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2021 DIGILAW 130 (ORI)

Larsen & Turbo Limited v. State Of Orissa

2021-03-17

B.P.ROUTRAY, S.MURALIDHAR

body2021
JUDGMENT 1. Heard Mr. S. Mohanty, learned counsel for the Petitioner and Mr. D. Beura, learned Additional Standing Counsel for the Revenue Department-Opposite Parties. 2. This writ petition has been filed by the Petitioner-M/s. Larsen & Toubro Limited seeking two reliefs. One is a challenge to the re-assessment order dated 31st March 2007 passed by the Sales Tax Officer (STO), Jagatsinghpur Circle, Paradeep under Section 12 (8) of the Orissa Sales Tax Act, 1947 (OST Act) for the year 2001-02. The other is a challenge to Section 5(2)(AA)(i) of the OST Act as it did not prescribe a method to compute the taxable sale price. 3. The background facts are that during the year 2001-02, the Petitioner in its return disclosed a gross turnover of Rs.16,44,90,014/- and a taxable turnover of Rs.4,43,62,976/-. It filed a revised annual return for the aforementioned year on 20th January 2004, disclosing a gross turnover of Rs.15,85,64,493/- and a taxable turnover of Rs.1,85,55,030/-. This was as per the bills raised in the year 2001-02 against Paradeep Port Trust (PPT) for a sum of Rs.8,87,27,001/- and invoices against Paradeep Refinery Project (PRP), of Indian Oil Corporation Limited (IOCL) for a sum of Rs.6,95,97,542/-. 4. The Petitioner explains in its petition as under: 'That during the year 2001-2002 the Petitioner received a sum of Rs.15,84,57,275.00 from Paradeep Port Trust and Tax Deducted at Source (TDS) by Paradeep Port Trust is Rs.63,38,291/-. Similarly the Petitioner received a sum of Rs.6,01,72,750.00 from Indian Oil Corporation and TDS to the tune of Rs.24,06,010.00. Hence during the year 2001-2002 the Petitioner received a total sum of Rs.21,86,30,025.00 from PPT and IOCL as against which TDS of Rs.87,45,201.00 was deducted and deposited.' 5. During the assessment proceedings under Section 12(4) of the OST Act, the Petitioner claimed a deduction of Rs.14,00,09,463/- towards labour and service charges, overhead expenses, consumables, sub-contractors turnover, exemptions and first point tax paid goods. It accordingly disclosed taxable turnover as indicated earlier i.e. Rs.1,85,55,030/-. 6. In response to the notice issued to it under Section 12(4) of the OST Act by the STO, the Petitioner furnished all relevant documents including the agreements with PPT and IOCL, books of account, registers, the running account bills, agreements, etc. The Petitioner claimed a refund of Rs.71,22,917/-. On 28th February 2004, the STO passed an assessment order accepting the revised annual return and redetermined the taxable turnover as Rs.5,37,87,033/-. The Petitioner claimed a refund of Rs.71,22,917/-. On 28th February 2004, the STO passed an assessment order accepting the revised annual return and redetermined the taxable turnover as Rs.5,37,87,033/-. Consequently, the refundable amount was reduced to Rs.43,83,142/-. 7. Aggrieved by the assessment order, the Petitioner preferred a first appeal before the Assistant Commissioner of Sales Tax, Cuttack II Range (ACST), who by an order dated 7th July 2004, dismissed the appeal. 8. Consequent thereupon, the Petitioner filed a refund application under Section 14 of the OST Act read with Rule 39 of the OST Rules seeking refund of the sum of Rs.43,83,142/-. 9. A refund voucher was issued by the STO on 15th February 2005, for the aforementioned sum. On 31st March 2005, a sum of Rs.43,70,557/- was credited in the Petitioner's bank account. 10. It appears that some time thereafter the A.G. (Audit), Orissa scrutinized the Petitioner's assessment records. It was reported that the Petitioner had received a gross amount of Rs.21,86,30,025/- as against returned figure of Rs.15,85,64,493.00 in the original assessment and hence there was an escaped turnover of Rs.6,00,65,532/-. 11. It is contended by the Petitioner that without application of mind, the STO, solely on the basis of the above audit report, reopened the assessment under Section 12 (8) of the OST Act and issued a notice dated 1st August 2006 asking the Petitioner to explain why it should not be re-assessed for the escaped turnover. A further notice was issued on 5th September, 2009. 