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TMI Blog2022 (11) TMI 998X X X X Extracts X X X X X X X X Extracts X X X X ..... f aforesaid Assessment Order under the CST Act. The writ petition and contention of the counsel for the petitioner: 2. The Audit Assessment under Rule 12(3) of the CST(O) Rules had been concluded vide Order dated 05.08.2011 by the Sales Tax Officer, Barbil Circle, Barbil for the tax periods from 01.07.2007 to 31.03.2010, wherein the claim of exemption of penultimate sale in course of export under Section 5(3) of the CST Act was allowed on appreciation of Certificate of Export in Form H required to be furnished under Rule 12(10) of the Central Sales Tax (Registration and Turnover) Rules, 1957 (abbreviated as "CST(R&T) Rules") to the extent of Rs.12,23,71,036/- as against disclosed total turnover of Rs.12,64,00,682/- representing such sales. 2.1. On the basis of certain discrepancies, like absence of foreign buyer's agreement in the record, purchase order from buyer and despatch of goods to foreign destination prior to date of agreement, pointed out with reference to Certificate of Export in Form H to the extent of Rs.1,36,25,062/- by the Auditor General, Odisha, the concluded Audit Assessment under Rule 12(3) of the CST(O) Rules has been sought to be reopened by exercising power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed the gross turnover at Rs.27,34,38,227/- as per the revised return filed. The dealer is allowed deduction of Rs.34,87,547/- towards collection of tax and Rs.12,23,71,036/- towards export sale supported by Form H, the balance turnover is determined at Rs.14,75,79,644/- ***" iii. Having not applied independent mind and formed opinion, the Sales Tax Officer is not competent to invoke power under Rule 12(4) of the CST(O) Rules by surrendering to the objection raised by the A.G., Odisha. As the Assessing Authority sought to review the matter in the garb of reassessment under Rule 12(4) of the CST(O) Rules and thereby change his opinion as has already been taken while framing Audit Assessment under Rule 12(3) of the CST(O) Rules. iv. It is urged by Mr. Pranaya Kishore Harichandan, the counsel for the petitioner that the assessment order thus passed under Rule 12(4) of the CST(O) Rules is untenable in the eye of law as the statute is silent about conferment of power of "review". v. It is further contended that while passing Audit Assessment Order dated 29.07.2011 the Assessing Authority having verified the books of account and found no discrepancy and accepted the return f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed claim of exemption of penultimate sale under Section 5(3) of the CST Act, but also varied with the figure of Rs.1,36,25,062/- and recomputed said figure as Rs.3,07,82,938/-. Question raised for adjudication: 5. WHETHER the exercise of power under Rule 12(4) of the CST(O) Rules by the Sales Tax Officer is legally tenable basing on the objection raised by the A.G., Odisha on the ground that no documentary evidence is available in original record relating to Audit Assessment under Rule 12(3) of the said Rules wherein the claim of exemption on account of sale in course of export to the tune of Rs.12,23,71,036/- under Section 5(3) of the CST Act supported by Certificate of Export in Form H as prescribed under Rule 12(10) of the CST(R&T) Rules has been allowed? Relevant provision contained in CST(O) Rules for undertaking reassessment under Rule 12(4): 6. At the relevant point of time Rule 12(4) stood as follows: "(4)(a) Where, after a dealer is assessed under sub-rule (1), (2) or (3) for any period, the assessing authority, on the basis of any information in his possession, is of the opinion that the whole or any part of the turnover of the dealer in respect of any period or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les Tax & Ors., (2006) 148 STC 61 (Ori). 7.2. This Court in the case of Gopalpur Port Ltd. Vrs. Assistant Commissioner of Sales Tax & Ors., W.P.(C) No.17746 of 2012, disposed of vide Order 19.08.2015 recorded the following facts: "In the present writ application, the petitioner has sought to challenge the order dated 31.07.2012 passed by the Sales Tax Officer, Ganjam II Circle, Berhampur under Section 10 of the Orissa Entry Tax Act, 1999 for the period from 01.08.2007 to 31.12.2007 under Anenxure-3, inter alia, on various grounds but, in particular, for the purpose of the present consideration, confines the argument to the issue that the petitioner had already for the self-same period under the O.E.T. Act been subjected to an earlier proceeding under Section 10 of the O.E.T. Act based on a 'vigilance report' and the said proceeding had concluded by an order dated 26.02.2011 holding that the procurement of 66393.87 mts of boulder from the petitioner's own leased quarry and the purchase of boulder by the petitioner of 250977.78 mts from one M/s. Start Trading Pvt. Ltd., Cuttack would not be made subject of levy of entry tax, since it was held that the boulder was not a schedule go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith reference to the exact objection raised by AG" and according to the Tribunal, the STO and the