HIGH COURT OF ORISSA: CUTTACK W.P.(C) No.14234 of 2009 In the matter of an application under Articles 226 and 227 of the Constitution of India. ----------M/s Bharat Petroleum Corporation Ltd., AT: Sikharpur, Cuttack, Presently At: Sahid Nagar, Bhubaneswar-751 007 Represented by its Manager Finance (ER), Shri Debabrata Das … Petitioner … Opp. Party -VersusThe Sales Tax Officer, Cuttack- I East Circle, Cuttack For Petitioner : M/s Sanjit Mohanty, Sr. Advocate M/s A.N.Ray, N.Paikray, B.P.Mohanty, P.K.Mishra & K.K.Sahu For Opp. Party : Mr. M.S. Raman Additional Standing Counsel (Commercial Taxes Department) ---------- P R E S E N T: THE HONOURABLE THE CHIEF JUSTICE SHRI.V.GOPALA GOWDA AND THE HONOURABLE SHRI JUSTICE B.N.MAHAPATRA Date of Judgment:
16. 03.2012 B.N. Mahapatra,J.This writ petition has been filed with the following prayers: “(i) Issue a writ in the nature of Certiorari quashing the order dated 30.12.2006 as passed by the opposite party in initiating proceeding under Rule 12(8) of the Central Sales Tax (O) Rules vide Annexure-6; 2 (ii) Issue a writ in the nature of Certiorari quashing the ex-parte order of reassessment dated 24.12.2008 passed by the opposite party for the period 2001-02 under Rule 12(8) of the CST(O) Rules along with demand notice vide Annexure-5; (iii) Issue a writ in the nature of Prohibition, prohibiting the opposite party from collecting or demanding the amount of tax and penalty involved in the ex parte order of reassessment dated 24.12.2008 along with demand notice under Annexure-5; (iv) Issue any such other writ(s) or pass such order(s) as would be deemed just and proper in the interest of justice; (v) Allow this petition with cost”.
2. Petitioner’s case in a nutshell is that it is a Government of India Undertaking engaged in refining, receiving and selling of petroleum products, namely, MS, HSD, LPG (domestic and commercial) and SKO (domestic and commercial) among other petroleum products. It is a registered dealer under the Central Sales Tax Act, 1956 (for short, ‘CST Act’). Paradeep is a Lighterage point for berthing of high capacity vessels received from other countries bringing in Superior Kerosene Oil (SKO) and High Speed Diesel (HSD) as well as indigenous products from Refineries situated nearer to coastal ports in the western sector and also from eastern sector like Vizag and Chennai. The petitioner has a coastal location at Paradeep. Petroleum product is supplied from RIL Refineries, Jamnagar by tanker to Paradeep. Petroleum product is also moved from West Bengal to Paradeep by way of stock transfer. From Paradeep, supplies of petroleum products are made to various other locations in Odisha. Besides, the petitioner has an MOU with other oil companies for safe keeping of their petroleum product. This arrangement envisages extending storage assistance by the Company 3 owning the facilities to another Company who may or may not have storage facilities at that location and accordingly, there is no inter-state sale by the petitioner to other oil Companies in Orissa. Three Oil Companies, i.e., Indian Oil Corporation ltd. (for short, IOCL’), Hindustan Petroleum Corporation Ltd. (for short, ‘HPCL’), and petitioner-Bharat Petroleum Corporation Ltd. (for short, ‘BPCL’) are having terminals for storage and handling of oil at Paradeep. Each of the Oil Companies has its own storage tank as well as loading and unloading facilities at the terminal. The ocean going tankers carry cargo (HSD and SKO) to and from Paradeep. However, the big ocean going tankers cannot call at Haldia because of lower draft. Therefore, the cargo is brought in by big tankers and unloaded at Paradeep. For nonavailability of tankers space of Oil Company, the cargo of one Oil Company is stored in the tanks of another Oil Company by virtue of the hospitality arrangement. Thereafter, the cargoes are sent to Haldia in small tankers. In this manner, all the Oil Companies received cargo from outside the State and dispatched the same to outside the State from Paradeep. At Paradeep, due to shortage in storage facility, other oil Companies like IOCL, HPCL etc. often keep their product in BPCL storage tanks as per the safe keeping agreement. Such product kept in BPCL tanks, belonging to the storing oil company, is moved by tanker charted by said storing oil company to Haldia. Since the product of storing oil company is kept in the BPCL tanks, the same are loaded by BPCL on behalf of the said Company in the tanker based on their advice. Therefore, the petitioner (BPCL) has never moved its own 4 product outside the State of Odisha in tankers not has sold any product by way of inter-state transaction to other Oil Companies on this score.
3. While the matter stood thus, the petitioner appeared and caused production of books of account before the Opposite Party in regular assessment proceeding where it was submitted by the petitioner that there was no inter-state sale by BPCL to other Oil Companies in Odisha. Due to shortage of storage facilities, other Oil Companies are often keeping their oil in storage tanks of BPCL as per safe keeping agreement which are moved from Paradeep as per the advice from the storing Oil Company and thus, BPCL has neither moved its own products to outside the State of Odisha in tankers not has sold any product to other Oil Companies in this respect. In support of its submission, the petitioner placed reliance on its safe keeping agreement as well as Memorandum of Understanding between the Oil Companies which were looked into, and the order of assessment dated 31.03.2005 for the period 2001-02 under Rule 12(5) of the CST(O) Rules was passed by computing a demand of Rs.31,46,129/- for non-submission of declaration in Form ‘C’ in respect of direct inter-state sales of HSD and SKO effected by the petitioner other than the matters covered under inter Oil Company arrangement and the safe keeping agreement between the Oil Companies.
