HIGH COURT OF ORISSA : CUTTACK W.P.(C) No.16426 of 2014 In the matter of an application under Articles 226 and 227 of the Constitution of India. -------M/s. ABB India Limited, represented through its Chief Financial Officer, Sri Amlan Datta Majumdar, Sachivalaya Marg, Unit-IX, Bhubaneswar, Odisha … Petitioner … Opp. Parties -VersusState of Odisha and others For Petitioner : Mr. B.K.Mohanty, Sr. Advocate Mr. Satyajit Mohanty For Opp. Parties : Mr. R.P.Kar, Standing Counsel (O.Ps.-Sales Tax Dept.) ---------- P R E S E N T: THE HONOURABLE SHRI JUSTICE I.MAHANTY AND THE HONOURABLE SHRI JUSTICE B.N.MAHAPATRA Date of Judgment : 26.09.2014 B.N. Mahapatra, J.In the present writ petition, challenge has been made to the legality and validity of the Audit Visit Report dated 03.02.2014 (Annexure-2) issued by the Sales Tax Officer, Bhubaneswar-I Circle, Bhubaneswar and the order of assessment dated 01.08.2014 (Annexure6 series) passed by the Deputy Commissioner of Sales Tax, 2 Bhubaneswar-II Circle, Bhubaneswar-opposite party No.3 under Section 42(4) of the Orissa Value Added Tax Act, 2004 (for short, “the OVAT Act”.) for the period from 01.04.2011 to 31.03.2013 on the basis of such audit visit report.
2. Though several grounds have been taken in the writ petition, Mr. B.K. Mohanty, learned Senior Advocate appearing for the petitioner has confined his argument to one of the grounds of challenge for quashing the impugned order of assessment. According to Mr. Mohanty, the Sales Tax Officer, Bhubaneswar-I Circle, Bhubaneswar while preparing the Audit Visit Report has relied upon letter No.747 dated 21.01.2014 of the DCCT, Bhubaneswar-II Circle, Bhubaneswar and the materials contained therein regarding business transaction of the petitioner-company and thus abdicated his jurisdiction to the direction of the superior officer. The Audit Visit Report is nothing but outcome of influence and bias on the part of the Assessing Officer, on whose instigation, the Audit Visit Report has been prepared. The Deputy Commissioner of Sales Tax-opposite party No.3 being the purported author of the Audit Visit Report could No.have utilized the said report to assess the petitioner-company under Section 42 of the OVAT Act. Mr. Mohanty further submitted that a person canNo.be a judge of his own cause. Hence, the impugned order of assessment dated 01.08.2014 passed by the Deputy Commisioner of Sales Tax-opposite party No.3 on the basis of the Audit Visit Report, which again relied on the letter dated 3 21.01.2014 of the DCCT, Bhubaneswar-II Circle, Bhubaneswar is illegal, arbitrary, perverse, vitiated and violative of principles of natural justice and is liable to be quashed. In support of his contention, he relied upon the judgment of this Court in the case of Tata Sponge Iron Ltd. vs. Commissioner of Sales Tax, Orissa and others, (2012) 49 VST 33 (Orissa).
3. Mr. R.P. Kar, learned Standing Counsel appearing for the Revenue supporting the impugned order of assessment submitted that the impugned order of assessment suffers from no infirmity and illegality.
4. On rival contentions of the parties, the sole question that arises for consideration by this Court is whether opposite party No.3Deputy Commissioner of Sales Tax, Bhubaneswar-II Circle, Bhubaneswar having issued letter No.747 dated 21.01.2014 relying upon which the Audit Visit Report was prepared is competent to assess the petitioner-company under Section 42 of the OVAT Act.
5. To adjudicate the issue, it is relevant to refer to the Audit Visit Report dated 03.02.2014 (Annexure-2) submitted under sub-rule (3) of Rule 45 in Form VAT 303 and the order of assessment dated 01.08.2014 (Annexure-6) passed on the basis of the Audit Visit Report to find out whether the Audit Visit Report has been prepared on the basis of the letter dated Bhubaneswar and 21.01.2014 the of DCCT, Bhubaneswar-II Circle, self-same DCCT, Bhubaneswar-II Circle, Bhubaneswar has passed the order of assessment dated 01.08.2014 (Annexure-6). 4 6. Relevant portion of the Audit Visit Report (Annexure-2) is extracted hereunder: “But examination of books of accounts furnished by the dealer company and the letter received from the DCCT, Bhubaneswar-II Circle, Bhubaneswar bearing letter No.747 dated 21.01.2014 regarding the business transaction of the dealer the following information has been gathered regarding the sale in transit of the dealer for the period covered under audit: 1. The instant dealer enters into a prior agreement before the goods occasions interstate movement.
2. The perspective buyer offers the product specification of the goods to be purchased and accordingly goods are purchased from outside the State.
