TMI Blog2013 (4) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... extracted the report of Paradeep Port Trust and Ocean Loss Report submitted by the IOCL in reassessment order only for the purpose of better appreciation of the alleged transactions effected by the petitioner dealer which has been informed to the petitioner vide letter dated 30.12.2006 (Annexure-3). The information of Paradeep Port Trust or IOCL has not been utilized by the Assessing Officer against the petitioner-dealer to enhance the turnover alleged to have been escaped from assessment in notice dated 30.12.2006 under Annexure-3. What is taxed in the impugned reassessment order was exactly the same transaction shown in the letter dated 30.12.2006 (Annexure-3) communicated to the petitioner much before passing the impugned order of reassessment. Therefore, it cannot be said that the petitioner was not aware of the materials on the basis of which the reassessment proceeding has been made. Third is as to whether the Assessing Officer has passed the impugned assessment order on the dictate of his higher authority - Held that:- Further perusal of the assessment order passed under Rule 12(8) of the CST (O) Rules also reveals that on receiving report from the Additional Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SKO in question from the Lighterage Terminal at Paradeep to outside the State, i.e., Haldia and that the petitioner is not liable to pay tax under the CST Act. If any such appeal is filed within two weeks from today, the Appellate Authority is directed to adjudicate that issue, after affording opportunity of hearing to the petitioner, and pass order in accordance with law - With the aforesaid observations and directions, the writ petition is dismissed - W.P.(C) No.14234 of 2009 - - - Dated:- 16-3-2012 - SHRI. V.GOPALA GOWDA AND SHRI B.N. MAHAPATRA JJ. For Petitioner: M/s Sanjit Mohanty, Sr. Advocate M/s A.N. Ray, N. Paikray, B.P. Mohanty, P.K. Mishra K.K. Sahu For Opp. Party: Mr. M.S. Raman Additional Standing Counsel (Commercial Taxes Department) ---------- P R E S E N T: B.N. Mahapatra, J. This writ petition has been filed with the following prayers: (i) Issue a writ in the nature of Certiorari quashing the order dated 30.12.2006 as passed by the opposite party in initiating proceeding under Rule 12(8) of the Central Sales Tax (O) Rules vide Annexure-6; (ii) Issue a writ in the nature of Certiorari quashing the ex-parte order of reassessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g ocean going tankers cannot call at Haldia because of lower draft. Therefore, the cargo is brought in by big tankers and unloaded at Paradeep. For non-availability of tankers space of Oil Company, the cargo of one Oil Company is stored in the tanks of another Oil Company by virtue of the hospitality arrangement. Thereafter, the cargoes are sent to Haldia in small tankers. In this manner, all the Oil Companies received cargo from outside the State and dispatched the same to outside the State from Paradeep. At Paradeep, due to shortage in storage facility, other oil Companies like IOCL, HPCL etc. often keep their product in BPCL storage tanks as per the safe keeping agreement. Such product kept in BPCL tanks, belonging to the storing oil company, is moved by tanker charted by said storing oil company to Haldia. Since the product of storing oil company is kept in the BPCL tanks, the same are loaded by BPCL on behalf of the said Company in the tanker based on their advice. Therefore, the petitioner (BPCL) has never moved its own product outside the State of Odisha in tankers nor has sold any product by way of inter-state transaction to other Oil Companies on this score. 3. While ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of product from Paradeep to Haldia Port and the petitioner also explained to the Sales Tax Officer regarding the safe keeping arrangement and submitted that the petroleum products were kept by BPCL under the safe keeping agreement with other Oil Companies for safe keeping. Since the product belongs to the storing Oil Companies and was taken delivery at Haldia by them, the question of paying any tax by treating the aforesaid arrangement as interstate sales does not arise at all. On 10.09.2008, it was submitted by the petitioner orally that if the learned STO is not satisfied with the clarifications or the points agitated earlier, the petitioner should be given an opportunity of personal hearing so that there would be no levy of tax on the transactions claimed by the petitioner. The petitioner also submitted the sample copies of safe keeping statement jointly signed by HPCL and BPCL for