Orissa High Court
M/S. Steel Authority Of India Ltd vs State Of Odisha Represented By on 18 January, 2023
IN THE HIGH COURT OF ORISSA AT CUTTACK
TREV Nos.148 and 149 of 2001
M/s. Steel Authority of India Ltd. .... Petitioner
Mr. Rahul Tangri, Advocate
Mr. Dipankar Majumdar, Advocate
Mr. Mukesh Panda, Advocate
-versus-
State of Odisha represented by .... Opposite Party
Commissioner of Sales Tax, Orissa
Mr. Sunil Mishra, Additional Standing Counsel
CORAM:
THE CHIEF JUSTICE
JUSTICE M.S. RAMAN
ORDER
Order No. 18.01.2023
07. 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.
2. These revision petitions have come before this Court pursuant to
an order dated 26th July 1993 of the Orissa Sales Tax Tribunal
(Tribunal) which referred the following two questions to this Court
for adjudication:
(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?
(ii) Whether in the facts and circumstances of the
case, the Tribunal was not justified in holding that
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 inter-
State sales within the purview of Section 3 (a) of the
Central Sales Tax Act (CST Act) ?
3. Initially both these petitions were registered as SJC cases and
then subsequently converted into TREV Nos.148 and 149 of 2001.
4. 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".
5. 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
8th May 2010, giving the AO the power of reassessment.
6. 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:
"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?"
7. 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:
"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 Sub-
Section (2) of Section 6A can be subject matter of
reopening of a proceeding under Section 16 of the
State Act was not correct.
114. 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."
8. Considering that the law itself was amended thereafter with
effect from 8th 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.
9. These two revision petitions are disposed of accordingly. Issue
urgent certified copy of this order as per rules.
(Dr. S. Muralidhar)
Chief Justice
(M.S. Raman)
Judge
S.K. Guin
