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2022 (6) TMI 971 - HC - VAT and Sales TaxEnhancement of tax demand - enhancement of assessment without taking recourse to Rule 50(3) of the Orissa Sales Tax Rules, 1947 - whether enhancement is beyond jurisdiction and not based on material facts on record? - enhancement of turnover in absence of any materials to establish that the goods found short have been sold - determination of sales turnover by the Tribunal can be held to be based on lawful and valid nexus and sustainable in law or not? - validity of disposal of second appeal by the Tribunal without compliance of Rule 57 of the Rules for service of notice inviting cross-objection is justified in view of Section 23(3)(b) of the OST Act read with Rule 52 of the Rules? Whether, such enhancement directed by the Tribunal under Annexure-3 is legally justified? - HELD THAT:- On a bare reading of the impugned order under Annexure-3, it appears that the enhancement was directed not in compliance of Rule 50(3) of the Rules and therefore, in the considered view of the Court, the basic principle of natural justice and the relevant provision in the OST Rules have not been followed. In a similar situation, the enhanced assessment directed by the Tribunal was interfered with in the case of UTKAL SALES CORPORATION VERSUS STATE OF ORISSA [2008 (3) TMI 651 - ORISSA HIGH COURT] and the matter was remanded for a fresh consideration in accordance with law. Non-issuance of notice in terms of Rule 57 of the OST Rules - HELD THAT:- In any case, the Petitioner could have filed a cross-appeal, had it been aggrieved by any part of the order of the ACST. Nevertheless, the Tribunal had an obligation to issue a notice to the Petitioner for submission of cross-appeal as is required under Rule 57 of the OST Rules. STO declined to accept the explanation offered by the Petitioner towards the shortage in stock to the extent of 1899.15 Quintals of paddy which was based on sampling method on the ground that on the date of inspection, the dealer was present and admitted that each bag of paddy weighed 75 Kg - mere stock deficiency by itself could not be sufficient unless it is specifically shown that the suppressed stock was, in fact, sold by the assessee. In the present case, there is no material brought on record from the side of the Department to suggest that the shortage stock was sold by the Petitioner. Therefore, in absence of any such evidence, it would not be just and proper to hold that there was deficiency in stock and so the suppression of sales by the Petitioner. Apart from that, the shortage in stock is based on mere eye-estimation of the inspecting officers, which as discussed earlier, may not be sufficient for the purpose of fixing liability against the Petitioner. In any case, since the shortage of stock, even if it is assumed, per se cannot be a ground for enhancement of turnover, since no material evidence is produced by the Department to further indicate that the same was sold by the Petitioner. Having said that, the Court reaches at a conclusion that the Tribunal was not right in interfering with the order of the ACST and directing enhancement. The predominant issue with regard to the enhancement of turnover and decision thereon by the Tribunal cannot be sustained - the issues involved are answered in favour of the assessee and against the Department.
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