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M/s. Balaji Tobacco Store Versus The Sales Tax Officer, Cuttack

2015 (4) TMI 494 - ORISSA HIGH COURT

Validity of assessment order passed - Jurisdiction of Assessing Authority to pass the said order - Whether the Taxing authority has jurisdiction to make audit assessment under Section 42 of the OVAT Act after completion of the assessment under Section 43 of the said Act for the self-same tax period - Held that:- Where the tax audit conducted under subsection (3) of Section 41 results in detection of suppression of purchase or sale or both, erroneous claims of deduction including input tax audit, .....

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sessment made under Section 39 or Section 40 of the OVAT Act and all other types of assessment provided under the said Act are impliedly excluded. If the Legislature in its wisdom has taken away assessment as contemplated under Section 43 from Section 42 for the purpose of making audit assessment, after completion of any other assessment under the OVAT Act, Section 43 cannot be read into Section 42 by the State.

Section 41(2) of the OVAT Act read with Rule 41(2) of the OVAT Rules empo .....

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T Act, it is thereafter not permissible to assess the petitioner under Section 42 of the OVAT Act.

Audit assessment under Section 42 cannot be made after completion of the assessment of escaped turnover under Section 43 of the OVAT Act read with Rule 50 of the OVAT Rules for the self-same tax period(s). - order of assessment passed under Section 42 of the OVAT Act for the period 29.03.2006 to 30.11.2008 under Annexure-1 is hereby set aside. However, it is open to the Assessing Authori .....

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DER B. N. Mahapatra, J. This Writ Petition has been filed with a prayer for quashing the order of assessment dated 27.05.2011 passed under Section 42 of the Orissa Value Added Tax Act, 2004 (for short, OVAT Act ) by the opposite party-Sales Tax Officer, Cuttack-1 East Circle, Cuttack (hereinafter referred to as Assessing Authority ) for the period 29.03.2006 to 30.11.2008 under Annexure-1 on the ground that the Assessing Authority has no authority/jurisdiction to pass the said order. 2. In the W .....

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evied tax at the rate of 4% on un-manufactured tobacco for the period 24.01.2006 to 31.07.2006, which was included in the present tax period. According to Mr. Mohanty no assessment order under Section 42 of the OVAT Act can be passed after completion of the assessment under Section 43 of the OVAT Act for the self same period. It was further submitted that this action of the opposite party also amounts to taxing the same turnover twice for which assessment order is bad in law. 3. Mr.M.S.Raman, le .....

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-same period(s). 4. On rival contentions of the parties, the only question that falls for consideration by this Court is as to whether the Taxing authority has jurisdiction to make audit assessment under Section 42 of the OVAT Act after completion of the assessment under Section 43 of the said Act for the self-same tax period(s) ? 5. The dispute involved in the present writ petition lies in a narrow compass. Undisputed facts are that the petitioner is registered under the OVAT Act. The petitione .....

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said Act. Such assessments, as provided under sub-section (5) of Section 2 of the OVAT Act, are self assessment (section 39), provisional assessment (section 40), audit assessment (section 42), assessment of escaped turnover (section 43), assessment of unregistered dealer liable to be registered (section 44) and assessment of casual dealer (section 45). In the present case, we are concerned with audit assessment and escaped assessment. 7. The relevant provisions of those two Sections necessary f .....

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on such dealer a notice in the form and manner prescribed along with a copy of the Audit Visit Report, requiring him to appear in person or through his authorized representative on a date and place specified therein and produce or cause to be produced such books of account and documents relying on which he intends to rebut the findings and estimated loss of revenue in respect of any tax period or periods as determined on such audit and incorporated in the Audit Visit Report. xx xx xx (Underlined .....

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lowed- (i) wrongly any deduction from his turnover, or (ii) input tax credit, to which he is not eligible, the assessing authority may serve a notice on the dealer in such form and manner as may be prescribed and after giving the dealer a reasonable opportunity of being heard and after making such enquiry as he deems necessary, proceed to assess to the best of his judgment the amount of tax due from the dealer. xx xx xx (Underlined for emphasis) 8. It may also be necessary for our purpose to ext .....

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nd place, as specified in the said notice for compliance of the requirements of sub-rules (2) and (3). xx xx xx 50. Assessment of escaped turnover.- (1) Where a dealer has already been assessed under Section 39, 40, 42 or 44 and it is required to reopen the assessment under sub-section (1) of Section 43 for occurrence of any or more of the events specified in that sub-section, the assessing authority shall serve a notice in Form VAT-307 upon the dealer. xx xx xx (Underlined for emphasis) 9. The .....

