Bharat Sanchar Nigam LTD., Cuttack vs. Sales Tax Officer, CT And GST Circle, Cuttack I West

2026 :: Date of Order : 02.07.2026 ORDER

The petitioner, Government of India Enterprises functioning under the Department of Telecommunications, Ministry of Communications, was subjected to assessment under Section 12(5) of the OST Act vide Order dated 19th December, 2003 for the assessment year 1997-98, whereby the Assessing Authority had determined the liability on rental charges received treating it to be “consideration” for the transactions attracting scope and ambit of “transfer of right to use goods” in terms of Section 2(g)(iv) of the said Act.

Disputing the demand raised in the said assessment, the order was carried up to the Hon’ble Supreme Court of India. In Civil Appeal No.2048 of 2008 the said Hon’ble Court vide Order dated 25th July, 2013 granted liberty to the Assessing Authority to recompute the liability; consequent upon which the reassessment order dated 3rd November, 2014 was passed. The petitioner assailed the demand raised therein and also similar demands pertaining to other periods before this Court in various writ petitions, viz., W.P.(C) Nos.25037, 25038, 25039, 25040, 25042 and 25043 of 2014, which came to be disposed of on 2nd February, 2022 with the following order:

In pursuance thereto, fresh re-assessment proceeding was undertaken by the Sales Tax Officer, Cuttack-I West Circle, Cuttack pertaining to assessment year 1997-98 and by Order dated 4th June, 2022, the said Authority after examining the fact and taking note of the decision of the Hon’ble Supreme Court of India in the case of Bharat Sanchar Nigam Limited Vrs. Union of India, (2006) 145 STC 91 (SC), observed as follows: “*** After examining the facts of the present case and keeping the decisions in various case laws cited above in view, it is now safely concluded that mere use of telephone handset by the subscriber to avail of the service provided by the dealer company can not be considered as transfer of the right to use the goods. Since the goods in telecommunication are limited to the handsets supplied by the service provider and as there was no transfer of right to use the goods involved by use of telephone handsets by the subscribers, the transaction of providing telephone connection on rental basis lacks any element of ‘sale’ within the meaning of section 2(g)(iv) of the Act. Therefore, rentals/Fixed Monthly charges collected by the dealer company from the subscribers for providing telephone connection is not exigible to tax under the Act. In view of the discussions made in the foregoing paragraphs and since no tax is leviable under the Act on rental/Fixed monthly charges of telephone, the dealer company is assessed to NIL for the year 1997-98 and accordingly, the proceedings initiated under Section 12(5) of the Act for the said period is hereby dropped.”

The Additional Commissioner, CT & GST Territorial Range, Cuttack-I, Cuttack invoking juri iction under Section 23 of the OST Act read with Rule 80 of the OST Rules in connection with NIL demand raised in the remand-reassessment proceeding under Section 12(5) of the OST Act for the year 1997-98, issued notice vide letter No.775/CT., dated 30th May, 2025. The notice was issued inviting reply inter alia on the following grounds: “(G) The present initiation of revision proceeding involved following ground:

The petitioner in obedience to such notice, furnished reply by raising objection as to the juri iction and maintainability of such proceeding.

While the matter stood thus, the Sales Tax Officer, Cuttack-I West Circle, Cuttack issued show-cause notice bearing No.229/CT & GST, dated 3rd February, 2026 (Annexure-4) invoking the provisions of Rule 83 of the OST Rules for rectification of the remand-reassessment Order dated 4th June, 2022 (Annexure-2). The petitioner appearing before the said Authority, filed objection by raising following issues:

Notwithstanding such juri ictional error being pointed out, the petitioner received further notice/intimation vide letter No.1060/CT&GST, dated 7th March, 2026 issued by the Sales Tax Officer, Cuttack-I West Circle, Cuttack. Questioning the authority, juri iction and legal basis for issuing such notice/intimation dated 7th March, 2026 (Annexure-6) by invoking Rule 83 of the OST Rules on specious plea of rectification of the remand-reassessment order, the petitioner has filed this writ petition.

