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2023 (3) TMI 1331 - HC - VAT and Sales TaxRate of tax - HSD and LDO - fresh assessment under Section 12(8) of the OST Act - such reassessment is vitiated on account of “change of opinion” or not - disallowing set off of entry tax paid on the goods which were sold to the dealers at concessional rate of tax @ 4% as per Entry 81 of schedule appended to Notification dated 31.03.2001 issued under Section 5(1) of the OST Act - set off of entry tax - whether the petitioner is entitled to set off entry tax paid against tax payable for sale of goods? HELD THAT:- Both the First Appellate Authority and the Second Appellate Authority have come to the conclusion that the petitioner, having dealt with the item(s) mentioned in Entry No.101 and sold said item(s) against declaration in Form IV at concessional rate of tax, is not entitled to get set off of entry tax paid against the amount of tax payable for sale of goods. The Item No.101 deals with the general provision, so far as HSD and LDO are concerned, and for that the dealer is liable to pay tax @ 20%. There is no dispute on that. But here is a case where the petitioner is carrying on business in HSD and LDO, which is used within the State. There is no iota of doubt that the petitioner claims concessional rate of 4% tax on the strength of Form-IV. The transaction which was done by the petitioner with the others, being on the strength of Form-IV, set off was granted to the petitioner. The assessment order issued by the Assessing Officer under Section 12(4) is very clear to that extent, but reassessment made under Section 12(8) and confirmation thereof made by the First Appellate Authority and the Second Appellate Authority cannot be sustained in the eye of law. The reopening of the assessment is based on the investigation report of the tax authorities themselves and is, therefore, founded on nothing but a mere change of opinion. As a consequence thereof, the order passed by the Assessing Authority under Section 12(8) for reassessment has no justification in view of law laid down by the apex Court in Kelvinator of India Limited [2010 (1) TMI 11 - SUPREME COURT] followed by Nava Bharat Ferro Alloys v. State of Orissa, [2010 (3) TMI 1009 - ORISSA HIGH COURT]. Therefore, the formation of opinion in the reassessment under Section 12(8) of the OST Act cannot have any justification and while forming such opinion, as it appears from the records, no opportunity of hearing to the petitioner was given in compliance of the principles of natural justice. It is also not in dispute that the petitioner-company has paid entry tax on procurement of HSD and LDO into the State of Orissa but has not sold any finished goods rather sold the same goods as procured. On perusal of the assessment order under Section 12(4) of the OST Act, it is made clear that the Assessing Authority has taken note of the fact that HSD and LDO, which have been utilized by different companies by furnishing the Form-IV, the same has been taken note of and assessment thereon has been made by the Assessing Authority - obviously the petitioner is liable to pay tax @ 20% as per Entry-101, ibid. In such eventuality, the petitioner is liable to discharge its liability by availing set off of entry tax paid. The issue of set off being taken into consideration while finalizing assessment under Section 12(4) of the OST Act, on account of “change of opinion” the reassessment under Section 12(8), ibid. is not legally tenable. HSD is one of the covered goods under Note-1(b) and, thereby, the petitioner is statutorily entitled to claim set off of entry tax against sales tax payable on sale of HSD. As the State Government has not imposed any restriction/limitation on the claim of set off of entry tax on the covered items, the reassessment made by the Assessing Authority under Section 12(8) and confirmation made thereof by the First Appellate Authority and also the Tribunal denying the benefit of set off cannot be sustained in the eye of law. The benefit statutorily permissible, vide notification dated 31.03.2001 issued by the Government, cannot be denied/disallowed without considering such notification in proper perspective. The reassessment order under Section 12(8) of the OST Act dated 27.01.2007 under Annexure-3 passed by the Assessing Officer disallowing the set off of entry tax to the petitioner, which comes under the purview of the notification dated 31.03.2001, cannot be sustained in the eye of law - Revision allowed.
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