4. While the matter stood thus, the petitioner has been issued with a notice dated 29.12.2006 in Form III issued under Rule 10 of the CST(O) Rules wherein the petitioner has been called upon to produce the books of 5 accounts on the allegation that its turnover for the year ending 2001-02 has escaped assessment/under assessment. Another letter bearing No.5258 dated 30.12.2006 was also issued to the petitioner disclosing the reason for initiating reassessment proceeding for the year 2001-02 under the CST Act.
5. On the basis of the reasons disclosed in the letter dated 30.12.2006, the opposite party directed the petitioner to produce the ‘tankerwise ocean loss report’, bill of lading and ‘proration report’ in respect of all receipts/dispatches made at /from Lighterage Terminal at Paradeep including complete accounts of receipts and disposal of goods received at the terminal and all the documents and records relating thereto. Pursuant to such letter, the petitioner appeared before the opposite party on various dates. The petitioner by its letters dated 23.04.2007, 21.06.2007 and 10.09.2007 intimated the opposite party regarding the movement of product from Paradeep to Haldia Port and the petitioner also explained to the Sales Tax Officer regarding the safe keeping arrangement and submitted that the petroleum products were kept by BPCL under the safe keeping agreement with other Oil Companies for safe keeping. Since the product belongs to the storing Oil Companies and was taken delivery at Haldia by them, the question of paying any tax by treating the aforesaid arrangement as interstate sales does not arise at all. On 10.09.2008, it was submitted by the petitioner orally that if the learned STO is not satisfied with the clarifications or the points agitated earlier, the petitioner should be given an opportunity of personal hearing so that there would be no levy of tax on the transactions 6 claimed by the petitioner. The petitioner also submitted the sample copies of safe keeping statement jointly signed by HPCL and BPCL for the product of HPCL which was kept at BPCL tanker and subsequently loaded into cargo charted HPCL as an illustration as to understanding between different Oil Companies regarding the storage and movement of goods from Paradeep. As the opposite party was very much busy no oral hearing has taken place on 10.09.2008. Thereafter, the opposite party passed the order of reassessment on 24.12.2008 under Rule 12(8) of the CST(O) Rules by holding that the returns filed by the petitioner under the OST and CST Act during the period under assessment as well as the documents/statement furnished at the time of assessment, the transaction effected through Paradeep Terminal have never been reflected in the return not disclosed at the time of assessment. The learned STO also held that the movement of goods from Paradeep in Orissa to Haldia in West Bengal having inextricable link in order to supply or sale of the goods by the receiving Oil Companies in the manner that the movement cannot be dissociated without breach of mutual understanding between the BPCL and the receiving Oil Companies and thus, the aforesaid transaction involving such goods from one State to another pursuant to the prior agreement is an inter-state sale falling under Section 3(a) of the CST Act. With the above observations, the opposite party came to the conclusion that delivery of 38,881 KL of HSD and 29,728 KL of SKO by BPCL ex-tanker at the Port of destination at Haldia to other Oil Companies, i.e., IOC/IBP/HPC though are clearly inter-state sales falling under Sectio”
3. a) of the CST Act, have not been reflected in the return filed for the respective return period by the petitioner. Therefore, the petitioner is liable to pay tax for such inter-state transaction and accordingly the impugned assessment order was passed raising levy of demand of Rs.45,28,82,697/including penalty to the tune of Rs.27,17,29,618.27. Hence, the present writ petition.
6. Mr.S.Mohanty, learned Senior Advocate appearing on behalf of the petitioner submitted that the opposite party has initiated proceedings under Rule 12(8) of the CST(O) Rules as well as passed the order of reassessment on the basis of the report received from the Additional Commissioner of Commercial Taxes, Central Zone, Cuttack vide letter No.12867/CT dated 29.12.2006. Thus, the Additional Commissioner of Commercial Taxes being the higher authority the impugned order has been passed acting upon the direction of the higher authority which is evident from the order sheet dated 30.12.2006. The exercise of the power under Rule 12(8) of the CST(O) Rules by the Assessing Officer has been vitiated as the learned Assessing Officer mechanically reopened the completed assessment and abdicated and surrendered to the report of the Additional Commissioner. Since the proceeding has been initiated on the basis of the report of the Additional Commissioner, Commercial Taxes, the “reason to believe”. by the learned Sales Tax Officer and the “formation of opinion”. by the learned STO is in a 8 mechanical manner and the Assessing Officer has acted to the dictate of the higher authority, which is contrary to principles of law. Placing reliance on the judgment of this Court in the case of Indure Limited Vs. Commissioner of Sales Tax, Orissa & others, reported in (2006) 148 STC 6.Mr. Mohanty submitted that as in the instant case, the report/direction of the Additional Commissioner was taken into consideration and the Sales Tax Officer did not have anything to form of his own objective opinion except acting upon the direction/opinion of the Additional Commissioner and no reassessment proceeding could have been initiated at the behest of the higher authority. In support of the above provision of law reliance was also placed in the case of State of UP Vs. Maharaja Dharmandar Prasad Singh, reported in AIR 198.SC 997.
