that the Assessing Authority has exercised power under sub-section (1) of Section 10; obviously not under sub-section (3). 7.5. The above concluding paragraphs contained in....
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....ch less the counter affidavit assigning the reason as to why there was such inordinate delay in communicating the result of self-assessment returns filed way back during the year 2005-06, particularly so when the Audit Assessment Order dated 02.08.2006 (Annexure-1) got set aside in the Appeal filed at the behest of the petitioner vide Appellate Order dated 16.07.2019 (Annexure-2). 7.7. This Court in L.D. Modern Rice Mills Vrs. Commissioner of Commercial Taxes, Government of Odisha & Others, STREV No. 10 of 2020, vide Order dated 09.01.2023 clarified the effect of non-communication of order of acceptance of self-assessment in the following manner: "1. Admit. 2. The following question of law is framed: '(a) Whether exercise of power under Section 43 of the OVAT Act without resorting to the statutory provision of Section 39, 40, 42 and 44 in terms of Rule 50 of the OVAT Rules, 2005 is justified? (b) Whether the learned Tribunal was justified in interfering with the order of Appellate Authority?; (c) Whether the learned Tribunal was justified in passing an order in so far as penalty under Section 43(2) is concerned?" 3. As far as....
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....ior to the amendment. We are in complete agreement with the view taken by the High Court. No interference of this Court is called for in exercise of powers under Article 136 of the Constitution of India. Hence, the Special Leave Petitions stands dismissed. Pending application(s) shall stand disposed of.' 10. We are clear our mind, view taken by coordinate Bench received confirmation from the Supreme Court. The view was, prior to 1st October, 2015 there had to be formal communication or an acknowledgment by the department that the self-assessment stood 'accepted' for there to be reopening under Section 43(1). In this case there is no dispute that such acceptance was neither communicated nor made known as acknowledged by the Department." 7.9. Stemming on such exposition of law, having glance at the Notice in Form E-32, dated 24.04.2023 it would reveal that at the time exercise of power to reassess the petitioner under Section 10, the acceptance of self-assessment returns furnished during 2005-06 was not communicated. The purported communication of such fact of acceptance by Letter dated 31.03.2023 of the JCST is inappropriate exercise of authority/power conferred....
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....rection to the assessing authority to pass the audit assessment order afresh exclusively on the basis of audit visit report within a period of four weeks from the date of appearance of the petitioner-dealer before him for this purpose which is fixed to December 20, 2011. If the petitioner-dealer is aggrieved of the audit assessment order it may prefer statutory appeal. On the date of appearance of the petitioner on December 20, 2011, the assessing authority shall serve notice on the petitioner-dealer in the prescribed form for the purpose of making assessment under Rule 12(4) of the CST (O) Rules [i.e., Reassessment]. Needless to mention that the assessing authority shall complete the assessment under Rule 12(4) of the CST (O) Rules after affording reasonable opportunity of hearing to the petitioner-dealer and shall examine the petitioner's claim of branch transfer keeping in mind the judgment of the honourable Supreme Court in Tata Engineering and Locomotive Co. Ltd. [1970] 26 STC 354 (SC)." In the present case, the Appellate Authority set aside the Order of Audit Assessment, which was founded solely on Intelligence Report but not Audit Visit Report, for lack of jurisdiction. T....
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....uthority had no jurisdiction to proceed with such reassessment and therefore, the Order of Assessment dated 12.07.2024 is liable to be quashed. 7.13. When the Notices issued under Section 10 for the purpose of reassessment are found to be without any sanction of law, the consequential orders thereof cannot be countenanced. Further, the Appellate Authority while allowing the appeal filed at the behest of the petitioner directed for initiation of "proper proceedings strictly in accordance with the provisions of the OET Act and Rules framed thereunder". The Notices under Annexures-6 and 8 are found not to be in consonance with the provisions contained in the OET Act or the OET Rules. 7.14. It is trite that once the basis of a proceeding is gone, all the consequential acts, actions and orders would fall to the ground automatically. This principle is not only applicable to the judicial proceedings, but also to the quasi judicial proceedings and equally to the administrative orders too. [See, Badrinath Vrs. State of Tamil Nadu, (2000) 8 SCC 395; Kalabharati Advertising Vrs. Hemant Vimalnath Narichania, (2010) 10 SCR 971]. 8. A fallacious ground of the opposite parties diagonally....