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) has been assessed at a rate lower than the rate at which it is assessable, or (iv) that the dealer has been allowed.- (a) wrongly any deduction from his turnover, (b) input tax credit to which he is not eligible. Therefore, assessment of escaped turnover under Section 43 of the OVAT Act can be made even after completion of audit assessment under Section 42 of the said Act for selfsame tax period. But, this does not mean that no assessment under Section 43 of the OVAT Act can be made without co .....

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r Section 43 can be invoked for the occurrence of any or more of the events stated in Section 43. Thus, a turnover cannot be said to be escaped assessment if proceeding in respect of assessment under either of the Sections referred to in Section 43 are pending and no final order of assessment has been passed. A proceeding is said to be pending as soon as it commences and until it is concluded. Only after final order of assessment, it can be said whether the whole or any part of the turnover of t .....

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after a dealer is assessed or has already been assessed under Sections 39, 40, 42 or 44 of the OVAT Act, reassessment proceeding can be initiated under Section 43 of the OVAT Act. 12. Now, if we closely look at Section 42, which speaks of audit assessment, we will find that where the tax audit conducted under subsection (3) of Section 41 results in detection of suppression of purchase or sale or both, erroneous claims of deduction including input tax audit, evasion of tax or contravention of an .....

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ion 40 of the OVAT Act and all other types of assessment provided under the said Act are impliedly excluded. If the Legislature in its wisdom has taken away assessment as contemplated under Section 43 from Section 42 for the purpose of making audit assessment, after completion of any other assessment under the OVAT Act, Section 43 cannot be read into Section 42 by the State. 13. At this juncture, it would be beneficial to refer to the following decisions of the Hon ble Supreme Court. The Hon ble .....

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ency. The Court cannot add words to a statute or read words into it which are not there, especially when the literal reading produces an intelligible result. "No case can be found to authorise any court to alter a word so as to produce a casus omissus": Per Lord Halsbury, Mersey Docks v. Henderson. [1888] 13 App. Cas. 595, 602. "We cannot aid the legislature's defective phrasing of an Act, we cannot add and mend, and, by construction, make up deficiencies which are left there& .....

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(at 164). See the observation of Sarkar, J. in M. Pentiah & Ors. v. Muddala Veeramallapa & Ors., [1961] 2 S.C.R. 295 at 314 : (AIR 1961 SC 1107 at page 1115). 14. In Union of India vs. Deoki Nandan Aggarwal, AIR 1992 SC 96, the Hon ble Supreme Court held as under: 7.1. It is not the duty of the Court either to enlarge the scope of the legislation or the intention of the legislature when the language of the provision is plain and unambiguous. The Court cannot rewrite, recast or reframe t .....

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obvious intention of the legislature but could not legislate itself. But to invoke judicial activism to set at naught legislative judgment is subversive of the constitutional harmony and comity of instrumentalities. [885A-D] 15. In view of the above settled legal position, Section 43 cannot be read into Section 42 by the State when the Legislature in its wisdom excluded Section 43 from the provisions of Section 42 of the OVAT Act. Consequentially, no assessment under Section 42 can be made after .....

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2012) 47 VST 466 (Orissa). 17. Now, let us see the scope of the assessment under section 43. Scope of assessment under Section 43 is wider than the assessment provided under Section 42. In a proceeding under Section 43 of the OVAT Act, the Assessing Authority may bring to charge the turnover which had escaped assessment other than or in addition to that turnover which has led to issuance of the notice under Section 43. (See Commissioner of Income Tax vs. Sun Engineering Works Ltd. (1992) 198 ITR .....

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at the Commissioner may direct tax audit in respect of any individual dealers or class of dealers on out of turn basis or for more than once in an audit cycle to prevent evasion of tax and ensure proper tax compliance. (Underlined for emphasis) Rule 41 of the OVAT Rules, 2005 deals with Selection of dealers for tax audit . Sub-Rule (2) of Rule 41 provides as follows: (2) The Commissioner, where considers it necessary to safeguard the interest of revenue or where any enquiry is required to be con .....

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subordinate officers to check tax evasion. Therefore, in case of an assessee, if the Revenue authorities decide not to exercise the power conferred under Section 41(2) of the OVAT Act read with Rule 41(2) of the OVAT Rules to make audit assessment for particular tax period and choose to proceed to complete the assessment under Section 43 of the OAVT Act, it is thereafter not permissible to assess the petitioner under Section 42 of the OVAT Act. 20. The Hon ble Supreme Court in the case of Insti .....

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