Sri Pranaya Kishore Harichandan, learned Advocate representing the petitioner, submitted that the Additional Commissioner of Sales Tax, CT & GST Territorial Range, Cuttack-I, Cuttack perceiving erroneous assumption of juri iction in instituting the proceeding for revision suo motu under Section 23(4) of the OST Act read with Rule 80 of the OST Rules, issued the following letter vide No.347/CT, dated 5th March, 2026: “Sub:- Withdrawal of Show cause notice for revision under Section 23 read with under Rule 80 of the OST Rules, 1947 of the OST Act in connection with nil demand raised U/s.12(5) of the OST Act for the year 2003-041. With reference to the subject cited above, I am to intimate you that notice to show cause against revision of assessment order for the year 2003-04 has been issued vide Notice No.781/CT, dt.30.05.2025 & intimation No.930/CT, Dated 18.06.2025. As per the provisions of law the time limit for suo-motu revision is within 3 years from the date of passing of original assessment order. As the revision order were required to be passed on or before 03.06.2025 but could not passed. In the meanwhile, the Circle Head of Cuttack I West Circle, Cuttack found to have issued notice for the above-

Drawing attention to notice dated 7th March, 2026 (Annexure-6) issued by the Sales Tax Officer, the learned counsel for the petitioner submitted that after initiation of proceeding for suo motu revision being withdrawn, the Sales Tax Officer in the garb of review sought to rectify the remand-reassessment order on the flimsy plea that such order suffers error apparent on the face of the record. Rather, it is vehemently submitted by the learned counsel that, the assessing authority seeks to substitute the view already expressed vide remand- reassessment order dated 4th June, 2022 (Annexure-2).

It is strongly opposed by Sri Pranaya Kishore Harichandan, learned Advocate that the assessing authority being functus officio2 cannot invoke power under Rule 83 of the OST Rules to substitute his own view. Such a recourse purported to be undertaken by the Sales Tax Officer would tantamount to review of his own order. He further arduously submitted that by merely quoting the objections raised in connection with 2 For discussion on functus officio see, Vedanta Ltd., Jharsuguda, Odisha Vrs. Union of India, 2026 ILR-CUT ONLINE 764. notice dated 3rd February, 2026 (Annexure-4), without determining the question of juri iction raised therein, the Sales Tax Officer, Cuttack-I West Circle, Cuttack could not issue further notice/intimation dated 7th March, 2026 (Annexure-6) particularly after dropping of suo motu revision proceeding under Section 23(4) of the OST Act read with Rule 80 of the OST Rules.

The observations recorded by the Sales Tax Officer stand as follows: “Upon verification of the reply and documents on record, it is found that in the meanwhile, a notice vide no.353/CT dated 05.03.2026 is issued by the Ld. Additional Commissioner of Sales Tax, CT & GST Territorial Range, Cuttack I, for dropping the proceeding initiated by issuance of a notice to show cause against suo-motu revision of assessment order for the year 1997-98 issued vide Notice No.775/CT, dt.30.05.2025 & intimation No.924/CT, dated 18.06.2025. It is pertinent to mention here that, the earlier suo-motu proceeding has already been dropped by revisional authority and there is no other simultaneous ongoing proceeding apart from this rectification of order as initiated and intimated to you by this office letter no.229/CT & GST Dated 03.02.2026. Hence, the current proceeding for rectification of order under Rule 83 of the OST Rules, will sustain as per the statute. As per the above discussion in order to give ample opportunity of being heard, you are hereby issued another notice and you are directed to submit your written reply to this notice along with supporting documents, if any, within 7 days from the date of receipt of this notice, failing which action as deemed fit will be taken as per the provision of law.”