the product of HPCL which was kept at BPCL tanker and subsequently loaded into cargo charted HPCL as an illustration as to understanding between different Oil Companies regarding the storage and movement of goods from Paradeep. As the opposite party was very much busy no oral hearing has taken place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly reopened the completed assessment and abdicated and surrendered to the report of the Additional Commissioner. Since the proceeding has been initiated on the basis of the report of the Additional Commissioner, Commercial Taxes, the reason to believe by the learned Sales Tax Officer and the formation of opinion by the learned STO is in a mechanical manner and the Assessing Officer has acted to the dictate of the higher authority, which is contrary to principles of law. Placing reliance on the judgment of this Court in the case of Indure Limited Vs. Commissioner of Sales Tax, Orissa others, reported in (2006) 148 STC 61 Mr. Mohanty submitted that as in the instant case, the report/direction of the Additional Commissioner was taken into consideration and the Sales Tax Officer did not have anything to form of his own objective opinion except acting upon the direction/opinion of the Additional Commissioner and no reassessment proceeding could have been initiated at the behest of the higher authority. In support of the above provision of law reliance was also placed in the case of State of UP Vs. Maharaja Dharmandar Prasad Singh, reported in AIR 1989 SC 997. 7. The order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss transactions in its return. The product of BPCL had never moved from Paradeep to any other State. 11. In similar context and/or premises, the Hon ble Supreme Court in the case of M/s Indian Oil Corporation Limited Vs. Commissioner of Sales Tax another (Civil Appeal No.2438 of 2009) has been pleased to set aside the order of reassessment passed by the authority and remitted the matter to the Assessing Officer with a direction to give full opportunity of hearing to the petitioner and decide the reassessment proceedings included in the jurisdictional fact and the effect of form of declaration submitted by the Corporation. 12. Mr. Mohanty further submitted that notice for initiation of reassessment proceedings under Rule 12(8) of the CST(O) Rules has been issued on 29.12.2006 whereas initiation of the proceedings was made on 30.12.2006. Thus, the opposite party issued notice prior to initiation of proceedings under Rule 12(8). Therefore, the impugned notice is void and consequently the entire proceedings are vitiated ab-initio in law. Concluding his argument Mr. Mohanty submitted that the proceedings initiated under Rule 12(8) of the CST(O) Rules by the Assessing Officer is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of change of opinion does not arise. Therefore, it is a clear case of escapement of turnover from assessment and paying sales tax. Since there is efficacious remedy by way of appeal the present writ petition is not maintainable. 15. On the rival contentions raised by the parties, the questions that fall for consideration by this Court are as follows:- (i) Whether in the present case, the completed assessment has been reopened by mere change of opinion? (ii) Whether reasonable opportunity of hearing was afforded to the petitioner and the materials utilized against the petitioner-assessee were confronted to him before passing the order of reassessment under Rule 12(8) of the CST (O) Rules? (iii) Whether in the facts and circumstances of the case, the Assessing Officer has passed the impugned reassessment order on the dictate of his higher authority, i.e., the Assistant Commissioner of Commercial Taxes and without applying his own mind has come to the conclusion that the transactions in question are inter-state sale in nature? (iv) Whether notice for reassessment proceeding under Rule 12(8) of the CST(O) Rules has been issued on 29.12.2006 whereas initiation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same year. 17. Before proceeding further, it is necessary to know what is the meaning of making assessment on change of opinion under direct or indirect tax. It means, in respect of a particular income/transaction if the Assessing Officer after application of mind, takes a view that the particular goods or income is not liable to tax and completed the assessment, reopening of said assessment is not permissible by mere change of opinion of the Assessing Officer to levy tax on such goods or income. 