M/S.Seetal Automobiles vs. The Commissioner Of Commercial Taxes, Odisha

Facts

The Petitioner, M/s. Seetal Automobiles, challenges an order dated 20th February, 2017, and a demand notice for the tax period 2002-03, passed by the Deputy Commissioner of Sales Tax, Bhubaneswar Circle-II. Initially, an assessment order for 2002-03 was passed on 30th November, 2005, computing surcharge at Rs.19,51,758.13 before setting off entry tax. A reassessment order dated 25th May, 2007, was passed pursuant to a High Court order, directing surcharge computation after setting off entry tax, following the precedent in M/s. Bajaj Auto Limited v. State of Orissa. This reassessment order attained finality as the Department did not challenge it. However, after the Supreme Court's decision in Commissioner of Commercial Taxes v. M/s. Bajaj Auto Ltd. (2017), the impugned order re-computed the surcharge to Rs.17,00,448/- plus interest, totaling Rs.35,64,419/-, and raised a demand under Section 13(6) of the Orissa Sales Tax Act.

Held

The Court held that the impugned order dated 20th February, 2017, and the corresponding demand notice for the period 2002-03 are liable to be quashed. The Court reasoned that in identical circumstances, it had previously quashed similar orders of re-computation of surcharge and corresponding demands in cases where the reassessment orders pertaining to the assessees had attained finality and were not challenged by the Department before the Supreme Court. The Court referred to its order dated 26th August 2021 in W.P.(C) No. 14486 of 2021 (M/s. Neelam Motors v. Deputy Commissioner of Sales Tax, Sambalpur-II Circle) and an order passed on the same day in W.P. (C) No. 3609 of 2017 (M/s. JMG Automobiles v. Sales tax Officer, Cuttack), reiterating this legal position. The Court found the Supreme Court's decision in Commissioner of Commercial Taxes v. M/s. Bajaj Auto Ltd. (2017) inapplicable in this specific context because the factual position in the earlier High Court orders was different, and crucially, the Department had not challenged the finality of the reassessment order for the Petitioner. The operative direction was to quash the impugned order and demand. No issue was expressly left undecided.

Key Issues

1. Whether the impugned order dated 20th February, 2017, and the corresponding demand notice for the period 2002-03, passed by the Deputy Commissioner of Sales Tax, are liable to be quashed, considering that the reassessment order dated 25th May, 2007, had attained finality and was not challenged by the Department before the Supreme Court, despite the subsequent Supreme Court judgment in Commissioner of Commercial Taxes v. M/s. Bajaj Auto Ltd. (2017)? Petitioner's Contention: The Petitioner argued that the impugned order is bad in law as it seeks to re-open a concluded assessment for the period 2002-03, which was reassessed based on a High Court order and attained finality. They relied on the High Court's subsequent decisions in identical circumstances, such as in M/s. Neelam Motors v. Deputy Commissioner of Sales Tax, Sambalpur-II Circle, and M/s. JMG Automobiles v. Sales tax Officer, Cuttack, which quashed similar re-computation orders when the original reassessment was not challenged by the Department before the Supreme Court. Revenue's Contention: The judgment records no specific arguments made by the Revenue or Opposite Parties.