M/S. Neelam Motors vs Deputy Commissioner Of Sales Tax on 26 August, 2021
Orissa High Court
M/S. Neelam Motors vs Deputy Commissioner Of Sales Tax on 26 August, 2021
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P. (C) Nos.14486, 14487, 14491 & 14493 of 2021
In W.P.(C) No.14486 of 2021
M/s. Neelam Motors …. Petitioner
Mr. R.P. Kar, Senior Counsel on behalf of Mr. Mukesh Agarwal
-Versus-
Deputy Commissioner of Sales Tax, …. Opposite Parties
CT & GST Circle, Balasore and
Another
Mr. Sunil Mishra, Addl. Standing Counsel for CT & GST
In W.P.(C) No.14487 of 2021
M/s. Neelam Motors …. Petitioner
Mr. R.P. Kar, Senior Counsel on behalf of Mr. Mukesh Agarwal
-Versus-
Deputy Commissioner of Sales Tax, …. Opposite Parties
CT & GST Circle, Balasore and
Another
Mr. Sunil Mishra, Addl. Standing Counsel for CT & GST
In W.P.(C) No.14491 of 2021
M/s. Neelam Motors …. Petitioner
Mr. R.P. Kar, Senior Counsel on behalf of Mr. Mukesh Agarwal
-Versus-
Deputy Commissioner of Sales Tax, …. Opposite Parties
CT & GST Circle, Balasore and
Another
Mr. Sunil Mishra, Addl. Standing Counsel for CT & GST
In W.P.(C) No.14493 of 2021
M/s. Neelam Motors …. Petitioner
Mr. R.P. Kar, Senior Counsel on behalf of Mr. Mukesh Agarwal
-Versus-
Deputy Commissioner of Sales Tax, …. Opposite Parties
CT & GST Circle, Balasore and
Another
Mr. Sunil Mishra, Addl. Standing Counsel for CT & GST
Page 1 of 11
// 2 //
CORAM:
THE CHIEF JUSTICE
JUSTICE B.P. ROUTRAY
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M/S. Neelam Motors vs Deputy Commissioner Of Sales Tax on 26 August, 2021
ORDER
Order No. 26.08.2021
Dr. S.Muralidhar, CJ.
03. 1. These four writ petitions challenge the impugned re-
computation orders dated 8th March, 2021 passed by the Deputy Commissioner of Sales Tax, CT & GST Circle, Balasore (Opposite Party No.1) (‘Dy. CST’) for the periods from 2000- 2001, 2001-2002, 2002-2003 and 2003-2004 under the Odisha Sales Tax Act, 1947 (OST Act).
2. This is the second round of litigation at the instance of the Petitioner. Earlier, challenging the re-computation orders dated 23rd February, 2017 passed by the Dy. CST, Balasore, the present Petitioner had filed W.P. (C) Nos.3707, 3709, 3710 and 3712 of 2017. By a common order dated 31st July, 2019 this Court set aside the impugned orders on the sole ground of violation of the principle of natural justice. The Court directed that notice be issued to the Petitioner and after affording it an opportunity of being heard, a fresh reasoned order should be passed by the Dy. CST, Balasore. Purusnt thereto, fresh orders dated 8th March, 2021 were passed by the Dy. CST, Balasore re- computing the tax, surcharge and interest payable for each of the aforementioned four periods.
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- The present four writ petitions were listed before the Court on 14th July, 2021, when a direction was issued that an advance copy of the writ petitions be served on Mr. Sunil Mishra, learned Additional Standing Counsel (ASC) for the CT & GST Department.
- Today this Court heard Mr. R.P. Kar, learned Senior Counsel on behalf of the Petitioner and Mr. Sunil Mishra, learned ASC for the Department.
- The facts in each of the above writ petitions are more or less the same. Illustratively the facts for the year 2000-2001 are discussed hereafter. For the aforementioned period 2000-2001 an order of assessment was passed by the Taxing Authority, Balasore Circle on 31st January, 2002 under Section 12 (4) of the Orissa Sales tax Act, 1947 (‘OST Act’) raising a demand of Rs.6,58,166/-. One of the grounds for the above demand was “less payment of surcharge due to adoption of a wrong modalityfor calculation of surcharge by the dealer.”
- The appeal filed by the Petitioner against the said order was dismissed by the Assistant Commissioner of Sales Tax (ACST), Balasore on 5th June, 2002. The Second Appeal filed by the Petitioner before the Odisha Sales Tax Tribunal, Cuttack (‘Tribunal’) registered as S.A. No.787 of 2002-03 was heard by Full Bench of the Tribunal and by an order dated 27th November, 2007 the appeal was remanded to the ACST, Balasore to pass an appropriate order. On 27th February, 2009 a fresh assessment // 4 // order was passed by the Sales Tax Officer, Balasore Circle (STO) determining that the Petitioner was entitled to a refund of Rs.22,24,750.17. On 4th April, 2009 the Petitioner applied for grant of the above refund. The said amount was credited to the account of the
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M/S. Neelam Motors vs Deputy Commissioner Of Sales Tax on 26 August, 2021
Petitioner on 27th January, 2010.
