M/S.Promise Foods vs. Sales Tax Officer

Held

The Court held that the non-compliance with the mandatory requirement of Section 41(4) of the Orissa Value Added Tax Act, 2004, renders the assessment order vitiated. This finding is based on the judgment of a larger bench of the same High Court in the case of PAL CONSTRUCTION v. Assessing Authority (W.P. No. 16957 of 2009), delivered on March 31, 2022. The larger bench had answered the issue in the affirmative, confirming that the procedural lapse of not submitting the audit visit report within seven days of the audit's completion invalidates the assessment. Consequently, in the present case, as the audit visit report was not submitted to the Assessing Authority within the prescribed seven-day period from the completion of the audit, the impugned assessment order dated November 9, 2006, and consequential orders were set aside. The ratio decidendi is that a mandatory procedural requirement, if not adhered to, leads to the vitiation of the consequential order.

Facts

The petitioner, M/s. Promise Foods, a partnership firm, challenged an assessment order dated November 9, 2006, and consequential orders passed by the Sales Tax Officer, Audit Unit, Puri. The core of the dispute revolved around the mandatory requirement under Section 41(4) of the Orissa Value Added Tax (OVAT) Act, 2004, which mandates the submission of an audit visit report within seven days of the audit's completion. This specific issue had been referred to a larger bench of the High Court. The petitioner contended that the assessment order was vitiated due to non-compliance with this provision.

Key Issues

1. Whether the non-compliance with the mandatory requirement of Section 41(4) of the Orissa Value Added Tax Act, 2004, which stipulates the submission of an audit visit report within seven days from the completion of the audit, vitiates the assessment order? Petitioner's Contention: The petitioner argued that the assessment order was invalid because the audit visit report was not submitted within the stipulated seven-day period as required by Section 41(4) of the OVAT Act. They relied on the principle that procedural mandates, when declared mandatory, must be strictly followed for the validity of subsequent actions. Revenue's Contention: The judgment does not record any specific arguments made by the revenue or the Opposite Parties (Sales Tax Officer, Audit Unit, Puri & Another) regarding this issue. However, the context implies they likely sought to uphold the assessment order despite the alleged procedural lapse.