TMI Blog2023 (3) TMI 1331X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner is carrying on business in HSD and LDO, which is used within the State. There is no iota of doubt that the petitioner claims concessional rate of 4% tax on the strength of Form-IV. The transaction which was done by the petitioner with the others, being on the strength of Form-IV, set off was granted to the petitioner. The assessment order issued by the Assessing Officer under Section 12(4) is very clear to that extent, but reassessment made under Section 12(8) and confirmation thereof made by the First Appellate Authority and the Second Appellate Authority cannot be sustained in the eye of law. The reopening of the assessment is based on the investigation report of the tax authorities themselves and is, therefore, founded on nothing but a mere change of opinion. As a consequence thereof, the order passed by the Assessing Authority under Section 12(8) for reassessment has no justification in view of law laid down by the apex Court in Kelvinator of India Limited [ 2010 (1) TMI 11 - SUPREME COURT ] followed by Nava Bharat Ferro Alloys v. State of Orissa, [ 2010 (3) TMI 1009 - ORISSA HIGH COURT] . Therefore, the formation of opinion in the reassessment under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For Opp. Parties : Mr. Sunil Mishra, Addl. Standing Counsel PRESENT: DR. B.R. SARANGI,J. M/s. Indian Oil Corporation Limited, a Government of India Undertaking under the administrative control of the Ministry of Petroleum and Natural Gas, Government of India and incorporated under the provisions of the Section 617 of the Companies Act, 1956, has filed this STREV with a prayer to set aside the order dated 28.11.2013 passed by the Sales Tax Tribunal (Full Bench), Cuttack passed in S.A. No.633 of 2008-2009 for the Assessment Year 2002- 2003 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, holding that the petitioner is neither a manufacturing concern nor sold the HSD (High Speed Diesel) or LDO (Light 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o above notice, the petitioner submitted its reply on 09.11.2006 contending that there is no restriction under law in claiming set off of entry tax paid on HSD even if the HSD is sold at a concessional rate of tax @4% to the dealers who furnished declaration in Form IV to use the said HSD in manufacturing, processing or mining activities. But the Assessing Officer, on certain conjecture and surmises, without extending any reasonable opportunity of being heard and depriving the benefit of natural justice and without taking into consideration the contentions raised by the petitioner, in exercise of power under Section 12(8) of the OST Act, 1947 passed the reassessment order dated 27.01.2007 for the year 2002-2003 disallowing the claim of set off of entry tax paid on goods which were sold to the dealers for use in manufacturing, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se by him in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power subject to the production of the true declaration by the purchasing registered dealer or his authorised agent in form -IV. Explanation - This entry is also applicable for purchases through leasing or works contract or hire purchases. DECLARATION FORM-IV (see serial 81) I/We ---------------hereby declare that the goods purchased by me/us in cash memo/bill NO.---- dated the ------from -----shall be used in the manufacturer/processing of goods for sale/in mining/generation or distribution of electricity or any form of power. Dealer/Authorised Agent Similarly, Item No.101 of the schedule of the said notification under Annexure-1 reads as follows:- 101 Light Diesel Oil and High Speed 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, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stood the statutory language; (ii) its findings are based on no evidence; (iii) if its findings are inconsistent with the evidence or contradictory to it; (iv) if it has acted on material partly relevant or partly irrelevant; (v) where its conclusions drawn are based on imagination, surmises and conjectures; (vi) if its findings are recorded on nonapplication of mind; (vii) its findings are based on no supporting evidence; (viii) the findings are perverse; and/or they are returned without due consideration of matters relevant; and (ix) improperly excluded evidence; In CIT Vrs. Scindia Steam Navigation Co. Ltd., AIR 1961 SC 1633 it has been laid down as follows:- The result of the above discussion may thus the summed up: 1) when a question is raised before the Tribunal and is dealt with by it, it is clearly one arising out of its order; (2) when a question of law is raised before a tribunal but the Tribunal fails to deal with it, it must 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 held that the materials already determined in the original assessment proceeding cannot be further taken up and cannot be a valid reason for reassessment. Therefore, reopening of the assessment under Section 12(8) of the OST Act is an outcome of mere change of opinion and is not based on substantial information. The transaction being a part of the original assessment order passed under Section 12(4) of the OST Act the same could not have been reopened in the name and style reassessment under Section 12(8) of the OST Act. It is made clear that Section 12(8) of the OST Act lays down that the jurisdictional condition precedent for re-opening of the assessment is that the formation of the opinion of the Assessing Officer that the turnover has escaped assessment should be on the basis of any reasons . 