18. The Hon ble Supreme Court in the case of Binani Industries Ltd. vs. Asst. Commissioner of Commercial Taxes, [2007] 6 VST 783 (SC), held that reopening of assessment is not permissible by mere change of opinion of the Assessing Officer. Merely because the Assessing Officer changes his opinion that cannot have any effect on the assessment which has been completed on the basis of the view taken on turnover considered in the earlier assessment. 19. In the instant case, the earlier order of assessment passed on 31.03.2005 for the year 2001-2002 under Rule 12(5) of CST(O) Rules [in the reassessment order it is referred to as assessment under Rule 12(4)] does not reveal that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der assessed. When such a reason exists, the Sales Tax Authority may at any time within five years from the date of expiry of the year to which the said period relates call for a return after complying with the provision of Rule 10 and proceed to assess the amount of tax due from the dealer. The Sales Tax Authority may also direct in cases where such escaped or under assessment is due to the dealer having concealed particulars of his turnover or having without sufficient cause, furnished incorrect particulars thereof, the dealer shall pay penalty in addition to the tax assessed. However, such penalty shall be levied not exceeding two and half time, the amount of tax so assessed. 21. Undisputedly, in the instant case, the petitioner has been informed the reasons for reopening of assessment for the year 2001-2002 under Rule 12(8) of CST(O) Rules by the Assessing Officer in his letter dated 30.12.2006. The said letter is set out herein below:- OFFICE OF THE COMMERCIAL TAX OFFICER: CUTTACK 1 EAST CIRCLE, CUTTACK No.5258/CT Dated 30.12.2006 To M/s. Bharat Petroleum Corporation Limited Sikharpur, Cuttack bearing TIN-21901201770 Sub: Reasons for reopening of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the Lighterage Terminal at Paradeep. 23. Finally, the reassessment under Rule 12(8) of CST(O) Rules has been completed on the basis of the reasons stated in the notice dated 30.12.2006 (Annexure-3). The exact turnover alleged to have been escaped from earlier assessment, as indicated in Annexure-3, has been brought to tax in the impugned reassessment order. Therefore, it cannot be said that the petitioner was not aware of the reasons for initiation of reassessment proceeding under Rule 12(8) of the CST (O) Rules and reassessment was completed without confronting the materials utilized for making assessment. 24. Further, it is noticed that the reassessment proceedings was initiated on 30.12.2006 and the same was completed on 24.12.2008. Thus, two years time was taken to complete the reassessment proceeding from the date of communication of reasons to the petitioner for initiating the reassessment proceedings. The reassessment order reveals that sufficient opportunity of hearing was given to the petitioner and it has taken a number of adjournments on different dates. On 10.09.2008, the Senior Accounts Officer of the petitioner company appeared before the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trust have been referred to in course of hearing of the writ petition, nothing was brought to our notice as to how prejudice has been caused to the petitioner. Merely by saying that non-supply of copy of the information supplied by IOCL and Paradeep Port Trust is in violation of the principles of natural justice is not enough. Duty is cast on the assessee to show as to how prejudice has been caused to it on account of informations received from Paradeep Port Trust and IOCL which have been referred in the reassessment order. As discussed above, no prejudice is caused to the petitioner on account of referring the reports of Paradeep Port Trust and IOCL in reassessment order. 27. Question No.(iii) is as to whether the Assessing Officer has passed the impugned assessment order on the dictate of his higher authority, i.e., the Assistant Commissioner of Commercial Taxes without applying his own mind and came to the conclusion that the transactions in question are inter-state sale in nature and therefore, it is vitiated in law. Mr. Mohanty, submitted that the reassessment proceedings initiated are illegal as the same has been initiated at the behest of the higher authority i.e. the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he period 2001-02. Hence, the case is reopened u/r.12(8) of the CST (O) Rules for re-assessment. Accordingly, notice u/r.10 of the CST (O) Rules is issued to the dealer-Company along with a letter disclosing the facts for reopening the case, fixing the date to 07.02.2007. 