7. The above decision dated 27th November, 2007 of the Full Bench of the Tribunal in the Petitioner’s case was based on the decision dated 5th January, 2007 of this Court in M/s. Bajaj Auto Ltd. v. State of Odisha 2007 (1) OLR 415 (Ori). The question addressed by this Court in the said decision was “whether surcharge under Sec.5-A of the O.S.T. Act is to be computed before giving the reduction of the entry tax amount as contemplated under Section 4 (1) of the Orissa Entry Tax Act or from the net amount of sales tax payable after grant of such reduction?” In the aforementioned decision delivered on 5th January, 2007 the Division Bench of this Court while interpreting the provision of the OET Act read with the relevant provisions of the Orissa Entry Tax Rules (OET Rules), concluded that the modalities adopted by the state taxing authority in computing the surcharge on the gross tax assessed, instead of tax payable after reduction to the extent of the entry tax paid, was not in accordance with the provisions of the OST Act, OET Act and the OET Rules. Accordingly, the clarification dated 31st January, 2002 of the State Government as regards the modality of calculating surcharge was held to have no legal sanctity.
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- It must be noted here that, while the Department challenged the aforementioned decision of this Court in Bajaj Auto Ltd. (supra) before the Supreme Court, it did not challenge the order dated 27th November, 2007 passed by the Tribunal in the Petitioner’s case, based on the decision in Bajaj Auto Ltd.. As a result, the Tribunal’s order dated 27th November, 2007 in the Petitioner’s case attained finality.
- After nearly six years after the Petitioner received the refund, the Supreme Court delivered a judgment on 28th October, 2016 in Commissioner of Commercial Taxes v. Bajaj Auto Ltd. AIR 2016 SC 5014. The Supreme Court reversed the order of this Court and held that the surcharge “under Section 5-A of the OST Act is to be levied before deducting the amount of entry tax paid by the dealer.” It must also be mentioned here that as a result of the above judgment of the Supreme Court, the Department began issuing orders of re-computation of the tax, surcharge and interest payable to all the assessees, including those in whose cases it had not challenged the order of the Tribunal.
- In the case of M/s. Bajaj Auto Ltd. the re-computation order was challenged before this Court in W.P. (C) No.3804 of 2018. Since the judgment of the Supreme Court in the Bajaj Auto case was inter partes, this Court held, by the judgment dated 31st March, 2021, the re-computation orders to be valid, since they were consistent with the judgment of the Supreme Court to which M/s. Bajaj Auto Ltd. was a party.
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11. However, as far as the present case is concerned, the Petitioner was not a party to the proceeding in the Supreme Court. The order of the Full Bench of the Tribunal in its case attained finality. In fact refunds were paid to it as a consequence. Therefore, there was no justification in law for the Department to seek to re-compute the tax, surcharge and interest payable by the Petitiioner for the
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M/S. Neelam Motors vs Deputy Commissioner Of Sales Tax on 26 August, 2021
aforementioned periods.
- Even after the remand to the Department of the issue by the order dated 31st July, 2019 of this Court in W.P. (C) Nos. 3707, 3709, 3710 and 3712 of 2017, the legal position did not change. The fact remains that there is no provision as such in the OST Act for ‘re-computation’ of tax long after the assessment proceedings have attained finality. The relevant provision for reopening of an assessment under the OST Act is Section 12 (8). The limitation there is 5 years from the expiry of the year to which the period of assessment relates. The other provision which permits the Commissioner to suo motu revise an order is Section 23 (4) of the OST Act read with Rule 80 of the Orissa Sales Tax, Rules (‘OST Rules’). Here again the limitation is 3 years from the date of passing of any order by the STO or 2 years from the date of passing of an order by the Additional Commissioner, Special Additional Commissioner or Assistant Commissioner.
- Under Rule 26-A of the OST Rules, a registered dealer is expected to preserve books of account and other documents including bills, credit and cash memoranda, invoices and // 7 // vouchers, etc. relating to the business of any year for a period of three years thereafter or for a period of 12 months after finalization of the order of assessment or penalty in appeal, revision or reference for the year to which it relates, whichever is later. As far as the present case is concerned, even if the aforementioned periods of limitation have been crossed.
- Viewed from any angle therefore, there is no legal basis for the Department in the present case to have sought to re-compute the tax, surcharge and interest payable by the Petitioner for the aforementioned periods.