7. The order of assessment dated 24.12.2008 has been passed utilizing documents received from Paradeep Port Trust as well as IOC without supplying or disclosing copy of the said documents to the petitioner during the course of reassessment proceedings. The impugned order has been passed without affording reasonable opportunity of hearing and without production of books of account. In support of his contention that the assessment has been completed in violation of principles of natural justice, Mr.Mohanty relied upon the order sheet attached to the writ petition under Annexure-6.
8. While completing the original assessment, the opposite party was aware of the fact of “safe keeping arrangement”. as well as “hospitality 9 arrangement”. regarding keeping stock of one Oil Company in the tanker of other Oil Company and also sending of cargo by one Oil Company on behalf of another Oil Company, the said STO not cannot say that those are all inter-state sales. The reassessment proceeding is nothing but mere change of opinion which is not permissible as held by the Hon’ble Supreme Court in the case of Binani Industries Limited Vs. Assistant Commissioner of Commercial Taxes, reported in (2007) 6 VST 78.(SC).
9. In view of the safe keeping agreement, the alleged transaction does not fall within the ambit and/or sphere of Section 3(a) of the CST Act. In the present case, there was no contract for sale of goods between the petitioner and HPCL or the petitioner with other Oil Companies and therefore in absence of contract of sale, the movement of goods from one state to another was of no consequence. The goods had never moved from Paradeep to Haldia pursuant to any contract of sale and no sale was concluded at any point of time at Haldia. The learned STO failed to bring home the charge of inter-state sale between the parties against a money consideration. The movement of goods from Paradeep to Haldia cannot be linked to any supply or sale of goods and the said finding of opposite party is based on surmise and presumption.
10. Levy of Central Sales Tax coupled with penalty by the Assessing Officer based on the mere movement of goods from Paradeep to Haldia is without jurisdiction and without any authority of law. The opposite party is 10 not justified to say that the dealer was not assessed due to default on the part of the dealer in disclosing the true and correct picture of business transactions in its return. The product of BPCL had never moved from Paradeep to any other State.
11. In similar context and/or premises, the Hon’ble Supreme Court in the case of M/s Indian Oil Corporation Limited Vs. Commissioner of Sales Tax & another (Civil Appeal No.2438 of 2009) has been pleased to set aside the order of reassessment passed by the authority and remitted the matter to the Assessing Officer with a direction to give full opportunity of hearing to the petitioner and decide the reassessment proceedings included in the jurisdictional fact and the effect of form of declaration submitted by the Corporation.
12. Mr. Mohanty further submitted that notice for initiation of reassessment proceedings under Rule 12(8) of the CST(O) Rules has been issued on 29.12.2006 whereas initiation of the proceedings was made on 30.12.2006. Thus, the opposite party issued notice prior to initiation of proceedings under Rule 12(8). Therefore, the impugned notice is void and consequently the entire proceedings are vitiated ab-initio in law. Concluding his argument Mr. Mohanty submitted that the proceedings initiated under Rule 12(8) of the CST(O) Rules by the Assessing Officer is without any authority of law and accordingly the same is liable to be quashed.
13. Mr. M.S.Raman, learned Additional Standing Counsel for the Commercial Taxes Department vehemently argued that along with the notice 11 issued under Rule 10 of the CST(O) Rules for the year 2001-02, the opposite party authority vide its letter No.5258 dated 30.12.2006 has supplied the petitioner the reasons for reopening the assessment and afforded opportunity to the petitioner to produce the books of account and the documents on which it may rely in support of its contentions. The petitioner was also required to produce tanker-wise ocean loss report, bill of lading and proration report in respect of receipt and despatch made at/from the Lighterage Terminal at Paradeep including complete accounts of receipt and disposal of goods received at the terminal and all the documents and records relating thereto. In response to the said notice, the petitioner appeared before the Assessing Officer after availing sufficient opportunities through number of adjournments and explained its case with regard to the reasons disclosed to it for initiating reassessment proceeding.
14. Decision of the Hon’ble Supreme Court in the case of M/s Indian Oil Corporation Limited (supra) (Civil Appeal No.2438 of 2009) has no application to the present case. The issue involved in the earlier writ petition of IOCL is different from the issue involved in the present case. In that case, the Hon’ble Supreme Court has directed for verification of the declaration Form ‘F’ and consideration of the jurisdictional factor. In the present case, no ‘F’ Form was furnished by the petitioner-Company. The Assessing Officer has jurisdiction to make the assessment/reassessment in view of the power vested in him under Rule 12(8) of the CST(O) Rules. It was not the case of change of opinion as earlier no opinion was formed by the Assessing Officer 12 with regard to the alleged transaction in question, which has been brought to tax under the present reassessment order. Admittedly, the petitioner has not disclosed the transactions in question in its statutory returns periodically filed before the opposite party and in the original assessment order dated 31.03.2005 (Annexure-1) there is no reference to or adjudication of the issue with regard to alleged transfer of goods from Lighterage Terminal at Paradeep to Haldia. Hence, question of change of opinion does not arise. Therefore, it is a clear case of escapement of turnover from assessment and paying sales tax. Since there is efficacious remedy by way of appeal the present writ petition is not maintainable.
