M/S. Plywood Home vs Commissioner Of Sales Tax
2023 Latest Caselaw 336 Ori

           IN THE HIGH COURT OF ORISSA : CUTTACK.

                          STREV No. 4 of 2019
                                and
                          STREV No. 5 of 2019

                     (Applications under Section 24
                   of the Odisha Sales Tax Act, 1947)

    M/s. Plywood Home, Balasore                 ...             Petitioner


                                    VERSUS
    Commissioner of Sales Tax
    and Others                                          Opposite parties
                                                ...

   Advocates appeared in the case:

    For the Petitioner          :                 Mr. PRK Patro and
                                        Bijoy Kumar Sahoo, Advocates

    For the Opposite Parties    :            Mr. Susanta Kumar Pradhan,
                                             Additional Standing Counsel
                                               (CT & GST Organisation)

     CORAM:
     THE CHIEF JUSTICE
     JUSTICE MURAHARI SRI RAMAN

                               JUDGMENT

10.01.2023

MURAHARI SRI RAMAN, J.--

1. By way of Sales Tax Revision petitions the petitioner, proprietorship concern dealing in plywood, laminated sheets, glass and mirror furniture fittings and hardware goods, challenged the

Orders dated 08.05.2006 passed by the Commissioner of Sales Tax, Odisha in Appeals preferred under Section 23(4)(c)(ii) of the Odisha Sales Tax Act, 1947 (for short hereinafter referred to as "OST Act") pertaining to the Assessment Years 2001-02 and 2002-03.

1.1. Initially, the challenge to the Orders dated 08.05.2006 (impugned orders) was laid invoking extraordinary jurisdiction under Article 226/227 of the Constitution of India by filing writ petitions being W.P.(C) Nos. 12568 of 2006 and 12569 of 2006 as alternative remedy available under the OST Act and rules framed thereunder was exhausted. Said writ petitions were converted to STREV at the request of the counsel for the petitioner vide Order dated 11.01.2019:

"10. 11.01.2019

Learned counsel for the petitioner seeks permission to convert the present writ petition to Sales Tax Revision as per the statute.

Permission granted.

The same be renumbered and list on 06.02.2019."

1.2. During the course of hearing when this Court asked about maintainability of STREV petitions against the Appellate Orders passed by the Commissioner of Sales Tax under Section 23(4)(c)(ii) while sitting in appeals against the Orders in suo motu revision(s) passed by the Assistant Commissioner of Sales Tax, Balasore Range, Balasore under Section 23(4)(a) of the OST Act read with Rule 80 of the OST Rules, 1947, Sri PRK Patro, learned

Advocate for the petitioner simply stated that the Assistant Commissioner of Sales Tax being not the competent under the statute to exercise suo motu revision power, the Order of the Commissioner of Sales Tax is treated to be suo motu revision order and hence, in view of Section 23(4)(c)(i) of the OST Act, the present revision petitions have been preferred with permission of this Court.

1.3. Apparently, the petitioner's submission is misconceived.

1.4. Section 23(4) of the OST Act reads thus:

"(4)(a) Subject to such rules may be made and for reasons to be recorded in writing, the Commissioner may, upon application by a dealer or person or on his own motion revise any order made under this Act or the rules made thereunder by any person other than the Tribunal appointed under sub-section (3) of Section 3 to assist him:

Provided that the Commissioner shall not entertain any such application for revision if the dealer or the person filing the same having a remedy by way of appeal under sub-section (1) or sub-section (3) did not avail of such remedy or the application is not filed within the prescribed period.

Explanation.-

Any provision contained elsewhere in this Act which provides for determination of any specific matter shall not debar the Commissioner from determining such matter in exercise of the powers conferred upon him under this sub- section.

(b) If the Commissioner proposes to reject an application for revision under the foregoing provision he shall record the reasons for such rejections.

(c) Any dealer or person as the case may be, the State Government aggrieved by any order passed by the Commissioner on his own motion may, within sixty days from the date of receipt of such order, prefer an appeal-

(i) if the order was passed by the Commissioner, to the High Court and

(ii) if the order was passed by any authority subordinate to the Commissioner, to the Commissioner.