- Mr. Mishra, learned ASC for the Department sought to refer to a letter dated 20th November, 2001 written by the Deputy Secretary to Government, to the Commissioner of Commercial Tax on computation of tax and surcharge payable. This letter stated that surcharge would be calculated and payable on the taxable turnover (Sections 5 and 5-A) instead of the reduced sales tax amount after setting off the entry tax. He accordingly submitted that this was the basis for the orders re-computing the tax, surcharge and interest payable.
- This Court is unable to agree with the above submission. Once the assessment for a period has attained finality, and has not been re-opened by the Department in accordance with law, it is not possible for the amount of the tax, surcharge and interest payable for that period to be re-computed.
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17. In State of Punjab v. Bhatinda District Cooperative Milk P. Union Ltd., (2007) 10 VST 180 (SC), the Supreme Court was interpreting Section 21 of the Punjab General Sales Tax Act 1946, which permits suo motu revision without any specific period of limitation. It is more or less similar to the corresponding provision for exercise of revisional jurisdiction by the Commissioner under the OST Act. The Supreme Court in the said decision observed as under:
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M/S. Neelam Motors vs Deputy Commissioner Of Sales Tax on 26 August, 2021
“A bare reading of section 21 of the Act would reveal that although no period of limitation has been prescribed therefor, the same would not mean that the suo motu power can be exercised at any time.
It is trite that, if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. What, however, shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder and other relevant factors.
Revisional jurisdiction, in our opinion, should ordinarily be exercised within a period
of three years having regard to the purport in terms of the said Act. In any event, the
same should not exceed the period of five years. The view of the High Court, thus,
cannot be said to be unreasonable. Reasonable period, keeping in view the discussions made hereinbefore, must be found out from the statutory scheme. As indicated hereinbefore, maximum period of limitation provided for in sub-section (6) of section 11 of the Act is five years.”
18. The Supreme Court further observed as under :
// 9 // “We are however, not oblivious of the fact that ordinarily the writ court would
not entertain the writ application questioning validity of a notice only, particularly, when the writ petitioner would have an effective remedy under the Act itself. This case, however, poses a different question. The Revisional Authority, being a creature of the statute, while exercising its revisional jurisdiction, would not be able to determine as to what would be the reasonable period for exercising the revisional jurisdiction in terms of section 21(1) of the Act. The High Court, furthermore in its judgment, has referred to some binding precedents which have been operating in the field. The High Court, therefore, cannot be said to have committed any jurisdictional error in passing the impugned judgment.”
- In the present case too appears to be no scope for re-opening of the concluded assessments or re-computation of the amount of tax and surcharge payable for the aforementioned periods 2000- 2001, 2001-2002, 2002-2003 and 2003-2004.
- Mr. Mishra then sought to contend that till such time the Supreme Court judgment in Bajaj Auto Ltd. was not delivered i.e. 28th October, 2016, no steps could have been taken for re- computation and therefore that must be the relevant date for the computation of limitation.
- This Court is unable to agree with this submission either. The Full Bench of the Tribunal allowed the Petitioner’s second appeal applying the law in terms of the judgment of this Court in Bajaj Auto. As explained by the Supreme Court in the case of // 10 // Dy. CIT v. Simplex Concrete Piles (India) Ltd. (2013) 11 SCC 373:
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M/S. Neelam Motors vs Deputy Commissioner Of Sales Tax on 26 August, 2021
“The subsequent reversal of the legal position by the judgment of the Supreme Court
does not authorize the Department to reopen the assessment, which stood closed on
the basis of the law, as it stood at the relevant time.”
22. The legal position has been succinctly explained by the Tripura High Court in Tripura Ispat (A Unit of Lohia Group) v. Union of India (2021) 87 GSTR 463 (Tripura) as under:
“As is well settled, all legal proceedings on the date when they are being decided by
any court, would be governed by the law laid down by the Supreme Court which prevails on such date. As is oftgen happens, a decision of the Supreme Court is reviewed, reconsidered or overruled by larger Bench. Such subsequent developments would undoubtedly clarify the position in law and such declaration would undisputedly apply to all pending proceedings. The proceedings which are closed in the meantime cannot be reopened on the basis of subsequent declaration of law by the Supreme Court. Any other view would lead to total anarchy. Based on the judgment of the Supreme Court several proceedings would have been decided. If years later such view is reversed, the parties who had not carried the proceedings in higher forum and thus not kept the proceedings alive, cannot trigger a fresh look at the decision already rendered by the competent court on the basis of the previous judgment of the Supreme Court which was correctly applied at the relevant time.”
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- F o r a l l t h e af o re m e nt i o n e d r e a s o n s , t h i s C o u r t f i n d s t h e i m p u g n e d re-computation orders to be unsustainable in the eye of law and therefore they are hereby set aside.
- All the four writ petitions are allowed in the above terms, but with no order as to costs.
(Dr. S. Muralidhar) Chief Justice (B.P. Routray) Judge S.K. Parida
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