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....surprise by way of setting up pleading for the first time which was never the context before the Authority concerned while exercising power to proceed with reassessment. In this connection the following observations in Shiv Prasad Sahu Vrs. State of Orissa, (2009) 19 VST 417 (Ori) may be pertinent to be taken note of: "27. To deal with the third question it is necessary to refer the grounds of appeal filed before the learned Tribunal by the Revenue. The ground of appeal which has been annexed to the petition as annexure 4 does not reveal that any specific ground has been taken with regard to addition of 10 per cent towards driage and wastage made by the assessing officer and deleted by the first appellate authority. By a cryptic order the Tribunal has restored the order of assessment. The order does not reveal whether any argument has been advanced by the Revenue against deletion of addition 10 per cent of purchased quantity of mohua flowers by the first appellate authority. Needless to say that the Tribunal is under a duty to decide all the questions of facts and law raised in the appeal before it. However, Tribunal on its own cannot make out a new case particularly when ....
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....ies Ltd. (supra) was applied in subsequent decisions of the Supreme Court in case of Commissioner of Central Excise, Bhubaneswar-1 Vrs. Champdany Industries Ltd., (2009) 9 SCC 466 and also in the case of Commissioner of Central Excise Vrs. Gas Authority of India Limited, (2007) 15 SCC 91. Therefore, in our view, applying the ratio of the Supreme Court referred to hereinabove, the impugned order disallowing all the deductions under Rule 58(1)(a) to (h) without giving any show-cause notice to the petitioner would be rendered bad in law." 8.5. With such lucid legal exposition, for the reasons mentioned in the foregoing paragraphs, the stand taken by the opposite parties deserves to be repelled. 8.6. This apart, Rule 34 of the OET Rules is inapplicable in the present context inasmuch as specific provision for reassessment has been spelt out under Section 10 of the OET Act read with Rule 15D of the OET Rules. Rule 34 of the OET Rules makes it abundantly clear that for any other matters not specified under the OET Rules but required for the carrying out the purposes of the Act and the Rules, the provisions of the OVAT Act and the Rules made thereunder shall mutatis mutandis apply. ....
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....ctionary of English Law 1959) defines 'mutatis mutandis' as 'with the necessary changes in points of detail'. Black's Law Dictionary (Revised 4th Edn. 1968) defines 'mutatis mutandis' as 'with the necessary changes in points of detail, meaning that matters or things are generally the same, but to be altered when necessary, as to names, offices, and the like' *** Extension of an earlier Act mutatis mutandis to a later Act, brings in the idea of adaptation, but so far only as it is necessary for the purpose, making a change without altering the essential nature of the things changed, subject of course to express provisions made in the later Act *** In the circumstances the conclusion reached by the High Court that the two Acts were independent of each other was wrong. We are of the view that, it is necessary to read and to construe the two Acts together as if the two Acts are one, and while doing so to give effect to the provisions of the Act which is a later one in preference to the provisions of the Principal Act wherever the Act has manifested an intention to modify the Principal Act.' Similarly, in Prahlad Sharma Vrs. State of U.P., (2004) 4 SCC 113, the phrase 'muta....