15. On the rival contentions raised by the parties, the questions that fall for consideration by this Court are as follows:(i) Whether in the present case, the completed assessment has been reopened by mere change of opinion?. (ii) Whether reasonable opportunity of hearing was afforded to the petitioner and the materials utilized against the petitionerassessee were confronted to him before passing the order of reassessment under Rule 12(8) of the CST (O) Rules?. (iii) Whether in the facts and circumstances of the case, the Assessing Officer has passed the impugned reassessment order on the dictate of his higher authority, i.e., the Assistant Commissioner of Commercial Taxes and without applying his own mind has come to the conclusion that the transactions in question are inter-state sale in nature?. (iv) Whether notice for reassessment proceeding under Rule 12(8) of the CST(O) Rules has been issued on 29.12.2006 whereas initiation of the reassessment proceeding was made o”
30. 12.2006 and therefore the entire proceedings are vitiated in law?. (v) Whether the issues involved in the present case are similar/identical to that of the case of Indian Oil Corporation Limited vs. State of Orissa and Others, [2008[ 15 VST 497(Orissa)?. (vi) Whether dispatch of 38,881 KL of HSD and 29,728 KL of SKO during the year 2001-2002 has been effected by the petitioner Company from the Lighterage Terminal at Paradeep to outside State of Odisha either by way of inter-state sale or branch transfer or that the alleged dispatch of goods in question has not been effected by the petitioner either by way of inter-state sale or stock transfer?.
16. Question No.(i) is as to whether the completed assessment has been reopened by mere change of opinion. Mr. Sanjit Mohanty, learned Senior Advocate appearing on behalf of the petitioner submitted that the Hon’ble Supreme Court in the case of Indian Oil Corporation Limited (supra) has been pleased to set aside the judgment dated 16.05.2008 of this Court passed in W.P.(C) No.3691 of 2007, inter alia, with the observation that the High Court has failed to consider the challenge to the order of reassessment by the petitioner-Corporation on the ground that it was a case for change of opinion. According to Mr. Mohanty, in the instant case also the impugned order of reassessment is not sustainable in law as the completed assessment has been reopened by mere change of opinion. Referring to Annexure-1, which is the order of assessment dated 31.03.2005 passed for 14 the assessment year 2001-2002, it was argued that the turnover of the petitioner-assessee having been earlier assessed under Rule 12(5) of CST (O) Rules and that taking into consideration the MOU between the Oil Companies, the alleged transfer of stock in question has not been brought to tax, the initiation of reassessment proceedings under Rule 12(8) of the CST (O) Rules for self-same year is not permissible under law as the reassessment proceedings has been initiated on change of opinion. The Revenue’s stand is that the turnover which has been assessed in the impugned order of re-assessment under Rule 12(8) of the CST (O) Rules was neither disclosed in the periodical returns filed for the year 2001-2002 not it was the subject matter of consideration in the earlier assessment order dated 31.03.2005 passed for the same year.
17. Before proceeding further, it is necessary to knot what is the meaning of making assessment on “change of opinion”. under direct or indirect tax. It means, in respect of a particular income/transaction if the Assessing Officer after application of mind, takes a view that the particular goods or income is not liable to tax and completed the assessment, reopening of said assessment is not permissible by mere change of opinion of the Assessing Officer to levy tax on such goods or income.
18. The Hon’ble Supreme Court in the case of Binani Industries Ltd. vs. Asst. Commissioner of Commercial Taxes, [2007]. 6 VST 78.(SC), held that reopening of assessment is not permissible by 15 mere change of opinion of the Assessing Officer. Merely because the Assessing Officer changes his opinion that cannot have any effect on the assessment which has been completed on the basis of the view taken on turnover considered in the earlier assessment.
19. In the instant case, the earlier order of assessment passed on 31.03.2005 for the year 2001-2002 under Rule 12(5) of CST(O) Rules [in the reassessment order it is referred to as assessment under Rule 12(4)]. does not reveal that the transaction in question which has been brought to tax in the impugned reassessment order passed under Rule 12(8) of the CST (O) Rules was the subject matter for consideration of Assessing Officer for the purpose of assessment and the Assessing Officer after forming any opinion about nature of transaction in question took a decision in that earlier assessment order not to levy tax on those transactions. On the other hand, the earlier assessment order dated 31.03.2005 (Annexure-1) shows that the dealer-assessee failed to appear along with the books of account and requisite declaration forms for which the assessment was completed on the basis of materials available on record. The gross turnover in respect of inter-state sale disclosed in its return was accepted and the entire turnover was brought to tax as the petitioner-dealer failed to furnish declaration forms against claims of concessional rate of tax. In course of hearing, Mr.Mohanty, learned Senior Advocate for the petitioner has not brought to our notice any material in support of his contention that in earlier regular assessment the 16 transaction in question was subject matter of consideration of Assessing Officer who after considering the nature of transaction with reference to MOU of Companies took a view that no tax is leviable on those transactions except saying that the reassessment proceedings has been initiated on change of opinion. The reassessment proceedings initiated for the self-same year cannot be said to be without jurisdiction on the ground of change of opinion unless and until it is established that the turnover brought to tax in the reassessment was subject matter of earlier assessment and no tax was levied by the assessing officer by taking a particular view. Therefore, the first ground of challenge that the completed assessment has been reopened under Rule 12(8) of the C.S.T (O) Rules by mere change of opinion, fails the same being misconceived.
