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STATE OF ODISHA Versus SUVADRA ENTERPRISES

2016 (3) TMI 1032 - ORISSA HIGH COURT

Re-assessment of tax turn over - Escaped assessment - Section 12(8) of Odisha Sales Tax Act, 1947 - Assessing officer did re-assessment solely on the basis of Audit report without providing opportunity of personal hearing - Held that:- the Sales Tax Officer has to form his objective opinion by taking the evidence of the opposite party into consideration. But here, no enquiry, independent of the report filed against the opposite party by the Income Tax Department, has been considered. By relying .....

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usion arrived about escaped assessment, is based on suspicion and no opportunity has been given. Therefore, as no reasonable opportunity has been given to the opposite party to pass order under section 12(8) of the Act, the Tribunal's order is valid. - Decided against the appellant - S. T. Rev. Nos. 89, S. T. Rev. Nos. 90, S. T. Rev. Nos. 91, S. T. Rev. Nos. 92 of 2011 - Dated:- 3-8-2015 - I. Mahanty and Dr. D. P. Choudhury, JJ. For Petitioner : M. S. Raman, Additional Standing Counsel (Commerci .....

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the case of the petitioner are as follows:- The opposite party who is a registered dealer under the Act deals in Milton, Hawkins, Aristocrate, Eagles, Curlon, Sumeet Grinder, air cooler, Electrical Appliances, Plastic furnitures etc. on retail and semi-wholesale basis was assessed for the years 1995-96, 1997-98 and 1998-99, under section 12(4) of the Act and for the year 1996-97 under section 12(8) of the Act. Subsequently, in 2000, Assistant Officer of A.G. Audit party made audit of the turn ov .....

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less purchase of first point tax paid goods as well as non-disclosure of taxable purchase of annual stock account of opening and closing balance of stock. Thus he found that ₹ 16,34,522.00 was escaped from assessment during those years resulting in ₹ 6,11,131.00 short levy of tax including surcharge. The Auditor also found for the years 1993-94 and 1994-95 there was similar suppression of tax of ₹ 1,48,141.00 including surcharge. After receiving the audit report, the learned As .....

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st. Commissioner of Sales Tax, Balasore Range, Balasore in F.A. Case No. AA 85 to 88/BD 2001-02 who vide order dated 21.3.2002 (Annexure-8) observed that the assessment of the year 1995-96 to 1998-99 has already been completed under section 12(4) of the Act. According to him, there was suppression of the sale of taxable goods of ₹ 19,45,020.14 paise, ₹ 6,60,600.96 paise, ₹ 11,20,283.15 paise and ₹ 8,65,360.31 paise in the years 1995-96, 1996-97, 1997-98 and 1998-99 respec .....

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e physical stock was made on 30.6.2001. 4. Against the order of the learned First Appellate Authority, Second Appeal was preferred by the opposite party before the Orissa Sales Tax Tribunal (DIVISION BENCH-II), Cuttack. The Tribunal vide order dated 28.2.2011 passed in S.A. Nos. 71 to 74 of 2002-2003 framed the point in issue as to whether the order of the learned ACST confirming the orders of assessment of escaped sales tax passed by the STO against the appellant for the periods 1995-96, 1996-9 .....

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ng any reason in such assessment, is unlawful. Learned Tribunal found that the conclusion reached by the authorities below are not based on any material before them. Since there is no material showing suppression of tax turn over, the conclusion arrived at by the authorities below, is bad in law and accordingly the Tribunal set aside the orders of the First Appellate Authority as well as the Assessing Authority and allowed the appeal. Hence the revision. 5. The case of the opposite party is that .....

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ed authorities below the learned Tribunal have not appreciated the true facts of the case. The Opposite Party hailed the judgment of the learned Tribunal and submitted to dismiss the revision. 6. Mr. Raman, learned Additional Standing Counsel (Commercial Taxes) strenuously argued that there was assessment of the opposite party establishment for those four years under section 12(4) of the Act. But during audit assessment, the suppression of sale by the opposite party came to light, for which righ .....