(cc) All order passed under this sub-section shall, subject to orders passed in an appeal, if any, be final.

(d) Notwithstanding anything contained in Section 17, the Commissioner shall not except with the prior approval of the State Government delegate his powers under this sub-section to any other person appointed under sub-section (3) of Section 3 to assist him."

1.5. In terms of Section 23(4)(d) read with Section 17 of the OST Act, the Commissioner of Sales Tax has delegated to the Assistant Commissioner of Sales Tax the power under Section 23(4)(a) read with Rule 80 to suo motu revise assessment orders passed by the Sales Tax Officer and Assistant Sales Tax Officer vide Notification No.14171-I-ST-76/63-CT, dated 03.08.1963. Perusal of Assessment Orders relating to the Assessment Years 2001-02 and 2002-03, which are subject-matter of suo motu revision(s) shows that the same were framed by the Sales Tax Officer of Balasore Circle, Balasore. Thus, in view of Notification dated 03.08.1963 issued by the Commissioner of Sales Tax in exercise of power under Section 17 of the OST Act, the Assistant Commissioner of Sales Tax of the Balasore Range is the competent authority to exercise power of suo motu revision.

Therefore, the Commissioner of Sales Tax passed the impugned Orders in exercise of powers under Section 23(4)(c)(ii) in the capacity of the Appellate Authority, as the Assistant Commissioner of Sales Tax is the subordinate to the Commissioner of Sales Tax in terms of sub-rules (1) and (2) of Rule 3 of the OST Rules.

1.6. It appears having exhausted statutory remedy available, the petitioner preferred writ petitions. However, the reason best known to it, at the behest of the petitioner, said writ petitions were directed to be converted to "sales tax revisions"/STREVs by seeking permission of this Court. Though not conceding, if at all it is considered that the Commissioner of Sales Tax had exercised power of suo motu revision, then also, in terms of Section 23(4)(c)(i) appeal lies to this Court, but not sales tax revision as suggested by the counsel for the petitioner for the sales tax revision is maintainable under Section 24 of the OST Act only against the Order of the Second Appeal passed under Section 23(3) by the learned Odisha Sales Tax Tribunal.

1.7. The cause title of the sales tax revision filed by the petitioner describes the following:

"An Application under Section 23(4)(c) of the Odisha Sales Tax Act, 1947 and rules made thereunder". 1.8. This is indicative that the petitioner has misdirected itself. The Order under challenge is not the one passed under Section 23(3). This Court is, therefore, of the opinion that the approach of the petitioner is improper, misleading and untenable inasmuch as

sales tax revision before this Court would lay from the order passed under Section 23(3) and not against order under Section 23(4)(c) of OST Act.

2. Notwithstanding the above position and no plausible explanation has been rendered by Sri PRK Patro, learned counsel for the petitioner, at his insistence this Court proceeded to hear the matter on merits.

3. The Assessing Authority while framing original assessment under Section 12(4) of the OST Act observed vide Orders dated 30.12.2002 and 07.08.2003 pertaining to the Assessment Years 2001-02 and 2002-03 that though Section 15 of the OST Act requires the petitioner to maintain "a true account of the value of goods bought and sold by him", it maintains only purchase account and in order to discharge liability on sale transaction/taxable turnover it added percentage of profit margin to the purchase figures. Vide Order dated 30.12.2002 for the Assessment Year 2001-02, the Assessing Authority observed as follows:

"*** But in the absence of sale and stock account I could not accept the profit margin shown by the dealer and completed the assessment on the best of my judgment. Taking into account the mark of demand on the plywood and other goods dealt in 10% margin of profit shown by the dealer appears to be low. Hence in order to determine the gross turnover, I added 15% profit margin to the purchase value disclosed during the year under assessment. ***"

3.1. The Assessing Authority initiated proceeding under Section 12(8) of the OST Act on receipt of adverse report submitted by the