20. Question No.(ii) is as to whether reasonable opportunity of hearing was afforded to the petitioner and the materials utilized against the petitioner-assessee was confronted to it before passing the impugned order of re-assessment under Rule 12(8) of the CST (O) Rules. Rule 12(8) contemplates that there must exist reason for believing that the turnover of dealer for any period to which the Act applies has escaped assessment or has been under assessed. When such a reason exists, the Sales Tax Authority may at any time within five years from the date of expiry of the year to which the said period relates call for a return after complying with the provision of Rule 10 and proceed to assess the amount of tax due from the dealer. The Sales Tax Authority may also direct in cases where 17 such escaped or under assessment is due to the dealer having concealed particulars of his turnover or having without sufficient cause, furnished incorrect particulars thereof, the dealer shall pay penalty in addition to the tax assessed. However, such penalty shall be levied not exceeding two and half time, the amount of tax so assessed.
21. Undisputedly, in the instant case, the petitioner has been informed the reasons for reopening of assessment for the year 2001-2002 under Rule 12(8) of CST(O) Rules by the Assessing Officer in his letter dated 30.12.2006. The said letter is set out herein below:“OFFICE OF THE COMMERCIAL CUTTACK 1 EAST CIRCLE, CUTTACK No.5258/CT TAX OFFICER: Dated 30.12.2006 To M/s. Bharat Petroleum Corporation Limited Sikharpur, Cuttack bearing TIN-21901201770 Sub: Reasons for reopening of the assessment for the year 2001-02 under the C.S.T. Act. A notice U/r. 10 of the C.S.T. (O) Rules, 1957 for the year 2001-02 is enclosed. Reasons for re-opening the assessment are as stated below(a) It has come to the notice that you have brought in 104890 KL of HSD and 15714 KL of SKO during the year 2001-02 to the Lighterage Terminal at Paradeep. During the same period you have dispatched 38881 KI of HSD and 29728 KL of SKO to outside the State of Orissa. (b) Information received further shows that during the year, you have sold goods in course of inter-state trade or commerce from Paradeep Lighterage Terminal to other oil companies. 18 (c) The returns for the year 2001-02 under the CST Act do not appear to reflect these transactions of Lighterage Terminal. The same were also not disclosed during the assessment completed for the year. The aforesaid position indicates that there is escapement of assessment during the year. Besides the books of accounts and documents on which you may rely in support of the contentions, you are required to produce the “tanker-wise ocean loss report”., bill of lading and “proration report”. in respect of all receipts/dispatches made at/from the Lighterage Terminal at Paradeep including complete accounts of receipt and disposal of goods received at the terminal and all the documents and records relating thereto. Sd/Sales Tax Officer, Cuttack 1 East Circle, Cuttack”.
22. The above letter shows that in the return filed for the year 2001- 2002 under the C.S.T. Act, the alleged transactions, i.e., dispatch of HSD and SKO in question from Lighterage Terminal at Paradeep to other Oil Companies outside the State were not reflected. It is further alleged that the same were also not disclosed during the assessment completed earlier for that year. The letter dated 30.12.2006 (Annexure-3) as quoted above clearly reveals that the Assessing Officer has indicated reasons for reopening of the assessment and the same was communicated to the assessee-petitioner. From the above letter, it also reveals that the petitioner was given opportunity to produce the books of account and documents in support of which it may rely upon. The petitioner was also required by the Assessing Officer to produce the “tanker-wise ocean loss report”., “bill of lading and 19 proration report”. in respect of all receipts / dispatches made at/from the Lighterage Terminal at Paradeep.
23. Finally, the reassessment under Rule 12(8) of CST(O) Rules has been completed on the basis of the reasons stated in the notice dated 30.12.2006 (Annexure-3). The exact turnover alleged to have been escaped from earlier assessment, as indicated in Annexure-3, has been brought to tax in the impugned reassessment order. Therefore, it cannot be said that the petitioner was not aware of the reasons for initiation of reassessment proceeding under Rule 12(8) of the CST (O) Rules and reassessment was completed without confronting the materials utilized for making assessment.
24. Further, it is noticed that the reassessment proceedings was initiated on 30.12.2006 and the same was completed on 24.12.2008. Thus, two years’ time was taken to complete the reassessment proceeding from the date of communication of reasons to the petitioner for initiating the reassessment proceedings. The reassessment order reveals that sufficient opportunity of hearing was given to the petitioner and it has taken a number of adjournments on different dates. On 10.09.2008, the Senior Accounts Officer of the petitioner company appeared before the Assessing Officer and clarified that the documents placed on earlier appearances would explain the view of the petitioner with regard to turnover alleged to have been escaped from assessment. Therefore, it cannot be said that reasonable opportunity of hearing has not been given to the petitioner and reassessment has been completed without confronting to the petitioner, the materials utilized for 20 making the assessment. It is only on verification/examination of the returns filed by the dealer under OST Act and CST Act for the period of under assessment as well as the documents/statements furnished by the petitioner at the time of reassessment proceedings, the Assessing Officer came to the conclusion that the transactions in question effected from Paradeep Lighterage Terminal to other Oil Companies have neither been reflected in the return not disclosed at the time of assessment.