ACST did not properly interpret the provision of law with reference to exemption allowed by the DIC and the objection raised by AG (O). As a result, the cases were remanded to the STO for a fresh adjudication. *** 12. The jurisdictional requirement of the STO having to form an independent opinion regarding the escapement of assessment was explained by this Court in The Indure Limited v. Commissioner of Sales Tax (2006) 148 STC 61 (Ori). In that case also the assessment was sought to be reopened by the STO under Section 12 (8) of the OST Act only on the basis of audit objection without forming any independent opinion himself regarding escapement of turnover. This Court referred to the judgment of the Supreme Court in Sales Tax Officer, Ganjam v. Uttareswari Rice Mills, MANU/SC/0556/1972 where it had been explained that the difference in phraseology between "for any reason" appearing in Rule 23(1) of the OST Rules and "if the sales tax authority has reasons to believe" does not make much of difference. It was also noticed that an earlier Division Bench of this Court in Bindlish Chemica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indure Limited (supra), it was explained as under: "18. The importance of this doctrine lies in the fact that if a statutory functionary is vested with a power to act, it is that statutory authority alone who will form the necessary objective opinion for exercising its power. In doing so, it may take into consideration whatever is relevant. As in the instant case audit objection may be a relevant consideration. Taking that objection into consideration, the Sales Tax Officer has to form his objective opinion. But the Sales Tax Officer cannot totally abdicate or surrender his discretion to the objection of the audit party by mechanically re-opening assessment under Section 12(8) as has been done in this case. This was frowned upon again by Justice Hegde again while delivering the judgment of the Apex Court in The Purtabpur Company Ltd. v. Cane Commissioner of Bihar and Ors., The Supreme Court quashed the order of the Cane Commissioner as it found that the Cane Commissioner virtually worked as the mouth piece of the Chief Minister." 15. Ultimately in The Indure Limited (supra) the impugned notice of reassessment was quashed since the Sales Tax Officer had "blindly initiated" the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s requiring assessment proceedings to be reopened. (See: Binani Industries Ltd., Kerala vs. Respondent: Assistant Commissioner of Commercial Taxes, VI Circle, Bangalore and Ors., (2007) 15 SCC 435; A.L.A. Firm v. CIT, (1991) 2 SCC 558). If a conscious application of mind is made to the relevant facts and material available or existing at the relevant point of time while making the assessment and again a different or divergent view is reached, it would tantamount to "change of opinion". If an assessing Authority forms an opinion during the original assessment proceedings on the basis of material facts and subsequently finds it to be erroneous; it is not a valid reason under the law for re-assessment. Thus, reason to believe cannot be said to be the subjective satisfaction of the assessing Authority but means an objective view on the disclosed information in the particular case and must be based on firm and concrete facts that some income has escaped assessment. 30. In case of there being a change of opinion, there must necessarily be a nexus that requires to be established between the "change of opinion" and the material present before the assessing Authority. Discovery of an inad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bhubaneswar)." 7.6. In the matter of Sri Jagannath Promoters & Builders, Giri Road Berhampur, Ganjam Vrs. Deputy Commissioner of Income Tax, Berhampur Circle, Berhampur, Ganjam and others, W.P.(C) No. 14603 of 2014, this Court vide Order dated 26.10.2021 held as follows: "13. In the present case, the reasons for reopening the assessment do not point to any new material that was available with the Department. What appears to have happened is that the same material viz., the accounts produced by the Assessee were re-examined and a fresh opinion was arrived at by the Opposite Party No.1 regarding the claim of the deduction of Rs.48,183/- on account of the loss of sale of assets. This had already been disclosed in the detailed accounts filed by the Assessee. In fact, a questionnaire had been issued by the AO in the course of the original assessment proceedings to the Assessee which was responded to by the Assessee. In other words, there was conscious application of mind by the AO to the said materials. Therefore, the inevitable conclusion as far as the present case is concerned is that the 'reason to believe' of Opposite Party No.1 that income for the AY in question had escaped ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax, income that has escaped assessment, cannot be absorbed by judicial intervention on an assumed change of opinion even in cases where the order of assessment does not address itself to a given aspect sought to be examined in the reassessment proceedings." 