9. Perusal of Assessment Order dated 31.01.2006 passed under Section 12(4) of the OST Act reveals that the Assessing Officer had allowed set off of entry tax against the sales tax payable on the turnover of sales subjected 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 Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as set forth in earlier cases, the apex Court in the aforesaid reported case has succinctly restated the law on the point of change of opinion in the context of reassessment as follows:- 29. The standard of reason exercised by the Assessing Authority is laid down as that of an honest and prudent person who would act on reasonable grounds and come to a cogent conclusion. The necessary sequitur is that a mere change of opinion while perusing the same material cannot be a reason to believe that a case of escaped assessment exists requiring assessment proceedings to be reopened. (See: Binani Industries Ltd., Kerala vs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, then, in the grab of reopening the assessment, review would take place. One must treat the concept of change of opinion as an in-built test to check abuse of power by the Assessing Officer. 9. This Court too has in similar circumstances, where there was a mere change of opinion on the same materials, set aside the reassessment notice and the consequential assessment order by its judgment dated 15th February, 2022 in Writ Petition (Civil) No. 25229 of 2017 (M/s. Tuff Tubes (Orissa) Pvt. Ltd. v. The Deputy Commissioner of Income Tax, Corporate Circle- 1(2), Bhubaneswar). 12. In the matter of Sri Jagannath Promoters Vrs. Deputy Commissioner of Income Tax, 2021 SCC OnLineOri 1769 = (2022) 440 ITR 192 = (2022) 324 CTR 233 it has been 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. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment on the ground that the same is based only on a change in opinion, the court ought to verify whether the assessment earlier made has either expressly or by necessary implication expressed an opinion on a matter which is the basis of the alleged escapement of income that was taxable. If the assessment order is non-speaking, cryptic or perfunctory in nature, it may be difficult to attribute to the assessing officer any opinion on the questions that are raised in the proposed reassessment proceedings. Every attempt to bring 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 re-assessment proceedings. 14. 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 part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons implies specific and concrete information from an external source and therefore, it cannot include an audit or other report which is prepared within the Department by the tax authorities. Otherwise it would be possible for the authorities to reopen an assessment on the basis of the change of opinion, in which event the finality of the completed assessment will lose all sanctity and integrity. Therefore, the reopening of the assessment is based on the investigation report of the tax authorities themselves and is, therefore, founded on nothing but a mere change of opinion. As a consequence thereof, the order passed by the Assessing Authority under Section 12(8) for reassessment has no justification in view of law laid down by the apex Court in Kelvinator of India Limited (supra) followed by Nava Bharat Ferro Alloys v. State of Orissa, (2010) 31 VST 319 (Ori.). Therefore, the formation of opinion in the reassessment under Section 12(8) of the OST Act cannot have any justification and while forming such opinion, as it appears from the records, no opportunity of hearing to the petitioner was given in compliance of the principles of natural justice. 18. It is also not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the fact that Note- 1(b) read with Note-2 of the notification dated 31.03.2001 in no uncertain terms, allows set off of entry tax paid on HSD against the sales tax payable. As a consequence thereof, the statutory allowance of set off cannot be denied to the petitioner on the ground that the petitioner had sold a part of its stock of HSD at a concessional rate of 4% against submission of declaration in Form-IV. 21. Undisputedly, HSD is one of the covered goods under Note-1(b) and, thereby, the petitioner is statutorily entitled to claim set off of entry tax against sales tax payable on sale of HSD. As the State Government has not imposed any restriction/limitation on the claim of set off of entry tax on the covered items, the reassessment made by the Assessing Authority under Section 12(8) and confirmation made thereof by the First Appellate Authority and also the Tribunal denying the benefit of set off cannot be sustained in the eye of law. The benefit statutorily permissible, vide notification dated 31.03.2001 issued by the Government, cannot be denied/disallowed without considering such notification in proper perspective. Therefore, the Assessing Officer, the First Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X
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