25. The Assessing Officer has extracted the report of Paradeep Port Trust and Ocean Loss Report submitted by the IOCL in reassessment order only for the purpose of better appreciation of the alleged transactions effected by the petitioner dealer which has been informed to the petitioner vide letter dated 30.12.2006 (Annexure-3). The information of Paradeep Port Trust or IOCL has not been utilized by the Assessing Officer against the petitioner-dealer to enhance the turnover alleged to have been escaped from assessment in notice dated 30.12.2006 under Annexure-3. What is taxed in the impugned reassessment order was exactly the same transaction shown in the letter dated 30.12.2006 (Annexure-3) communicated to the petitioner much before passing the impugned order of reassessment. Therefore, it cannot be said that the petitioner was not aware of the materials on the basis of which the reassessment proceeding has been made. It also cannot be said that any prejudice has been caused to the petitioner for referring to information furnished by Paradeep Port Trust or IOCL in the reassessment proceedings. Therefore, it cannot be said that the assessment has been 21 completed without affording opportunity of hearing to the petitioner and without confronting the adverse material to the petitioner.
26. Moreover, in the reassessment order the informations received from Paradeep Port Trust and IOCL have been extracted. Though in the impugned reassessment order the information received from IOCL and Paradeep Port Trust have been referred to in course of hearing of the writ petition, nothing was brought to our notice as to how prejudice has been caused to the petitioner. Merely by saying that non-supply of copy of the information supplied by IOCL and Paradeep Port Trust is in violation of the principles of natural justice is not enough. Duty is cast on the assessee to show as to how prejudice has been caused to it on account of informations received from Paradeep Port Trust and IOCL which have been referred in the reassessment order. As discussed above, no prejudice is caused to the petitioner on account of referring the reports of Paradeep Port Trust and IOCL in reassessment order.
27. Question No.(iii) is as to whether the Assessing Officer has passed the impugned assessment order on the dictate of his higher authority, i.e., the Assistant Commissioner of Commercial Taxes without applying his own mind and came to the conclusion that the transactions in question are inter-state sale in nature and therefore, it is vitiated in law. Mr.Mohanty, submitted that the reassessment proceedings initiated are illegal as the same has been initiated at the behest of the higher authority i.e. the Additional Commissioner of Commercial Taxes. In support 22 of his contention, he has relied upon the judgment of this Court in the case of Indure Limited vs. Commissioner of Sales Tax, Orissa & Others., (2006) 148 STC 6.and also the judgment of the Hon’ble Supreme Court in the case of State of U.P. vs. Maharaja Dharmandar Prasad Singh, AIR 198.SC 997.
28. In Indure Limited (supra), this Court has held that audit objection may be a relevant consideration but the Sales Tax Officer has to form his objective opinion taking that objection into consideration. But the Sales Tax Officer has totally abdicated or surrendered his discretion to the objection of the audit party by mechanically reopening the assessment. Therefore, this Court in the said case has held that the exercise of power under Rule 12(8) of the CST (O) Rules has been vitiated and accordingly quashed the impugned notice of reassessment.
29. In Maharaja Dharmandar Prasad Singh’ case (supra), the Hon’ble Supreme Court held that when the State Government alleged to have directed the Authority to initiate the proceedings to cancel the permission for construction given in respect of lease land on the ground that the lessee had violated the terms of the lease. However, since no casual connection was shown between the Government’s directives and the proceedings initiated for cancellation of the permission, it could not be said that the cancellation of permission was vitiated by a surrender of discretion on the part of the ViceChairman”
30. In the present case, order sheet dated 30.12.2006 (Annexure-6) reveals as under:“Instant case, the dealer has already been assessed u/r.12(4) of the CST (O) Rules for the period 2001-02 on 31.03.2005. Subsequently on receipt of a report from the Addl. Commissioner of Commercial Taxes (CZ), Cuttack, which is communicated by the Asst. Commissioner of Commercial Taxes, Cuttack 1 Range, Cuttack vide R.O. Letter No.12867/CT, dated 29.12.2006 it is revealed that there is some inter-state transaction effected by the dealerCompany during the period 2001-02. But on verification of assessment record it is found that the same transactions have not been disclosed by the dealer-Company at the time of assessment made u/r.12(4) of the CST (O) Rules. Thus, there is a reason to believe that the dealer-Company has been underassessed due to escapement of turnover for the period 2001-02. Hence, the case is reopened u/r.12(8) of the CST (O) Rules for re-assessment. Accordingly, notice u/r.10 of the CST (O) Rules is issued to the dealer-Company along with a letter disclosing the facts for reopening the case, fixing the date to 07.02.2007.”
31. Thus, from the above order dated 30.12.2006, it is ample clear that the Assessing Officer applying his mind and being satisfied that the alleged turnover had escaped from assessment, initiated reassessment proceeding. Further perusal of the assessment order passed under Rule 12(8) of the CST (O) Rules also reveals that on receiving report from the Additional Commissioner, the Assessing Officer applied his mind, examined the case of the assessee with reference to the copy of the hospitality arrangement between BPCL and HPCL and the statement of inter-state sale of petroleum products dispatched by HPCL from Lighterage Terminal at Paradeep to other oil companies outside the State filed by the petitioner, documents and previous order of assessment and referring to all the relevant 24 provisions of the CST Act came to the conclusion that there has been evasion of tax by the petitioner-assessee. The delivery of 38881 KL of HSD and 29728 KL of SKO by BPCL from Lighterage Terminal of Paradeep to outside State oil companies, i.e., IOC/IBP/HPC are clearly inter-state sales falling under Section 3 (a) of the CST Act and the same have not been reflected in the return filed for the respective return periods and have been kept away from the knowledge of the statutory assessing authorities. The returns don’t reflect the true and correct picture of the business transactions although it has been so declared in the returns itself. The declarations furnished don’t also appear to have been truthfully made.