7.8. The expression "change of opinion" has been explained by this Court in the case of Bharat Petroleum Corporation Ltd. Vrs. Sales Tax Officer, (2012) 52 VST 137 (Ori), wherein it has been laid down as follows: "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, and to identify the best means to some end, and, in general, to distinguish what we should believe from what we merely do believe. 12. In Union of India v. Mohan Lal Capoor, AIR 1974 SC 87 it has been held that reasons are the links between the materials on which certain conclusions are based and the actual conclusions. They disclose how the mind is applied to the subject-matter for a decision whether it is purely administrative or quasi-judicial and reveal a rational nexus between the facts considered and conclusions reached. The reasons assure an inbuilt support to the conclusion and decision reached. Recording of reasons is also an assurance that the authority concerned applied its mind to the facts on record. It is vital for the purpose of showing a person that he is receiving justice. Similar view has also been taken in Uma Charan v. State of Madhya Pradesh, AIR 1981 SC 1915. 13. Reasons being a necessary concomitant to passing an order, the appellate authority can thus discharge its duty in a meaningful manner either by furnishing the same expressly or by necessary reference to those given by the original authority." 7.12. In Steel Authority of India Ltd. Vrs. Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. It goes without saying that whilst the 'reasons' shown to the court and the petitioner may ipso facto not be faulted, yet the file tells a different story; they were not recorded before the impugned notice was issued. In fact, the revenue played a subterfuge, in trying to cover up its omission, and in ante-dating the record., in the attempt to establish that such reasons existed..." 7.14. As is manifest from bare reading of provision as it existed in Rule 12(4) of the CST(O) Rules, 1957, at the relevant point of time that the Assessing Authority is empowered to serve notice in Form IVA on the dealer to proceed with the reassessment, if "on the basis of any information in his possession" he is "of the opinion" that the whole or any part of the turnover of the dealer in respect of any period(s) has escaped assessment, or has been under-assessed, or has been assessed at a rate lower than the rate at which it is assessable or that the dealer has been allowed wrongly any deduction from his turnover or exemption under the Act or has been wrongly allowed set off of input tax credit in excess of the amount admissible under clause (c) of sub-rule (3) of Rule 7. Whereas formation of "o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent concluded under Rule 12(3) on examination of books of account, etc. is impermissible in law and such an action is without jurisdiction. Availability of alternative remedy: 9. Noteworthy here that way back in 2016, vide Order dated 04.01.2016 while issuing notice in the writ petition, this Court passed the following Order: "Misc. Case No.19771 of 2015 Heard. It is directed that the impugned demand shall remain in abeyance till disposal of the writ application. The Misc. Case is disposed of." 9.1. Though more than 6 years have been elapsed in the meantime neither record is produced nor does the CT&GST Organisation-opposite parties file counter-affidavit in the matter. Therefore, this Court is inclined to proceed with the matter on its merit on the basis of material as available on record. 9.2. Conspectus of enunciation of law on the subject as discussed in the preceding paragraphs applied to the fact-situation of the instant case vis-à-vis Order dated 24.08.2013 as maintained in the Order Sheet vide Annexure-7 drives this Court to safely conclude that the initiation of proceeding for reassessment was not in consonance with the statutory requirement. This view i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the Vice-Chancellor acted wholly without jurisdiction in reviewing her order dated January 24, 1987 by her order dated March 7, 1987. The said order of the Vice- Chancellor dated March 7, 1987 was a nullity. 12. The next question that falls for our consideration is whether the High Court was justified in dismissing the writ petition of the appellant on the ground of availability of an alternative remedy. It is true that there was an alternative remedy for challenging the impugned order by referring the question to the Chancellor under section 68 of the U.P. State Universities Act. It is well established that an alternative remedy is not an absolute bar to the maintainability of a writ petition. When an authority has acted wholly without jurisdiction, the High Court should not refuse to exercise its jurisdiction under Article 226 of the Constitution on the ground of existence of an alternative remedy. In the instant case., the Vice-Chancellor had no power of review and the exercise of such a power by her was absolutely without jurisdiction. Indeed, the order passed by the Vice-Chancellor on review was a nullity; such an order could surely be challenged before the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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