It is urged by the learned counsel for the petitioner that serious error of application of law has been perpetrated in initiating various proceedings by the Department. Reiterating the fact that after remand of the matter by the Hon’ble Supreme Court of India as well as this Court, the Assessing Authority on factual analysis of the matter, raised NIL demand by expressing his view that the subject-transactions effected by the petitioner would not come within the fold of “Transfer of right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration” as envisaged in Section 2(g)(iv) of the OST Act. In the garb of review of remand-reassessment and substitute his view expressed in the order touching the merit, the Assessing Authority is not empowered under law to initiate proceeding under Rule 83 of the OST Rules.

To buttress his argument, he relied on Master Construction Co. (P) Ltd. Vrs. State of Orissa and others, reported in (1966) 3 SCR 99, Sikkim Manipal University Vrs. The Chief Commissioner, Income Tax and another, reported in 2014 SCC OnLine Cal 22651 and Assistant Commercial Taxes Officer Vrs. Makkad Plastic Agencies, (2011) 4 SCC 750. 3. 6. It is vehemently contended that in view of the authoritative exposition of law in G.K.N. Driveshafts (India) Ltd. Vrs. Income Tax Officer, (2003) 259 ITR 19 (SC) = (2003) 1 SCC 72, the Assessing Authority is under obligation to address point of juri iction taken before him at the first instance. Before proceeding further in the matter, he is required to verify his own juri iction in view of B.P. Enterprises Vrs. State of Odisha, (2008) 18 VST 405 = 2008 SCC OnLine Ori 532. Being functus officio after finally terminating the remand-reassessment proceeding and expressing his view the Assessing Authority is not competent to review which power has not been conferred neither under Rule 83 of the OST Rules nor by or under any of other the provisions. In the light of such submissions, he would explain that after the Additional Commissioner of Sales Tax, CT & GST Territorial Range, Cuttack-I having dropped the proceeding for revision suo motu initiated under Section 23(4) of the OST Act and Rule 80 of the OST Rules, the Sales Tax Officer, CT & GST Circle, Cuttack-I West, Cuttack has transgressed his juri iction by proceeding further in the matter of rectification of Order dated 4th June, 2022 by invoking Rule 83 of the OST Rules.

Sri Sunil Mishra, learned Standing Counsel appearing for the CT & GST Organization placing reliance on the judgment rendered by the Hon’ble Supreme Court of India in the case of J. Sri Nisha Vrs. The Special Director, Adjudicating Authority, Directorate of Enforcement and another, reported in 2026 LiveLaw (SC) 320, opposing entertainment of writ petition, submitted that exercise of power under Article 226 of the Constitution of India to interfere at the show-cause notice stage may not be invoked. Since the Assessing Authority has issued notice dated 4th June, 2022 under Rule 83 of the OST Rules realizing error apparent on the face of the record while passing remand-reassessment order dated 4th June, 2022, no infirmity can be imputed in exercising such power conferred under the statute.

He would impress upon this Court that after hearing the petitioner/its representative, the Assessing Authority shall take appropriate decision taking into consideration objection, if any, that may be allowed to be filed by the learned counsel.

Heard Sri Pranaya Kishore Harichandan, learned representing the petitioner and Sri Sunil Mishra, learned Standing Counsel appearing for the CT & GST Organization on 25th June, 2026. After conclusion of hearing on the said date, this matter is directed to be listed on 2nd July, 2026 (today) for orders. Accordingly, this matter being listed, the order is passed in open Court.

Perused the documents annexed with the writ petition. The fact that the Assessing Officer has passed remand- reassessment order dated 4th June, 2022. Indubitably, the Additional Commissioner of Sales Tax, CT & GST Territorial Range, Cuttack-I, Cuttack has dropped the suo motu revision proceeding initiated under Section 23(4) of the OST Act read with Rule 80 of the OST Rules pertaining to the assessment year 1997-98 in connection with the said remand-reassessment order.

