9911796707
TMI Blog2023 (3) TMI 1331X X X X Extracts X X X X X X X X Extracts X X X X ..... ht Diesel Oil) as its finished products; manufactured out of any raw materials and consumables, as it has paid entry tax on procurement of HSD and LDO into the State of Odisha, but has not sold any finished goods rather sold the same goods as procured and, thereby, the claim of the petitioner for setting off of the entry tax paid is not admissible. 2. The factual matrix of the case, in brief, is that the petitioner-company, being a registered dealer under the Orissa Sales Tax Act, 1947 ("OST Act, 1947" for short) having Registration Certificate No.CU-IE-683 within the jurisdiction of Sales Tax Officer, Cuttack-I East Circle, Cuttack, was engaged in the business of refining and selling of petroleum products like Motor Spirit (Petrol), HSD, LDO, Superior Kerosene Oil, Furnace Oil, Bitumen, ATF and AV Gas etc. It sold a part of its stock of HSD to the dealers, who had given undertaking in Form-IV in terms of Item No.81 of Schedule/Rate Chart that they would use the HSD in manufacture, processing of goods for sale or in mining or in the generation or distribution of electricity at a concessional rate of tax @ 4% and a part of its stock of HSD to the dealers for resale. Thereby, the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing, processing or mining activities against declaration in Form-IV and determined the tax payable at Rs.1,31,81,725/-. 2.4 Against the said reassessment order dated 27.01.2007 passed by opposite party no.2, the petitioner preferred First Appeal Case No.AA-442/CUIE/2006- 2007 under Section 23(1) of the OST Act, 1947 before the Assistant Commissioner of Sales Tax, Cuttack I Range, Cuttack. The First Appellate Authority, vide order dated 11.12.2008, dismissed the said appeal and confirmed the reassessment order dated 27.01.2007. 2.5 Aggrieved by the order dated 11.12.2008 passed by the Assistant Commissioner of Sales Tax, Cuttack I Range, Cuttack, the petitioner preferred Second Appeal No.663/2008-09 before the Odisha Sales Tax Tribunal (Full Bench), Cuttack, along with a stay revision petition before the Commissioner of Sales Tax, Orissa, Cuttack praying for full stay of the demanded amount till disposal of the second appeal. The Tribunal, vide order dated 28.11.2013, confirmed the order passed by the Assistant Commissioner of Sales Tax, Cuttack I Range, Cuttack in the First Appeal for the Assessment Year 2002-2003. Hence, this revision. 3. In the above backdrop of the case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peed Diesel Twenty per cent 5. Note-1 and Note-2 appended to the said notification read as follows: "Note-1. a. The amount of tax payable and respect of good specified in Sl. Nos.1, 11, 12, 13, 14, 17, 28, 30, 56, 58, 65, 68, 69, 76, 87, 97, 107, 119, 127, 134, 136, 138, 156, 180, 181 and 183 shall be reduced by the amount of Orissa Sales Tax paid by him on raw material and consumables subject to tax on purchase turnover and/or tax collected from him by the selling dealer separately on the body of the bill in respect of sale of raw materials and consumable subject to tax on sale turnover directly used in manufacture of such goods. Explanation:-Building materials for construction of Factories and allied construction, Office equipments, Packing materials, vehicle and such other materials which are not directly used in manufacturer shall not be treated as raw material or consumable for the purpose of allowing set of. b. The amount of tax payable in respect of goods specified in part -III of the Schedule to the Orissa Entry Tax Act, 1999 as well as in Sl. Nos. 21, 32, 46, 74, 101, 108 and 155 shall be reduced by the amount of Orissa Entry Tax paid on such goods under Oriss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust be deemed to have been dealt with it, and is therefore, one arising out of its order; 3) when a question is not raised before the Tribunal but the Tribunal deals with it, that will also be a question arising out of its order; 4) When a question of law is neither raised before the Tribunal nor considered by it, it will not be a question arising out of its order notwithstanding that it may arise on the findings given by it." In the case of 'revision', the revisional authority has no power to reassess and re-appreciate the evidence unless the statute expressly confers on it that power. 7. There is no dispute that the petitioner-company is engaged in sale of petroleum products such as MS, HSD, SKO, Lubricants, Furnace Oil, LDO, Bitumen etc. In addition, it also effects purchase of petrol, diesel and SKO from other marketing companies like Bharat Petroleum Corporation Ltd., Hindustan Petroleum Corporation. It also operates its business through the different depots inside the State of Odisha like Rourkela, Balasore, Berhampur, Cuttack, Sambalpur, Jatni, Paradeep TMI, Jeypore and Bhubaneswar. On receipt of notice from the assessing authority issued under Section 12(4) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax at concessional rate of tax as per Entry 81 on the strength of declaration in Form IV. For better appreciation the following is extracted from said Assessment Order:- "*** Out of the taxable turnover of Rs.1,31,81,72,472/- (sale