Vigilance upon inspection conducted in the business premise of the petitioner. But said reassessment proceeding was dropped on consideration of the plea taken by the dealer that the transactions reflected in the incriminating documents seized by the Vigilance were related to credit sales and since the petitioner-dealer was in habit of discharging liability on sales by adding percentage of profit to the figures of purchase, such credit sales does not attract tax liability. Such dropping of proceeding under Section 12(8) of the OST Act being not only erroneous but also prejudicial to the interest of revenue, the Assistant Commissioner of Sales Tax initiated suo motu revision proceeding invoking power under Section 23(4)(a) read with Rule 80. After hearing and examination of documents/records produced by the petitioner and also material available on record, vide Order dated 21.12.2005, the Assistant Commissioner of Sales Tax inter alia observed that the note book found during the inspection by the Vigilance contained transactions of credit sales and "it was admitted by the Authorised Agent that 60% of the total sales in a year were credit sales. Moreover, it was also admitted that the physical stock remains constant over the years". It is also noted that the petitioner could not produce "purchase bills/evidences of purchase in respect of three items as per physical stock". The said Revisional Authority rejected the plea of the petitioner that the entries in the credit ledger have no relation with the business activities of the dealer and they reflect "only domestic expenditure". The Revisional Authority having threadbare analyzing the material on record re-

casted/revised the quantum of tax liability for the periods 2001-02 and 2002-03.

3.2. Appeals preferred under Section 23(4)(c)(ii) by the petitioner against such Orders in suo motu revision proceedings got dismissed by the Commissioner of Sales Tax, Odisha with the following observations:

"*** I have gone through the assessment order, appeal petition, order passed by the forum below, and other materials on record. The bone of contention appears to be whether the sale suppression as detected from the seized note book should be accepted or not for initiation of suo motu revision proceedings. The Ld STO, Balasore Circle had dropped the proceedings initiated u/s 12(8) of the OST Act on the ground that since the dealer had maintained purchase account and paid tax on the arrived turnover by adding profit margin on the purchases, the petitioner's credit sale after payment of tax on purchases did not attract any tax liability. This was considered erroneous and prejudicial to the interest of revenue by the Ld ACST. The fact of the matter remains that the dealer maintained a purchase account which itself is in violation of provisions u/s 15 of the OST Act. Further, the dealer had admitted that the credit sales constituted nearly 60% of the total sale during the year. It is the responsibility of the dealer to record its transactions and explain them to the assessing authorities. The inspecting authorities detected that credit sales worth Rs.17,53,222.00 whereas the petitioner had disclosed a turnover for the period under reference amounting to Rs 9,68,951.00. The entries in the seized note book highlighted sales to different parties, which were admitted by the petitioner before the inspecting authorities and the assessing officer. It is evident that the Ld assessing officer did not consider the case in a proper perspective for which the Ld ACST, Balasore Range had to initiate suo motu revision proceedings. The dealer's disclosure of turnover appears to be miserably low and it is quite difficult

to run a business with such a turnover while meeting the expenditures towards fixed costs. After taking into account the submissions made by the dealer carefully, I am unable to convince myself suo motu revision proceedings initiated suffers from any infirmities. Considering the legal provisions and factual position in the case, the suo motu revision proceedings initiated and concluded by the Ld ACST, Balasore Range are confirmed in toto."

3.3. On the factual aspect the Appellate Authority confirmed the orders passed in suo motu revision proceedings.

3.4. This Court vide Order dated 18.12.2019 framed the following question of law:

"Whether on the facts and circumstances of the case, the Commissioner while sitting in appeal is justified in confirming against the order of the Asst. Commissioner on suo motu revision of an order passed by the Sales Tax officer, related to a sole proprietor dealing in retail plywood sales who maintains purchase account which is not unlawful and files returns by adding profit margin on purchase price for last 18 years having no adverse report based or which he (the sales tax officer) dropped the proceedings initiated under section 12(8) of the Orissa Sales Tax Act considering the factual aspects which for no reason doubted by Assistant Commissioner and revised by including the past sales data of earlier years in which tax already paid in the said financial year, by imaginary assumptions such as 'the dealers disclosure of turnover appears to be miserably low and it is quite difficult to run a business with such a turnover while meeting expenditure towards fixed costs'?"

