Allowed

Sail v. Commnr.of Sales Tax

Orissa HC18 Jan 2023TREV/149/2001

Case brief

AI extract

What is this about?

This court disposed of two tax revision petitions by SAIL concerning assessment years 1986-87 and 1987-88. Relying on Ashok Leyland vs. Tamil Nadu and noting the absence of reassessment powers under the CST Act for those years, the court held the reopening of assessment was beyond jurisdiction and set aside the reassessment orders, restoring the original assessment.

What did the court decide?

The impugned reassessment orders were set aside and the original assessment orders were restored to file.

Sail Vs Commnr.of Sales Tax — Writ and Judicial Review | Orissa HC (2023)

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IN THE HIGH COURT OF ORISSA AT CUTTACK

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TREV Nos.148 and 149 of 2001

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M/s. Steel Authority of India Ltd.

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…. Petitioner

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Mr. Rahul Tangri, Advocate Mr. Dipankar Majumdar, Advocate Mr. Mukesh Panda, Advocate

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-versus-

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State of Odisha represented by …. Opposite Party Commissioner of Sales Tax, Orissa

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Mr. Sunil Mishra, Additional Standing Counsel

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CORAM: THE CHIEF JUSTICE JUSTICE M.S. RAMAN

ORDER

Order No.

18.01.2023

1. These two revision petitions by the Assessee-M/s. Steel Authority of India Limited (SAIL) are for two assessment years (AY) i.e., 1986-87 and 1987-88 respectively.

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These revision petitions have come before this Court pursuant to an order dated 26^th July 1993 of the Orissa Sales Tax Tribunal (Tribunal) which referred the following two questions to this Court for adjudication:

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(i) Whether in the facts and circumstances of the case re-opening of the assessment under Rule 17 (8) of the CST (O) Rules, 1967 for the years 1986-87 and 1987-88 is contrary to law and without jurisdiction?

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(ii) Whether in the facts and circumstances of the case, the Tribunal was not justified in holding that

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transaction of dispatch of goods from Rourkela Steel Plant to different branches outside the State of Odisha according to the Demand Registration Scheme and time bound supply scheme as interState sales within the purview of Section 3 (a) of the Central Sales Tax Act (CST Act) ?

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Initially both these petitions were registered as SJC cases and then subsequently converted into TREV Nos.148 and 149 of 2001.

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Relevant to both these years, an additional issue that has arisen concerning the jurisdiction of the Assessing Officer (AO) to reopen an assessment in terms of Rule 10 of the CST (O) Rules. This question was perhaps not in the purview of the issues that arose when the aforementioned reference was made by the Tribunal because the law in this regard was clarified only subsequently by the judgment of the Supreme Court in Ashok Leyland Limited v. State of Tamil Nadu AIR 2004 SC 2836. In the said judgment which is by a Bench of three Hon’ble Judges of Supreme Court, a categorical view was taken that once an assessment order has been passed under Section 6 (A) (2) of the CST Act, it could not be subject matter of reopening of the assessment under the State Act. The Larger Bench of the Supreme Court in the above decision held observations to the contrary made in the earlier judgment in Ashok Leyland Limited v. Union of India [1997] 2 SCR 224 to be incorrect. It was held that reopening of assessment was permissible only where the order had been obtained “by commission of fraud, collusion, misrepresentation or suppression of material facts or giving or furnishing false particulars”.

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Page 2 of 4

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It is only thereafter that an amendment was made by insertion of Sub-Section (3) to Section 6 (A) of the CST Act with effect from 8^th May 2010, giving the AO the power of reassessment.

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In the years with which the present Petitioner is concerned with i.e., 1986-87 and 1987-88, there was no power of reassessment with the AO and, therefore, the reassessment orders whereby the inter-branch transfers made by the Petitioner-Assessee were treated as inter-State sales, were beyond the jurisdiction of the AO. The Court, therefore, considers it necessary to formulate the further question of law relevant to the above issue as it directly arises from the impugned re-assessment orders in the present cases as under:

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“Whether on the facts and in the circumstances of the case, the Assessing Officer could have reopened the assessment under Rule 10 of the CST (O) Rules?”

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The Court considers it necessary to address the above question first as far as these two revision petitions are concerned since it goes to the root of the matter. As already mentioned in Ashok Leyland Limited v. State of Tamil Nadu (supra), the Supreme Court disagreed with the earlier view expressed in Ashok Leyland Limited v. Union of India (supra) and concluded in paragraph 113 and 114 as under:

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“113. We, therefore, are of the opinion that the observations made by this Court in Ashok Leyland (supra) to the effect that an order passed under SubSection (2) of Section 6A can be subject matter of reopening of a proceeding under Section 16 of the State Act was not correct.

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Page 3 of 4

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However, we may hasten to add that the same would not mean that even wherein such an order has been obtained by commission of fraud, collusion, misrepresentation or suppression of material facts or giving or furnishing false particulars, the order being vitiated in law would not come within the purview of the aforementioned principle.”

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Considering that the law itself was amended thereafter with effect from 8^th May 2010 by inserting Section 6 (A) (3) of the CST Act, it is obvious that during the time when the reassessment orders were passed in the present case, the AO did not have the power of re-assessment. Consequently, the above question is required to be answered in the negative i.e, in favour of the Assessee and against the Department. In that view of the matter, the impugned reassessment orders of the AO are hereby set aside and the original assessment orders which were interfered with by the Tribunal are restored to file. It must be added here that in the original assessment orders, the AO had accepted the case of the Assessee that the inter-branch transfers were in fact not inter-State sales.

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These two revision petitions are disposed of accordingly. Issue urgent certified copy of this order as per rules.

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(Dr. S. Muralidhar) Chief Justice

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(M.S. Raman) Judge

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S.K. Guin

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Sail v. Commnr.of Sales Tax

Case brief

What is this about?

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Sail v. Commnr.of Sales Tax

Case brief

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