Orissa High Court
M/S. Solar Industries India Ltd vs Commissioner Of Commercial ..... ... on 12 December, 2023
Bench: B.R. Sarangi, Murahari Sri Raman
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C) No.3625 of 2017
M/s. Solar Industries India Ltd. ..... Petitioner
Mr. R.P. Kar, Sr. Advocate
along with Mr. A.N. Ray, Advocate
Vs.
Commissioner of Commercial ..... Opposite Parties
Taxes & Ors.
Mr.Sunil Mishra, SC,
CT & GST Organization
CORAM:
ACTING CHIEF JUSTICE DR. B.R. SARANGI
MR. JUSTICE MURAHARI SRI RAMAN
ORDER
12.12.2023 Order No. This matter is taken up through hybrid mode.
06.
2. Heard Mr. R.P. Kar, learned Senior Counsel along with Mr. A.N. Ray, learned counsel appearing for the petitioner and Mr. Sunil Mishra, learned Standing Counsel appearing for the CT & GST Organization.
3. The petitioner has filed this writ petition seeking to quash the Circular No.18034/CT/REV-24/8/2016-Rev-CCT dated 30.11.2016 under Annexure-3 issued by opposite party no.1-The Commissioner of Commercial Taxes, Odisha, Cuttack, pursuant to which the opposite party no.2-The Deputy Commissioner of Sales Tax, Jharsuguda Circle, Jharsuguda vide office order No.7630/CT dated 01.12.2016 under Annexure-4 had withdrawn the assessment order dated 29.09.2016 pertaining to tax periods from 01.04.2013 to 31.03.2016 as passed in exercise of powers under Section 42-A of the Odisha Value Added Tax Act, 2004 (for short "the OVAT Act") under Annexure-2. The Petitioner has further challenged the notices Page 1 of 7 in Form-VAT-301 dated 08.12.2016 prescribed under Rule 44(2) of the Odisha Value Added Tax Rules, 2005 for conducting tax audit in respect of tax periods from 01.04.2013 to 30.09.2015 under Annexure-5 by opposite party no.3-The Sales Tax Officer, Jharsuguda Circle, Jharsuguda, which is issued consequent upon such withdrawal of assessment orders.
4. Mr. R.P. Kar, learned Senior Counsel appearing for the petitioner brings to the notice of this Court that on the approval of the Commissioner of Commercial Tax, Odisha, Cuttack, the assessing authority issued notice in Form VAT-306-A contemplating assessments under Section 42-A of the OVAT Act for the tax periods from 01.04.2013 to 31.03.2016 and consequent thereto assessment order dated 29.09.2016 was passed. While the matter stood thus, the Commissioner issued circular dated 30.11.2016 under Annexure-3, inter alia instructing as follows:-
"III. Whether assessment u/s 42-A of the OVAT Act has been completed and demand raised has already been paid by the dealer; the assessment be dropped forthwith by withdrawing the assessment order and demand notice. On the other hand, audit of these dealers be taken up u/s 41 of the OVAT Act for tax periods upto 30.09.2015. In such cases, the payment already made by the dealer as per the Demand Notice of the assessing officer shall either be adjusted against the liability of the dealer or be refunded to him, depending on the result of audit followed by the audit assessment u/s 41 & u/s 42 of the OVAT Act.
The JCCTs of Territorial Ranges are hereby directed to assign these dealers (mentioned at Para I, II & III above) to different audit teams under regular audit programme of this year u/s 41 of the OVAT Act, covering the tax periods upto 30.09.2015. Audit of such dealers must be completed by 31.03.2017 positively."
He further submitted that the withdrawal of assessment by virtue of Office Order dated 01.12.2016 under Annexure-4 is without jurisdiction and beyond the scope of statutory provisions Page 2 of 7 envisaged under the OVAT Act. It is submitted that the Assessing Officer-Deputy Commissioner of Sales Tax, Jharsuguda Circle, Jharsuguda becomes functus officio after framing assessment by passing final orders of assessment on 29.09.2016. Therefore, the action of withdrawal of assessment orders is illegal and arbitrary.
