TMI Blog2007 (11) TMI 558X X X X Extracts X X X X X X X X Extracts X X X X ..... re shall be no order as to costs. - - - - - Dated:- 28-11-2007 - GANGULY A.K. C.J. AND MAHAPATRA B.N. , JJ. The judgment of the court was delivered by B.N. MAHAPATRA J. In this writ petition, the petitioner challenges the initiation of reassessment proceeding under section 12(8) of the Orissa Sales Tax Act, 1947 (hereinafter referred to as the Act ) for the years 1995-96 and 1996-97 by the Sales Tax Officer, Koraput-II Circle, Rayagada (hereinafter called as the STO ) on the following two grounds: (i) The A.G. Audit Report on the basis of which proceeding under the Act has been initiated is not in conformity and in contempt of the order of the honourable High Court of Orissa in the case of P. R. Tata Co. v. Sales Tax Officer [1971] 27 STC 176 and State of Orissa v. Iqbal Bros. [1990] 79 STC 337; and (ii) Non-communication of reason for reopening of the assessment in writing to the petitioner is arbitrary and vitiates the proceeding initiated under section 12(8) of the Act. In this case, a Division Bench of this court on September 20, 2001 while issuing notice on the question of admission indicated that there were conflicting opinions of this court on the poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons with the Government of Orissa for procurement of tamarind on payment of royalty from the leased out areas. Under the said lease agreements, the petitioner was entitled to procure tamarind which existed at the time of entering into the agreement with the Government of Orissa or that may come to exist in future during the period of lease. Copies of the said agreement entered into between the petitioner and the Government of Orissa are under annexures 2A and 3A to the writ petition. The royalty amount so paid by the petitioner to the Government of Orissa for procurement of tamarind during the aforesaid three years has been disclosed by the petitioner in its return as turnover of purchase for the purpose of payment of sales tax under the Act and the same was accepted by the opposite party for the three assessment years while passing the aforesaid orders under section 12(4) of the Act. Subsequently, the STO has reopened the case and issued notice to the petitioner under section 12(8) of the Act on the basis of the A.G.'s audit report to include the expenses incurred by the petitioner towards collection, transportation charges, etc., in the purchase price for the purpose of levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , forest produce was sold by the Forest Department and purchased by the petitioner for a consideration money as per the schedule and the purchaser himself was to pluck harida, collect, transport and crush them. None of these things was done by the seller. The seller also did not incur any expenses towards anything done at the time or before delivery of Harida. Therefore, purchase price would not include collection, transport and crushing charges incurred by the petitioner. In the case of State of Orissa v. Iqbal Brothers [1990] 79 STC 337 (Orissa), the question before this court was whether the dealer was to pay tax on the purchase turnover of mohua flower on the basis of royalty amount paid by the dealer to the Forest Department for removal of mohua flower collected from the persons on payment of remuneration or the prevailing market rate at which mohua flower was sold at the time of purchase by the dealer would be purchase turnover of the dealer for the purpose of paying tax under the Act. This court confirmed the order of the Sales Tax Tribunal relying upon P.R. Tata's case [1971] 27 STC 176 holding that the dealer was to pay tax on the purchase turnover of mohua flower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary to decide who is the seller in the present transaction and what is the valuable consideration paid by the purchaser-petitioner to the seller for purchase of tamarind during the relevant period of lease. It is so necessary because of the fact that tamarind during the relevant period was declared as goods liable to purchase tax under section 3B of the Act, and, accordingly, the petitioner is liable to pay tax on its turnover of purchase of tamarind. For this purpose, it is relevant to quote the definition of the terms purchase turnover and purchase price as defined under the Act. The term turnover of purchase has been defined under section 2(j) of the Act which is as follows: Section 2(j): 'Turnover of purchases' means the aggregate of the amounts of purchase prices paid and payable by a dealer in respect of the purchase or supply of goods or classes of goods declared under section 3B. The term purchase price has been defined in section 2(ee) of the Act which is as follows: Section 2(ee): 'Purchase price' means the amount payable by a person as valuable consideration for the purchase or supply of any goods less any sum allowed by the seller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both days inclusive and it is hereby agreed that the said forest produce may be extracted by the forest contractor only during the aforesaid period. (3) The details of the consideration payable by the contractor under this agreement are specified in Schedule II below. All payments on account of dues from forest contractors shall be made into a Government Treasury of Sub-Treasury and the Treasury challan should be sent at once after each payment to the Range Officer concerned. (4) The routes by which the said forest produce may be removed from the contract area and the depots at which it shall be presented for examination are specified in Schedule III below . . . Sd/-Illegible Divisional Forest Officer Reyagada Division. From a plain reading of the agreement form of forest contract as entered into between the Governor of Orissa and the petitioner it is amply clear that the seller in this case is the Government of Orissa and the buyer is the petitioner under the contract. Under the contract the petitioner is liable to pay the consideration as specified in the Schedule II to the Government of Orissa. On payment of the consideration amount to the Government of Oriss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the initiation of proceeding under section 12(8) is not sustainable in the eye of law. [See Suburban Industries Kalinga Private Limited v. Sales Tax Officer, Bhubaneswar [1993] 90 STC 280 (Orissa), State of Orissa v. Ugratara Bhojanalaya [1993] 91 STC 76 (Orissa) and Indure Limited v. Commissioner of Sales Tax [2006] 148 STC 61 (Orissa)]. Law is also settled that if the dealer responds and participates in the proceeding, it is open to him to seek for the reasons which necessitated the reopening of the proceeding. At that stage, the assessing officer cannot take the plea that the reasons are not to be indicated. If he is in possession of the materials which he proposes to use against the dealer in the proceeding for reassessment, he must before using the materials bring them to the notice of the dealer and give them adequate opportunity to explain and answer the case on the basis of those materials. [See Suburban Industries Kalinga Private Limited [1993] 90 STC 280 (Orissa) and Sales Tax Officer, Ganjam v. Uttareswari Rice Mills reported in [1972] 30 STC 567 (SC)]. Keeping in view the ratio of the decisions rendered in the above cases, the second ground of challenge is now consid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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