32. From the order dated 30.12.2006 and observations of the Assessing Officer in the impugned order, it is clear that the learned Assessing Officer has not mechanically reopened the completed assessment and abdicated and surrendered to the report of the Additional Commissioner. Hence, the decision of this Court in the case of Indure Limited (supra) has no application to the present case and the decision of the Hon’ble Supreme Court in the case of Maharaja Dharmandar Prasad Singh (supra) on the other hand supports the case of the Assessing Officer.
33. In view of the above, we are of the considered opinion that on receipt of report of the Additional Commissioner of Commercial Taxes, the learned Assessing Officer applied his mind and initiated the reassessment proceedings and after examining the documents, returns etc. filed by the petitioner has passed the impugned reassessment order”
34. Question No.(iv) is whether notice for reassessment proceeding under Rule 12(8) of the CST(O) Rules has been issued on 29.12.2006 whereas initiation of the reassessment proceeding was made on 30.12.2006 and therefore the entire reassessment proceedings are vitiated in law?. This allegation is not sustainable since the certified copy of the order sheet filed by the petitioner attached to the writ petition as Annexure-6 does not reveal that any order to issue notice under Section 10 has been passed on 29.12.2006. On the other hand, the ordersheet dated 30.12.2006 reveals that the case is reopened under Rule 12(8) of the CST (O) Rules for reassessment on that date. Accordingly, notice under Rule 10 of the CST (O) Rules is issued to the dealer-Company along with letter disclosing the reasons for reopening the case fixing the date to 07.02.2007. The notice under Rule 10 of the CST(O) Rules (Annexure-2) was also issued on 30.12.2006. However, in the left side bottom portion of the said notice, the date put on has been shown to be 29.12.2006. From the said notice, it further reveals that no date is put under signature of the STO, Cuttack-I circle, Cuttack. In view of the ordersheet entry dated 30.12.2006 and that notice under Rule 10 of CST(O) Rule has been issued on 30.12.2006, it can be safely concluded that the date 29.12.2006 appearing on the left side bottom portion of the notice (Anneuxre-2) is a mistake occurred inadvertently. Therefore, the allegation that opposite party issued notice prior to initiation of proceedings under Rule 12(8) and the entire reassessment proceedings are vitiated, is not sustainable in law”
35. Question No.(v) is as to whether the issue involved in the present case are similar/identical to that of the case of Indian Oil Corporation Limited vs. State of Orissa and Others, [2008[ 15 VST 49.(Orissa). Mr. Mohanty submitted that the issues involved in the present case are similar /identical to that of the case of Indian Oil Corporation’s case (supra) and in that case the Hon’ble Supreme Court remanded the matter to the Assessing Officer to redo the assessment. Therefore, it was submitted to set aside the impugned reassessment order and direct the assessing officer to redo the assessment. Mr. Raman vehemently argued that in the case of Indian Oil Corporation Limited (supra), the Hon’ble Supreme Court remanded the matter to the Assessing Officer with a direction to consider the effect of Form-F declarations submitted by the appellant-Corporation and also to decide the question of jurisdiction on the ground of change of opinion. So far as the present case is concerned, the petitioner has neither disclosed the transactions in question in its return much less furnished any declaration in Form-F to prove that the transfer of goods from Lighterage Terminal at Paradeep to outside the State, i.e., Haldia was otherwise than by way of sale. The completed assessment has also not been reopened by change of opinion. Therefore, the issue involved in present case is not identical / similar to that of the case of Indian Oil Corporation referred to supra and therefore there is no need to remand the case to the Assessing Officer to redo the assessment. We find substantial force in the contention of Mr. Raman. Moreover, we have 27 already held that in the instant case the completed assessment has not been reopened by mere change of opinion.
36. Question No.(vi) is as to whether dispatch of 38,881 KL of HSD and 29,728 KL of SKO during the year 2001-2002 has been effected by the petitioner Company from the Lighterage Terminal at Paradeep to outside State of Odisha either by way of inter-state sale or branch transfer or that the alleged dispatch of goods in question has not been effected by the petitioner either by way of inter-state sale or stock transfer?. To deal with this question, it is necessary to refer to Section 6A of CST Act. Under Section 6A where any dealer claims that he is not liable to pay sales tax under the CST Act in respect of any goods on the ground that the movement of such goods from one State to another was occasioned by reasons of transfer of goods by him to any other place otherwise than by way of sale, the burden of proving that fact shall be on the dealer. Sub-section (1) of Section 6A provides that for the purpose of discharging such burden the dealer may produce a declaration in the prescribed form duly filled in and signed by the consignee or recipient of the goods in other State and the evidence of dispatch of goods. Thus, when there are only stock transfers but not actual sale the benefit of Section 6-A is attracted. The declaration referred to Section 6-A(1) shall be in Form-F as provided in Rule 12 of the CST (R & T) Rules, 1957. Subsection (2) of Section 6 of the CST Act provides that if the assessing authority is satisfied after making such inquiry that the particulars contained in the declaration furnished by a dealer under sub-section (1) are correct and genuine 28 then he may make an order to that effect and there upon the movement of goods shall be deemed for the purpose of C.S.T. Act to have been occasioned otherwise than as a result of sale. Law is well-settled that during the relevant time the dealer was also competent to produce other evidence before the Taxing Authority to prove that he is not liable to be taxed, because there is nothing in Section 6A or in Rule-12 to suggest that Form “F”. is the only mode for discharging the burden that lies on the dealer. Section 6-A is an enabling provision and furnishing of declaration Form “F”. cannot be held to be mandatory.