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conclusion ignoring the orders passed by the authorities below it. According to him, the reason given by the learned Tribunal, is arbitrary and not based on any fact. He further submitted that the Tribunal being the Second Appellate Authority, must abide by the facts found by the authority below. But instead, it went on observing opinion on facts without relying upon the record which shows that there is suppression of sale turn over by the opposite party. On the otherhand, learned Tribunal has e .....

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posite Party submitted that the opposite party being the dealer, has submitted selfassessed Form showing the bills of purchase and sale. He further submitted that on the sales tax, the order of the Tribunal is correct and legal and prayed the same should be confirmed and the revision should be dismissed. DISCUSSIONS : 8. We have carefully considered the submission of the respective counsel and perused the records to apprise ourselves of the facts of the case. From the records, it is found that t .....

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rly stated not to have suppressed any sale. The Assessing Authority vide Annexure-7 indicated that there was re-assessment on 17.8.2001 and it is found that tax of ₹ 1,53,170.00 is payable by the opposite party for the assessment year 1997-98. This order does not disclose the discussion on the plea taken by the opposite party. Vide order dated 21.3.2002 (Annexure-8), the First Appellate Authority simply observed that opportunity was given to the opposite party to adduce evidence and the or .....

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Assessing Authority about re-assessment does not disclose about any material of the opposite party, how the First Appellate Authority observed that opportunity was given to the opposite party to adduce evidence. But no evidence was given. While considering the impugned order of the learned Tribunal, it appears that the learned Tribunal has gone in detail and it is clearly observed in para-6 that original record of escaped assessment was not available to the Tribunal to ascertain if the assessing .....

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ler cannot be enhanced for levy of sales tax merely on suspicion. We also endorse this view and observe that mere suspicion, however major may be, cannot substitute legal proof. It is reiterated that there is nothing found from the orders of re-assessment or the First Appellate Authority that the stock entry or any other material was considered independently to find out the escaped tax liability of the opposite party. 9. At this stage, it is required to go through the provision under section 12( .....

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urn under sub-section(1) of Section 11 and may proceed to assess the amount of tax due from the dealer in the manner laid down in sub-section(5) of this Section and may also direct, in cases where such escapement or under assessment or composition is due to the dealer having concealed particulars of his turnover or having without sufficient cause has furnished incorrect particulars thereof, that the dealer shall pay, by way of penalty, in addition to the tax assessed under this sub-section, a su .....

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1) of Section 11 and may proceed to assess the amount of tax due from the dealer in the manner laid down in sub-section(5) of Section 12 of the Act. It is imperative to go through the sub-section (5) of Section 12 of the Act which is reproduced below : 12 (5): If upon information which has come to his possession, the Commissioner is satisfied that any dealer has been liable to pay tax under this Act in respect of any period and has nevertheless, without sufficient cause, failed to get himself r .....

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one and half times that amount: Provided that no penalty shall be levied for the quarter during which the dealer first or again becomes liable to pay tax under this Act and for the period between the date of application for registration and the date of registration. 11. The above provision makes it mandatory for the Assessing Authority to hold enquiry for such period after giving the dealer the reasonable opportunity of being heard to pay the tax as per the principle of best judgment. Therefore .....

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udit Assessment Report and found that there is a prima facie case under section 12(8) of the Act against the opposite party. Moreover, neither the written statement nor any short of oral statement of the opposite party find place in the re-assessment order passed by the learned Assessing Authority. The reasons given in the escaped assessment order, does not disclose how much tax turn over has been suppressed by the petitioner. Equally the First Appellate Authority has also not considered whether .....

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the matter and faithfully followed the instructions conveyed to him by the Assistant Commissioner (C.S.) without giving the appellants an opportunity to meet the points urged against them. The whole procedure was contrary to the principles of natural justice. The procedure adopted was, to say the least, unfair and was calculated to undermine the confidence of the public in the impartial and fair administration of the salestax department concerned. From the aforesaid proposition, it is clear tha .....

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e considerations while discharging quasi judicial functions. From the aforesaid observation of the Hon ble Apex Court, we are of the view that in the instant case learned Assessing Authority even though has accepted the request of the Audit Officer, the re-assessment by the Assessing Officer as quasi judicial authority should be independent but not solely based on the report of the Audit Officer. 14. The aforesaid two decisions of the Hon ble Apex Court have been followed by this Court in the de .....

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