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2014 (9) TMI 372 - HC - VAT and Sales TaxWaiver of pre deposit - Whether the condition precedent for pre-deposit of 20 per cent of tax or interest or both in dispute in addition to payment of admitted tax for entertaining an appeal as provided under section 77(4) of the OVAT Act read with proviso to rule 87 of the OVAT Rules is unreasonable, oppressive, violative and ultra vires of article 14 of the Constitution of India - Held that:- Section 77(4) of the OVAT Act provides that no appeal against any order shall be entertained by the appellate authority, unless it is accompanied by satisfactory proof of payment of admitted tax in full and twenty per centum of the tax or interest or both in dispute. it becomes crystal clear that appeal is a statutory remedy and the same is maintainable provided that the statute enacted by a competent Legislature provides for it. Further, there can be no quarrel that the right of appeal cannot be absolute and the Legislature can put conditions for maintaining the same. - provisions of section 77(4) of the OVAT Act requiring deposit of 20 per cent of the tax or interest or both in dispute as a precondition for entertaining an appeal against the order enumerated under section 77(1) of the OVAT Act does not make the right of appeal illusory and such a condition is within the legislative power of the State Legislature and cannot be held to be unreasonable and violative of article 14 of the Constitution. - Decided against the assessee. Imposition of penalty under section 42(5) - penalty equal to the twice of the demand - Held that:- even if further opportunity will be given to the assessee before imposing penalty that will be a futile exercise. Penalty is not independent of the tax assessed. If the tax is assessed, imposition of penalty under section 42(5) is warranted. section 42(5) of the OVAT Act authorizing imposition of penalty equal to twice the amount of tax assessed under section 42(3) or (4) of the OVAT Act is constitutionally valid. It is not arbitrary, unreasonable, oppressive, or hit by article 14 or in any way ultra vires the Constitution of India. - Decided against the assessee. Failure of the authorized officer to submitt audit visit report to the assessing authority within seven days - Held that:- notice issued in form VAT 306 and the accompanying audit visit report reveal that the audit of the business of the petitioner was undertaken by the officers of the audit unit on October 1, 2007 and audit visit report was to be submitted within seven days from October 1, 2007 as contemplated in section 41(4). But the audit visit report was submitted on March 31, 2008, i.e., after six months of the completion of the audit. This is in clear violation of the statutory provision contained in section 41(4) since there is a time-limit prescribed for submission of audit visit report and the same has not been complied with. Therefore, the said audit visit report has no validity. - Decided in favor of assessee. Whether the audit visit report is vitiated on the ground that the same has been submitted by an officer who was neither a part of nor is the head of the team of audit - Held that:- The audit visit report attached to the writ petition under annexure 1 reveals that on October 1, 2007, an investigation audit under rule 41(3) of the OVAT Rules was preferred by the Enforcement Wing of Commercial Taxes, Government of Odisha, simultaneously, at both the factory premises as well as the registered office premises of the company located at Jajpur and Bhubaneswar. While a team of officials led by ACST-Enforcement Range, Berhampur visited the factory premises, the registered office premises was visited by STO(I), Berhampur and ASTOs of Investigation Unit of Bhubaneswar under the supervision of the ACST, Enforcement Range, Balasore. Thus, the ACST, Enforcement Range, Berhampur was incharge of the audit team conducting audit in factory premises. But the audit visit report reveals that the same has been submitted by the S.T.O., Investigation Unit, Bhubaneswar as head of the audit team. Thus, the audit visit report has not been submitted by the officer in-charge of the audit team authorized to conduct the audit in the factory premises as required under section 41(4) of the OVAT Act read with rule 45(3) of the OVAT Rules. Therefore, the said report is vitiated in law. - Decided in favor of assessee. Whether statutory period of 30 days allowed in section 42(2) of the OVAT Act, 2005 has not been extended to the petitioner in form VAT 306 and thereby the audit assessment proceedings are vitiated - Held that:- Section 42(2) provides that where a notice is issued to a dealer under sub-section (1) he shall be allowed time for a period not less than 30 days for production of relevant books of account and documents. In the instant case, notice in form VAT 306, which has been attached to the writ petition as annexure 1 reveals that such notice though was dated April 30, 2008 has been issued vide issue No. 2177 dated May 16, 2008 fixing date of appearance and production of the books of account on June 10, 2008. Thus, the notice in form VAT 306 itself shows that 30 days time as provided under section 42(2) has not been allowed to the petitioner. The petitioner's case is that the notice in form VAT 306 was served in first week of June, 2008 and thus the petitioner barely had 4-5 days to appear and comply with the direction in the notice and thereby the cardinal principle of natural justice is violated. Thus, this is a case of clear violation/infraction of the mandatory provisions of section 42(2) of the OVAT Act. - Decided in favor of assessee. In the fact situation, completion of audit assessment on the basis of AVR which has been submitted in violation of statutory provisions of section 41(4) of the OVAT Act read with rule 45(3) of the OVAT Rules and upon issuance of notice in form VAT 306 in violation of section 42(2) is not sustainable in law. Accordingly, we set aside the impugned assessment order dated October 20, 2008 and the consequent demand notice. Decided partly in favour of assessee.
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