37. Petitioner’s case is that dispatch of 38,881 KL of HSD and 29,728 KL of SKO from the Lighterage Terminal of Paradeep to outside the State, i.e., Haldia has not been effected by it either by way of inter-state sale or on stock transfer basis. It has not moved its own product outside the State of Odisha in tankers not has sold any product by way of inter-state transaction to other Oil Companies. In view of the safe keeping arrangement, the alleged transaction does not fall within the ambit and/or sphere of Section 3(a) of the CST Act. In the reassessment proceeding the petitioner filed one Memorandum of Understanding (MOU) with other Oil Companies for safe keeping of their petroleum products and contended that on the basis of such MOU stock of HSD and SKO kept with the petitioner-Company were transferred to outside State on their request. The goods in question had never moved from Paradeep to Haldia pursuant to any contract of sale and no sale was concluded at any point of time at Haldia. There was no movement of goods 29 resulting completed sale, system and procedure adopted by BPCL and other Companies cannot be treated as inter-state sale in the process of trade and commerce. The movement of goods from Paradeep to Haldia cannot be linked to any supply or sale of goods and the said finding of the opposite party is based on surmise and presumption.
38. The above claim of the petitioner with regard to transfer of the goods in question from Lighterage Terminal at Paradeep to Haldia has not been accepted by the Assessing Officer and he came to the conclusion that the said transactions are by way of interstate sale, inter alia recording the following findings in the impugned reassessment order. “It needs further mention that the goods of BPCL which are not intended to be supplied to any other oil company are taken delivery of by BPCL at the port of destination. Where, it is intended for supply to other oil company, it is delivered accordingly. Consignment in one tanker is taken delivery of by BPCL in part and the balance by other oil company. This shows that the cargo owned by BPCL and despatched from Paradeep terminal were all not intended for delivery to BPCL outside the state. The cargo, to the extent, it has been received by BPCL, can only be transfer of stock to self outside the State of Orissa other wise than by way of sale and not the entire consignment of cargo shipped from Paradeep. In view of the position so stated, despatches of goods outside the State of Orissa by sea through Paradeep terminal by BPCL, claimed ambiguously as safe keeping of the product of HPCL in BPCL storage tanks and loading of the said product on behalf of HPCL in the tanker, based on advice from HPCL, is contrary to material evidence and substantial part of the said transactions is inter state sale liable to tax in the hands of BPCL in the State of Orissa. In the situation, the conclusion appears to be irresistible that there has been evasion of tax by a corporate oil giant in the public sector. The delivery of 38,881 KL of HSD an”
29. 728 KL of SKO by BPCL ex-tanker at the Part of destination at Haldia to other oil companies i.e. IOC/IBP/ HPC, though are clearly inter state sales falling under section 3(a) of the CST Act, have not been reflected in the return filed for the respective return period and have been kept away from the knowledge of the statutory authorities. The returns don’t reflect the true and correct picture of the business transactions although it has been so declared in the returns itself. The declarations furnished don’t appear to have been truthfully made.”
39. Thus, the Assessing Officer has already recorded its finding on the facts and materials available on record. He has taken a view on the basis of various factual aspects involved in the transactions and come to the conclusion that the transactions in question are inter-state sales effected by the petitioner. Therefore, there is no reason to remand the matter to him to examine this issue once again. The petitioner may avail the alternative remedy of appeal which is a substantive statutory right. Under the CST Act read with OST Act and Rules framed thereunder, there is provision for First Appeal and Second Appeal. The First Appellate Authority being the fact finding Authority the factual controversy involved in the case can be effectually adjudicated by the said Appellate Authority. Needless to say that appeal is continuation of assessment and appellate authority is empowered to re-appreciate the facts and material evidence available on record. Therefore, it is a fit case where the petitioner should approach the First Appellate Authority for appropriate relief.
40. In the fact situation, it is open to the petitioner to approach the First Appellate Authority challenging the impugned assessment order (Annexure-5), if so advised, taking all its contentions with regard to alleged 31 transfers of HSD and SKO in question from the Lighterage Terminal at Paradeep to outside the State, i.e., Haldia and that the petitioner is not liable to pay tax under the CST Act. If any such appeal is filed within two weeks from today, the Appellate Authority is directed to adjudicate that issue, after affording opportunity of hearing to the petitioner, and pass order in accordance with law.
41. With the aforesaid observations and directions, the writ petition is dismissed. ………………………….. B.N. Mahapatra,J.V.Gopala Gowda, CJ I agree. …………………………… Chief Justice Orissa High Court Date 16th March,, 2012/ssd/ss/skj