31. Thus, from the above order dated 30.12.2006, it is ample clear that the Assessing Officer applying his mind and being satisfied that the alleged turnover had escaped from assessment, initiated reassessment proceeding. Further perusal of the assessment order passed under Rule 12(8) of the CST (O) Rules also reveals that on receiving report from the Additional Commissioner, the Assessing Officer applied his mind, examined the case of the assessee with reference to the copy of the hospitality arrangement between BPCL and HPCL and the statement of inter-state sale of petroleum products dispatched by HPCL from Lighterage Terminal at Paradeep to other oil companies outside the State filed by the petitioner, documents and previous order of assessment and referring to all the relevant provisions of the CST Act came to the conclusion that there has been evasion of tax by the petitioner-assessee. The delivery of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ules (Annexure-2) was also issued on 30.12.2006. However, in the left side bottom portion of the said notice, the date put on has been shown to be 29.12.2006. From the said notice, it further reveals that no date is put under signature of the STO, Cuttack-I circle, Cuttack. In view of the ordersheet entry dated 30.12.2006 and that notice under Rule 10 of CST(O) Rule has been issued on 30.12.2006, it can be safely concluded that the date 29.12.2006 appearing on the left side bottom portion of the notice (Anneuxre-2) is a mistake occurred inadvertently. Therefore, the allegation that opposite party issued notice prior to initiation of proceedings under Rule 12(8) and the entire reassessment proceedings are vitiated, is not sustainable in law. 35. Question No.(v) is as to whether the issue involved in the present case are similar/identical to that of the case of Indian Oil Corporation Limited vs. State of Orissa and Others, [2008[ 15 VST 497 (Orissa). Mr. Mohanty submitted that the issues involved in the present case are similar /identical to that of the case of Indian Oil Corporation s case (supra) and in that case the Hon ble Supreme Court remanded the matter to the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he goods in other State and the evidence of dispatch of goods. Thus, when there are only stock transfers but not actual sale the benefit of Section 6-A is attracted. The declaration referred to Section 6-A(1) shall be in Form-F as provided in Rule 12 of the CST (R T) Rules, 1957. Subsection (2) of Section 6 of the CST Act provides that if the assessing authority is satisfied after making such inquiry that the particulars contained in the declaration furnished by a dealer under sub-section (1) are correct and genuine then he may make an order to that effect and there upon the movement of goods shall be deemed for the purpose of C.S.T. Act to have been occasioned otherwise than as a result of sale. Law is well-settled that during the relevant time the dealer was also competent to produce other evidence before the Taxing Authority to prove that he is not liable to be taxed, because there is nothing in Section 6- A or in Rule-12 to suggest that Form F is the only mode for discharging the burden that lies on the dealer. Section 6-A is an enabling provision and furnishing of declaration Form F cannot be held to be mandatory. 37. Petitioner s case is that dispatch of 38,881 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the position so stated, despatches of goods outside the State of Orissa by sea through Paradeep terminal by BPCL, claimed ambiguously as safe keeping of the product of HPCL in BPCL storage tanks and loading of the said product on behalf of HPCL in the tanker, based on advice from HPCL, is contrary to material evidence and substantial part of the said transactions is inter state sale liable to tax in the hands of BPCL in the State of Orissa. In the situation, the conclusion appears to be irresistible that there has been evasion of tax by a corporate oil giant in the public sector. The delivery of 38,881 KL of HSD and 29,728 KL of SKO by BPCL ex-tanker at the Part of destination at Haldia to other oil companies i.e. IOC/IBP/ HPC, though are clearly inter state sales falling under section 3(a) of the CST Act, have not been reflected in the return filed for the respective return period and have been kept away from the knowledge of the statutory authorities. The returns don t reflect the true and correct picture of the business transactions although it has been so declared in the returns itself. The declarations furnished don t appear to have been truthfully made. 39. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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