3. Interstate Purchase bill has been issued in the name of ultimate buyer in each and every case reflecting name of instant dealer (i.e. consigneename of the ultimate buyer of Odisha and invoiced to M/s. ABB India Ltd.) 4. LR copy has been issued in the name of consignee (ultimate buyer) and consigNo.(the outside state seller) reflecting interstate purchase bill no and date of bill, bill value, consignment details, etc. meaning thereby the goods have been dispatched directly to the ultimate buyer from the point of its original interstate purchase. In course of audit verification a confidential letter along with some documents related to business transaction (transit sale) of the instant dealer was received from the DCCT, BBSR-II Circle, Bhubaneswar which was transmitted by the STO, Unified Check Gate, Gobindpur Jharsuguda. On careful examination of said letter and materials contained therein it is revealed that one LR consignment No.7083855/dt, 27.12.2011 (Enclosed 5 in Annexure-2) obtained by the STO, Gobindpur Check Gate, Jharsuguda reveals the name of the consigNo.to be M/s. Raychem RPG Pvt. Ltd., Telegaon Road, Chakan, Pune and the name of the consignee is M/s IND Barath Energy (Utkal) Ltd., Jharsuguda, Odisha. The said document reveals that as on the date and time of interception of the consignment of three No.of transformers carried from Pune to Jharsuguda at Unified Check Gate, Gobindpur, Jharsuguda there was no endorsement of transfer of document of title to the goods by M/s ABB Ltd. to M/s Ind Barath Energy (Utkal) Ltd. But the waybill used to bring the consignment into the State of Odisha has been supplied by M/s. Ind Barath Energy (Utkal) Ltd. means the goods have been handed over to ultimate buyer without transfer of document of title to the goods by M/s. ABB India Ltd. Moreover analysis of the aforementioned LR and other documents like the invoice issued by the outside state party, i.e. M/s. Raychem RPG Pvt. Ltd. attached in the report reveals that bill no.4201100380/27.12.2011 has been invoiced to M/s ABB Ltd. where the ultimate consigNo.is M/s Ind Barath Energy (Ltd.) against WB No.BBB-0041163. Further, the documents enclosed with the report which potentially carries the statement of the Manager, Accounts & Finance, M/s Ind Barath Energy (Utkal) Ltd. states that there is no documents mentioning any kind of endorsement anywhere and this is a regular recurring phenomeNo.for effecting such transaction. (underlined for emphasis) 7. A perusal of the assessment order dated 01.08.2014 under Annexure-6 reveals that tax audit of the dealer-company for the period 01.04.2011 to 31.03.2013 was conducted by the audit team headed by the Sales Tax Officer, Bhubaneswar-I Circle, Bhubaneswar who submitted the audit report in Form VAT-303 under sub-rule (3) of Rule 6 45 of the OVAT Rules, 2005 and the said audit report has been utilized against the petitioner for passing the impugned assessment order. The impugned assessment order further reveals that same has been passed by the Deputy Commissioner of Sales Tax, Bhubaneswar-II Circle, Bhubaneswar as Assessing Authority. A portion of the audit visit report under Annexure-2 quoted above reveals that opposite party No.3-Deputy Commissioner of Sales Tax, Bhubaneswar had issued letter No.747 dated 21.01.2014 relying upon which audit visit report was prepared.
8. In view of the above, we are of the view that the Deputy Commissioner of Sales Tax, Bhubaneswar-II Circle, Bhubaneswaropposite party No.3, who has passed the impugned order of assessment on the basis of the audit visit report is involved in the audit process.
9. The principle of natural justice demands that nobody shall be a judge of his own cause. The Hon’ble Supreme Court in the case of A.K.Kraipak and others Vs. Union of India and others, (1969) 2 SCC 262 held as under: “20 The aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas No.covered by any law validly made. In other words they do No.supplant the law of the land but supplement it. The concept of natural justice has undergone a great deal of change in recent years. In the past it was thought that it included just two rules namely: (1) no one shall be a judge in his own case (Nemo debet esse judex propria causa) and (2) no decision shall be given 7 against a party without affording him a reasonable hearing (audi alteram partem). Very soon thereafter a third rule was envisaged and that is that quasi-judicial enquiries must be held in good faith, without bias and No.arbitrarily or unreasonably. But in the course of years many more subsidiary rules came to be added to the rules of natural justice...”
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10. At this juncture, it is relevant to refer to the judgment of this Court in the case of Tata Sponge Iron Ltd. (supra), wherein it has been held as follows: “Therefore, we are of the view that in order to maintain transparency, any officer who is involved in any manner or has acted with the process of audit and preparation of the audit report in respect of the dealer should No.be the Assessing Officer of that dealer. Otherwise, there will be violation of cardinal principles of natural justice. Our view is fortified by the judgment of this Court in National Trading Co. (supra) wherein this Court held as follows: “……Although many contentions were raised in support of the writ petition, we need No.examine them as the matter can be decided on the following : short point being that the reporting officer himself canNo.be the assessing officer. It is said that justice should No.only be done but should manifestly be seen to be done. Justice can never be seen to be done if a person acts as a Judge in his own cause or is himself interested in its outcome. This principle applies No.only to judicial proceedings but also to quasi-judicial and administrative proceedings. In the case at hand, there is no dispute that the reporting officer himself took up the impugned assessment proceedings and completed the same. This he could No.have done.”
. 8 11. In the facts situation, we set aside the order of assessment dated 01.08.2014 (Annexure-6) passed by the Deputy Commissioner of Sales Tax, Bhubaneswar-II Circle, Bhubaneswar and remand the matter for fresh assessment by the competent authority having jurisdiction over the dealer, who is in no way connected with the tax audit of the petitioner. We make it clear that we have No.expressed any opinion on the merit of the case except on the question of jurisdiction/authority of opposite party No.3, who has passed the impugned order of assessment. The fresh assessment process shall be completed within a period of eight weeks from today after giving opportunity of hearing to the petitionercompany.
12. With the aforesaid observations and directions, this writ petition is disposed of. No costs. ………………………….. B.N. Mahapatra, J.I.Mahanty, J.I agree. ……………………….. I.Mahanty, J.Orissa High Court, Cuttack The 26th September, 2014/bks/skj/ss