3.5. It transpires from the Appellate Orders passed under Section 23(4)(c)(ii) as also the Orders under Section 23(4)(a) that the factual backdrop pertaining to impugned Assessment Years emanated from Vigilance inspection and seizure of incriminating

documents/records from the business premise of the petitioner. The suppression of purchases has been established by due examination of the material on record and consideration of evidence produced by the petitioner during the course of proceedings. The Revenue Authorities were justified, therefore, in varying with the percentage of profit as stated to have been added by the petitioner for many years due to special circumstance that is obtained during the Assessment Years in question. This Court is not, therefore, inclined to interfere with the impugned Orders which have been passed on facts.

3.6. It is well-settled that each assessment year is a unit by itself. It has been observed in Sarsowati Devi Vrs. CST, (1974) 34 STC 8 (All) and Baij Nath Prasad Vrs. CST, (1987) 67 STC 346 (All) that where the material recovered in a survey relates to a year other than the assessment year, the same cannot be used for rejection of account books for the different assessment year. Each assessment year is a separate and self-contained unit of assessment and the accounts of each year must be judged with reference to material pertaining to that assessment year. Merely because the accounts of the preceding year were rejected was no ground for rejecting the accounts for the assessment year in question. A resort to best judgment assessment can only be made if the account books produced were incomplete or otherwise unreliable and there is material to show that the assessee has suppressed such sales.

3.7. Viewed the matter in the aforesaid perspective, in the instant case, certain material was seized on search being

conducted by the Vigilance and such seized material was found to be relatable to the years in question. Said material was used during the course of assessment with confrontation. The fact-situation in the impugned Assessment Years being not identical to the earlier years, the contention of the petitioner that the percentage of profit as added to the purchase turnover to arrive at taxable turnover is liable to be repelled.

3.8. The Hon'ble Supreme Court of India in the case of Rallis India Ltd. Vrs. State of Tamil Nadu, (1998) 8 SCC 182 held that the finding of fact arrived at by the statutory authorities is required to be given due weight unless it is found by the High Court that such a finding is either based upon no evidence or irrelevant evidence or incorrect principles. By taking note of provisions contained in Section 24 of the OST Act this Court in the case of Gayatri Brick Industries Vrs. State of Odisha, 2015 SCC OnLine Ori 273 observed that "only on question of law, the revision can be considered by the Court". In yet another case being Laxmi Jewellers Vrs. State of Odisha, (2017) 100 VST 220 (Ori) it has been laid down that in exercise of power conferred under Section 80 of the Odisha Value Added Tax Act, 2004 (which corresponds to Section 24 of the OST Act) this Court can interfere with the finding of the statutory Appellate Authority if there is any error apparent on the face of record or miscarriage of justice, but cannot assume the power of Appellate Court for reversing the fact- finding by re-appreciating the evidence or the materials produced before the Appellate Forum.

3.9. Admittedly, in the present case, no additional material was adduced by the petitioner to show that the finding of the Assistant Commissioner of Sales Tax in suo motu proceedings as affirmed by the Commissioner of Sales Tax, Odisha in Appeals was perverse. This Court finds that sales tax revision itself is not entertainable against orders passed by the Commissioner of Sales Tax in exercise of power under Section 23(4)(c)(ii) of the OST Act. Additionally, this Court also observes that the question of law as posed by the petitioner for adjudication of this Court is not "question of law", rather it pertains to factual aspect and the Appellate Authority in his Order passed under Section 23(4)(c)(ii) accepted the cogent reasons assigned in the orders passed under Section 23(4)(a) by the revisional authority which was based on evidence and material available on record.

4. In view of the above, no ground has been made out by the petitioner-assessee in the instant revision petitions to invoke jurisdiction under Section 24 of the OST Act.

5. In the result, for the reasons stated above, both the revision petitions fail and accordingly, the sales tax revisions are dismissed. In the circumstances, however, there is no order as to costs.

                         (Murahari Sri Raman)                 (Dr. S. Muralidhar)
                               Judge                             Chief Justice


Laxmikant