M/S. B.D. Patnaik, Keonjhar vs. Addl. Commnr. Of Sales Tax, Cuttack

Held

The Court held that the reassessment order dated March 21, 2016, passed by the Assessing Authority under Section 43 of the OVAT Act, 2004, is not sustainable in law. This is because the order was initiated and passed without communicating a prior order under Section 39 of the OVAT Act, 2004, to the petitioner. The Court found this to be a violation of a mandatory procedural requirement. The Court relied on its own previous decision in Keshab Automobiles v. State of Odisha, which was subsequently upheld by the Apex Court in Deputy Commissioner of Sales Tax v. Rathi Steel and Power Ltd. The reasoning was that non-compliance with Section 39 renders the subsequent reassessment order invalid. Consequently, the Court set aside both the order passed by the first appellate authority and the original reassessment order. The writ petition was disposed of with these directions.

Facts

The petitioner, M/s. B.D. Patnaik, challenged a reassessment order dated March 21, 2016, passed by the Deputy Commissioner of Sales Tax, Barbil Circle, under Section 43 of the Odisha Value Added Tax (OVAT) Act, 2004, for the tax periods from April 1, 2007, to August 31, 2009. The petitioner argued that this order was passed without communicating a prior order under Section 39 of the OVAT Act. The first appellate authority, the Additional Commissioner of Sales Tax (Appeal), allegedly failed to consider this procedural lapse and relevant judgments. The Department, through its Standing Counsel, conceded that the order under Section 39 was not communicated to the petitioner.

Key Issues

1. Whether the reassessment order dated March 21, 2016, passed under Section 43 of the OVAT Act, 2004, is sustainable in law when a mandatory order under Section 39 of the OVAT Act, 2004, was not communicated to the petitioner? Petitioner's Contention: The petitioner argued that the reassessment order is invalid because it was passed without complying with the mandatory requirement of communicating an order under Section 39 of the OVAT Act, 2004. They relied on the High Court's judgment in Keshab Automobiles v. State of Odisha, which was confirmed by the Apex Court in Deputy Commissioner of Sales Tax v. Rathi Steel and Power Ltd. The petitioner contended that the first appellate authority erred by not quashing the reassessment order on this ground. Revenue's Contention: The Standing Counsel for the CT & GST Organization conceded that the Department had not communicated the order under Section 39 of the OVAT Act, 2004, to the petitioner.