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....yed in Rule 34 of the OET Rules. Such expression read juxtaposed with "mutatis mutandis" can only mean that in case the provisions of the OET Rules are silent about "any other matters" than what are specifically found mentioned, in such event the provisions of the OVAT Act and the Rules framed thereunder could be made applicable. Stemming on the principle laid down by the Hon'ble Supreme Court referred to supra that a delegated power to legislate by making Rules 'for carrying out the purposes of the Act' is a general delegation without laying down any guidelines; it cannot be so exercised as to bring into existence substantive rights or obligations or disabilities not contemplated by the provisions of the Act itself, looking at the present matter in the said perspective, it can be stated that when specific substantive provisions are available for the Assessing Authority to undertake reassessment under Section 10 of the OET Act and corresponding Rules, particularly Rule 15D of the OET Rules, laid down the procedure to exercise such power conferred under Section 10, there is no scope or occasion for the Authority to invoke Rule 34 of the OET Rules. 8.13. In the present case, the p....
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....swered by the High Court in revision under Section 80 of the OVAT Act, the same can be corrected invoking provisions of sub-section (2) of Section 49 of the OVAT Act by exercising same or identical power conferred under the Central Sales Tax Act, 1956 and the converse can also be true. However, such is not true for the purpose of OET Act. 8.16. It has already been held in the foregoing paragraphs that issue of subsequent fresh Notice in Form E-32, dated 08.09.2023 (Annexure-8) by omitting the circumstances for which sub-section (3) of Section 10 of the OET Act envisaged makes it abundantly manifest that the Assessing Authority consciously abandoned the proceeding for reassessment under sub-section (3) of Section 10 initiated by dint of Notice in Form E-32, dated 24.04.2023 (Annexure-6). 8.17. For the reasons ascribed hereinabove, the contention of the Revenue is illogical, irrational and without any substance. Conclusion: 9. It emerges from the above discussions that: i. The Intelligence Report being utilised in the course of Audit Assessment under Section 9C treating the said report to be Audit Visit Report is contrary to what is laid down in Bhusan Power and ....
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....vant in the present context in view of the discussions made above, it may be analysed that the Appellate Order being passed on 16.07.2019, the statutory Notices in Annexures-6 and 8 being issued in the year 2023, i.e., 24.04.2023 and 08.09.2023, the same are barred by period stipulated in Section 10(3) of the OET Act. Section 10(3) of the OET Act having specified "three years" for invoking jurisdiction to reassess in the light of judgment or order which attained finality, there is no scope to import period of "five years" specified in Section 49(2). However, the stance taken by the opposite parties is repelled in view of Indian Oil Adani Ventures Limited Vrs. State of Odisha, 2025 SCC OnLine Ori 4024 and discussions made supra on inapplicability of Rule 34 to the instant case. 10. With the aforesaid factual matrix, given legal perspective and reasons mentioned hitherto, the Notice in Form E-32, dated 24.04.2023 (Annexure-6) and the Notice in Form E-32, dated 08.09.2023 (Annexure-8) are quashed and consequential Assessment Order dated 12.07.2024 (Annexure-9) is hereby set aside. 11. In the wake of the above analysis and discussions, the writ petition stands allowed and pending....
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....y, the assessing authority, on the basis of information in his possession, may, ^a[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. 45. If the assessing authority is satisfied that the escapement a[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. 46. 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 proceed to rea....
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....r sub-section (1), the assessing authority may proceed to complete the assessment to the best of his judgment basing on the materials available in the Audit Visit Report and such other materials as may be available, and after causing such enquiry as he deems necessary. (5) Without prejudice to any penalty or interest that may have been levied under any provision of this Act, an amount equal to twice the amount of tax assessed under sub-section (3) or (4) shall be imposed by way of penalty in respect of any assessment completed under the said sub-sections. (6) Notwithstanding anything contained to the contrary in any provision under this Act, an assessment under this section shall be completed within a period of six months from the date of service of notice issued under sub-section (1) along with the Audit Visit Report: Provided that if, for any reason, the assessment is not completed within the time specified in this sub-section, the Commissioner may, on the merit of each such case, allow such further time not exceeding six months for completion of the assessment proceeding. (7) No order of assessment shall be made under sub-section (3) or (4) af....