12. Consequent thereto, the impugned re-assessment order was passed by the STO on 31st March 2007 enhancing the taxable turnover by Rs.6,00,65,532/- and determining the tax liability along with surcharge as Rs.52,85,767/-. 13. Apart from assailing the impugned order, as being an ex parte order inasmuch as no notice was served on the Petitioner, it is pointed out on merits that what is sought to be enhanced was already included in the turnover of the previous year and tax had already been paid on it. It is contended that this was overlooked by the audit report and, therefore, the STO erred in mechanically relying on the said report and reopening the assessment. 14. Notice was issued in the present petition on 21st May 2010, and the impugned re-assessment order was stayed. 15. It is contended that this was overlooked by the audit report and, therefore, the STO erred in mechanically relying on the said report and reopening the assessment. 14. Notice was issued in the present petition on 21st May 2010, and the impugned re-assessment order was stayed. 15. In an additional affidavit filed by the Petitioner on 4th December 2009, it is inter alia stated that the STO in the original assessment order had himself held as follows: 'T.D.S. Certificate submitted by the dealercontractor are scrutinished. It is found that the dealercontractor has received gross payment of Rs.15,84,57,275.00 from the Contractee, Paradeep Port Trust. Tax deducted at source comes to Rs.63,38,291/-. Further the dealer has also received gross payment of Rs.6,01,72,750.00 from the Contractee, Indian Oil Corporation Ltd and Tax deducted at source Rs.24,06,910.00. Thus the dealer-contractor has received gross payment of Rs.21,86,30,025.00 from the Contractees against which tax deducted and deposited in this Circle is at Rs.87,45,201.00' 16. Accordingly, it is explained how the STO while passing the original assessment order had rightly excluded Rs.6,01,72,750/- from the gross turnover of the Petitioner. 17. The additional affidavit also encloses a Suo Motu revisional order dated 22nd November 2003 passed by the ACST for the year 2000-01, which clearly states that the Petitioner had outstanding bills of Rs.8,53,67,873/- as on 31st March, 2001. It is explained that the receipt of Rs.6,01,72,750.00 which is part of outstanding bills of Rs.8,53,67,873.00 as on 31st March 2001, has suffered tax during the year 2000-2001 and hence was rightly excluded from the gross turnover of the Petitioner for the year 20012002 as it would have amounted to double taxation. It is further contended that the original assessment order dated 28th February 2004, passed under Section 12(4) of the OST Act having stood confirmed in appeal, the assessment order got merged with the appellate order by operation of the doctrine of merger. Therefore, initiation of the proceedings under Section 12 (8) of the OST Act in respect of an assessment which has merged with the appellate order, would be without jurisdiction and impermissible in law. Reliance is placed on the decision in State of Orissa v. Ugratara Bhojanalaya [1993] 9 STC 76 (Ori) and Naba Bharat Ferro Alloys v. State of Orissa (2010) I OLR 976 (Ori). 18. Reliance is placed on the decision in State of Orissa v. Ugratara Bhojanalaya [1993] 9 STC 76 (Ori) and Naba Bharat Ferro Alloys v. State of Orissa (2010) I OLR 976 (Ori). 18. An affidavit has been filed by the STO focussing only on the issue of service of notice of re-assessment on the Petitioner but not addressing the merits of the case. In fact, on merits, there appears to be no reasonable explanation offered by the STO to any of the issues raised by the Petitioner. Importantly, the fact that on the component of the enhanced taxable turnover in the re-assessment order, the Petitioner had already paid tax during the year 2000-01, which had been acknowledged by the ACST in the Suo Motu revision order dated 22nd November 2003, has not been denied by the Opposite Parties. 19. Consequently, the Court sets aside the impugned reassessment order. 20. The writ petition is allowed but in the circumstances, with no order as to costs.