It is discernable from perusal of record that the Sales Tax Officer, Cuttack-I West Circle, Cuttack has issued notice dated 3rd February, 2026 seeking to rectify the remand-reassessment order dated 4th June, 2022 in exercise of power conferred under him under Rule 83 of the OST Rules. However, the petitioner having furnished the (preliminary) objection dated 5th March, 2026 before the said Authority, a further notice dated 7th March, 2026 under Rule 83 of OST Rules has been issued affording opportunity of hearing. Having glance at said notice under caption “Rectification of assessment order dated 04.06.2022 passed under the OST Act for the period 1997-98” it is observed that quoting the relevant portion of judgment rendered by the Hon’ble Supreme Court of India in the case of Bharat Sanchar Nigam Limited (supra) and the verbatim objection raised by the petitioner, having not determined any of the questions raised by the petitioner at paragraph-8 of the objection (reflected as paragraph-7 in the impugned notice) (Annexure-6) touching the juri iction and authority, notice to further proceed in the matter was issued. This Court is of the opinion that the juri ictional issue is required to be addressed before proceeding further in the matter on merit.

The Hon’ble Supreme Court of India in G.K.N. Driveshafts (India) Ltd. (supra), held as follows:

It deserves to be noted that in view of B.P. Enterprises Vrs. State of Odisha, (2008) 18 VST 405 = 2008 SCC OnLine Ori 532 it becomes the duty of the authority himself to keep the juri ictional issue in mind. In Sarda Mines Private Limited Vrs. State of Odisha, 2026 SCC OnLine Ori 2303 the following dicta as enunciated and followed religiously since long has been reiterated: “In The Barons of the Exchequer Vrs. Heydon, [1584] EWHC Exch J36, it has been held that a Statute cannot be used for a purpose alien to which it has been made, and where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all and that other methods of performance are necessarily forbidden, vide Taylor Vrs. Taylor, [L.R.] 1 Ch. 426. Even assuming that OP No. 3 has juri iction, the same could not have been exercised in the absence of juri ictional facts, which the subject Rules would take cognizance of. Existence of power is one thing and its exercise is another. Mere existence least justifies the exercise.”

In this respect it would not be inept to say that the petitioner is required to participate in the assessment proceeding and produce materials and documents like books of account, vouchers, invoices, etc. maintained in terms of statutory requirement before the Assessing Authority. However liberty is reserved to the Assessee- petitioner to raise such issues which are available to it under law including the juri iction and authority to invoke Rule 83 of the OST Rules on the facts and in the circumstances of the case. 6. 5. In this regard the observations of this Court in the case of Lakhiram Jain Vrs. Sales Tax Officer, (2009) 21 VST 280 (Ori) = 2008 SCC OnLine Ori 63 = 107 (2009) CLT 107 may be relevant. It has been stated in the said case as follows:

In State of Punjab Vrs. Shiv Enterprises, 2023 LiveLaw (SC) 56 in the context of entertainment of writ petition challenging notice to show cause it has been held that: “Apart from the fact that the aforesaid is factually incorrect, even otherwise, it was premature for the High Court to opine anything on whether there was any evasion of the tax or not. The same was to be considered in an appropriate proceeding for which the notice under Section 130 of the Act was issued. Therefore, we are of the opinion that the High Court has materially erred in entertaining the writ petition against the show cause notice and quashing and setting aside the same. However, at the same time, the order passed by the High Court releasing the goods in question is not to be interfered with as it is reported that the goods have been released by the appropriate authority.” 6. 7. Referring to view expressed by the Hon’ble Supreme Court of India and earlier decisions of this Court, in the case of Mitambini Mishra Vrs. Union of India, 2022 SCC OnLine Ori 4149 the entertainment of the writ petition at the stage of show cause notice was declined.