against Form IV) is taxed @ 4%, Rs.1,07,65,00,465.00 (sale of SKO, FO, etc.) is taxed @ 4%, Rs.13,01,66,451/- (Bitumen) is taxed @ 8%, Rs.24,59,30,963.00 (sale of lubricants and wax) is taxed @ 12% and Rs.6,89,22,68,475 is taxed @ 20%. ***" In the re-assessment Order dated 27.01.2007 passed under Section 12(8) of the OST Act it has been determined as follows: "*** Accordingly the gross turnover at Rs.13,79,11,93,546.00. After allowing deduction of Rs.1,90,17,42,027.00 towards OSTC/SCC the taxable turnover of the dealer is determined at Rs.9,66,30,38,826.00. OST @ 4% (Form IV on Rs.1,31,81,72,472.00, @ 4% on Rs.1,07,65,00,465.00, @ 8% on 13,01,66,451.00, @ 12% on 24,59,30,963.00 and @ 20% on 6,89,22,68,475.00 calculates at Rs.1,51,41,65,644.00. Surcharge @ 1% on tax due also calculates at Rs.15,14,16,564.00 and allowed set off towards payment of ET for an amount of Rs.4,44,08,106.00. ***" From the aforesaid, it is crystal clear that same turn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 inadvertent mistake or non-application of mind during assessment would not be a justified ground to reinitiate proceedings under Section 21(1) of the Act on the basis of change in subjective opinion (CIT v. Dinesh Chandra H. Shah, (1972) 3 SCC 231; CIT v. Nawab Mir Barkat Ali Khan Bahadur, (1975) 4 SCC 360)." 11. This Court has, in the case of Kalinga Institute of Industrial Technology (KIIT), Bhubaneswar, Vrs. Assistant Commissioner of Income Tax Exemption Circle, Bhubaneswar & Others, W.P.(C) No. 4440 of 2022, disposed of vide Orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 assessment is based on a mere 'change of opinion'. 14. In this context, the following observations of the Delhi High Court in Jindal Photo Films Ltd. v. the Deputy Commissioner ofIncome Tax (1998) 234 ITR 170 (Del) are relevant: "Following the settled trend of judicial opinion and the law laid down by their Lordships of the Supreme Court time and again different High Courts of the country have taken the view that if an expenditure or a deduction was wrongly allowed while computing the taxable income of the Assesses, the same could not be brought to tax by reopening the assessment merely on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect 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." 15. Therefore, taking a cue from the above, it is to be considered whether the petitioner is entitled to set off entry tax paid against tax payable for sale of goods. Both the First Appellate Authority and the Second Appellate Authority have come to the conclusion that the petitioner, having dealt with the item(s) mentioned in Entry No.101 and sold said item(s) against declarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stice. 18. It is also not in dispute that the petitioner-company has paid entry tax on procurement of HSD and LDO into the State of Orissa but has not sold any finished goods rather sold the same goods as procured. On perusal of the assessment order under Section 12(4) of the OST Act, it is made clear that the Assessing Authority has taken note of the fact that HSD and LDO, which have been utilized by different companies by furnishing the Form-IV, the same has been taken note of and assessment thereon has been made by the Assessing Authority. The goods in question have been sold by the petitioner against declaration in Form-IV furnished by the purchasing manufacturers; however, the concessional rate of tax is not available in respect of such goods, namely, HSD & LDO as they fall within the exclusion clause "other than..... diesel oil" as per Entry- 81 of List-C. Therefore, obviously the petitioner is liable to pay tax @ 20% as per Entry-101, ibid. In such eventuality, the petitioner is liable to discharge its liability by availing set off of entry tax paid. The issue of set off being taken into consideration while finalizing assessment under Section 12(4) of the OST Act, on accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer, the First Appellate Authority and the Tribunal have not considered the Note-1(b) of the notification dated 31.03.2001 in proper perspective when the dealer is statutorily required to make sales of HSD at the concessional rate against declaration in Form-IV and in such event Note-1(b) of the notification dated 31.03.2001 would be redundant. As such, there cannot be any unreasonable, arbitrary and discriminatory classification made by the authority, which will be hit by Article 14 of the Constitution of India. 22. On the basis of aforesaid analysis, the question no.(i) is answered in the negative, i.e., in favour of the dealer and against the department. So far as question nos.(ii) and (iii) are concerned, they are not specifically answered as this Court holds the reassessment under Section 12(8) of the OST Act is impermissible in law. 23. As a consequence thereof, the order dated 28.11.2013 passed by the Orissa Sales Tax Tribunal (Full Bench), Cuttack in S.A. No.663/2008-09 under Annexure-6 confirming the order dated 11.12.2008 passed by the Assistant Commissioner of Sales Tax, Cuttack I Range, Cuttack in Appeal No.AA- 442/CUIE/2006-07 in Annexure-4 and the reassessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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