In Union of India Vrs. Coastal Container Transporters Association, (2019) 20 SCC 446 it has been held that: “On the other hand, we find force in the contention of the learned senior counsel, Sri Radhakrishnan, appearing for the appellants that the High Court has committed error in entertaining the writ petition under Article 226 of Constitution of India at the stage of show cause notices. Though there is no bar as such for entertaining the writ petitions at the stage of show cause notice, but it is settled by number of decisions of this Court, where writ petitions can be entertained at the show cause notice stage. Neither it is a case of lack of juri iction nor any violation of principles of natural justice is alleged so as to entertain the writ petition at the stage of notice. High Court ought not to have entertained the writ petition, more so, when against the final orders appeal lies to this Court. The judgment of this Court in the case of Union of India & Vrs. Guwahati Carbon Ltd., (2012) 11 SCC 651 relied on by the learned senior counsel for the appellants also supports their case. In the aforesaid judgment, arising out of Central Excise Act, 1944, this Court has held that excise law is a complete code in order to seek redress in excise matters and held that entertaining writ petition is not proper where alternative remedy under statute is available. When there is a serious dispute with regard to classification of service, the respondents ought to have responded to the show cause notices by placing material in support of their stand but at the same time, there is no reason to approach the High Court questioning the very show cause notices. Further, as held by the High Court, it cannot be said that even from the contents of show cause notices there are no factual disputes. Further, the judgment of this Court in the case of Malladi Drugs & Pharma Ltd. Vrs. Union of India, (2020) 12 SCC 808, relied on by the learned senior counsel for the appellants also supports their case where this Court has upheld the judgment of the High Court which refused to interfere at show cause notice stage.”

Whether the transactions pertaining to the assessment year 1997-98 do embrace within the connotation of “transfer of right to use any goods...” as per Section 2(g)(iv) of the OST Act is disputed question of fact to be adjudicated upon in course of assessment and/or other fact-finding appellate authorities empowered in this regard under the statute. Yet juri ictional issue as raised by the petitioner whether the Assessing Authority after expressing a view in the remand-reassessment proceeding can change such view at a later date by adhering to provisions of Rule 83 of the OST Rules is required to be considered by the authority himself.

This Court, therefore, does not find reason to examine the issues raised by the petitioner including the issues flagged above. The petitioner has the opportunity to file reply along with documents, if any, and rely on such decisions before the authority concerned. It would have also the opportunity of personal hearing. In such eventuality, the Assessing Authority is required to verify his own juri iction in view of B.P. Enterprises Vrs. State of Odisha, (2008) 18 VST 405 = 2008 SCC OnLine Ori 532. 6. 11. Bearing in mind the ratio of judgments as taken note of in the above paragraphs and with reference to Nagen Caterer Vrs. Central Board of Indirect Taxes and Customs, 2022 (I) ILR-CUT 729, this Court, having considered that writ petition challenging show cause notice, purport of which is to render natural justice, is discretionary remedy, declines to entertain the writ petition at the stage of notice or against the show-cause notice.

In the aforesaid view of the matter, without expressing opinion on the merit of the matter and considering that the facts discussed herein are confined only for the purpose of the present case, the following direction(s) are felt necessary to be issued: (i) The petitioner shall appear before the Sales Tax Officer along with copy of this order on or before 3rd August, 2026 and file further reply/explanation, if it is so advised. (ii) The Assessing Authority shall afford a reasonable opportunity of hearing and take into account all such documents and materials available on record as well as those to be produced by the petitioner in course of hearing. (iii) Liberty is reserved for the petitioner to cite decisions and produce relevant documents/ evidence in connection with the transactions, if necessary and take all such grounds as are available to it including juri iction of the Assessing Authority. (iv) The Assessing Authority is at liberty to pass appropriate order and such order shall be communicated to the petitioner forthwith. (v) It is expected that the Sales Tax Officer, Cuttack-I West Circle, Cuttack shall proceed with the matter in accordance with law.

In the result, the writ petition including pending Interlocutory Application(s), if any, stands disposed of.