5. Mr. Sunil Mishra, learned Standing Counsel appearing for the CT & GST Organization disputed such contention raised by learned counsel appearing for the petitioner. He submitted that since the amendment in the OVAT Act was made effective from 01.10.2015, there is no prejudice caused to the petitioner if the assessment order passed under Section 42A of the OVAT Act included therein transactions prior to said date are sought to be assessed by adhering to the procedure available prior to introduction of the Odisha Value Added Tax (Amendment) Act, 2015. Therefore, the assessing authority complying with instruction contained in circular dated 30.11.2016 by withdrawing the assessment order already passed under Section 42A has issued fresh notice under Section 41 of the OVAT Act contemplating tax audit so as to facilitate assessment to be framed under Section 42 of the OVAT Act.
6. In the present case, the assessment proceedings under Section 42-A of the OVAT Act, for the tax periods from 01.04.2013 to 31.03.2016 were carried out in lieu of tax audit. The assessment orders for the tax periods were passed on 29.09.2016 under the OVAT statute vide Annexure-2. It is borne on record that by way of issue of office order dated 01.12.2016, the aforesaid assessment order dated 29.09.2016 under the OVAT Act has been withdrawn by way of a letter/office order vide No.7630/CT dated 01.12.2016, in Page 3 of 7 terms of Circular No.18034/CT/REV-24/8/2016-Rev-CCT, dated 30.11.2016 under Annexure-3 issued by opposite party no.1- Commissioner of Commercial Taxes, Odisha, Cuttack.
7. It may be pertinent to take note of that in the case of M/s. Rajdhani Coir v. Commissioner of Commercial Taxes, Odisha, W.P.(C) No.11288 of 2018, disposed of on 04.12.2018, this Court quashed identical Circular dated 16.11.2016 considering the fact that further initiation of proceeding under Section 42 of the OVAT Act is impermissible once statutory demand for payment of tax and penalty in respect of tax periods from 01.04.2013 to 30.09.2015 has been complied with as per newly inserted sub-section (5) in Section 41 with effect from 01.10.2015. In such view of the matter, the present case of the petitioner deserves consideration.
8. Mr. Sunil Mishra, learned Standing Counsel appearing for the CT & GST Organization referring to paragraphs 6 & 7 of the counter affidavit filed by the Opposite Parties submitted that since the OVAT (Amendment) Act, 2015 came into force with effect from 01.10.2015 "the provisions pertaining to Section 42-A of the OVAT Act, i.e., assessment in lieu of audit have to be applied for the prospective tax periods". Therefore, it is submitted by him that "some field functionaries are found to have applied the said provisions for the prior tax periods, i.e., prior to 01.10.2015" and, therefore, admitted by placing reliance on the observation made by the Opposite Parties in the counter affidavit that "the said proceedings being against the provisions of law are without jurisdiction. Hence, the said proceedings are ab-initio void. Void proceedings have no legal sanctity. Thus, the demands raised in such void legal proceedings are not legally enforceable and also Page 4 of 7 prejudicial to the taxpayers". As the opposite party-Department has conceded that the assessment proceeding initiated under Section 42- A of the OVAT Act as invalid. It is fallacious to withdraw such assessment order passed under Section 42A of the OVAT Act treating the order to be null and void. It is well established fundamental principle that a decree/order/judgment passed by Court or authority without jurisdiction is a nullity and that its validity could be set up whenever and wherever it is sought to be enforced or relied upon. Vide Karan Singh v. Chaman Paswan, AIR 1954 SCC 340; Gopinath Deb v. Budhia Swain, 54 (1982) CLT 515.
However, The department might have proceeded bona fide but the order of assessment passed by the Assessing Officer, on the dictates of the higher authority-Commissioner of Commercial Tax, Odisha being wholly without jurisdiction, was a nullity. The question, therefore, does arise as to whether it is permissible for a party to treat the order as null and void without getting it set aside from the competent court. The issue is no more res integra and stands settled by a catena of decisions of the Hon'ble Supreme Court. For setting aside such an order, even if void, the party has to approach the appropriate forum. (Vide: State of Kerala v. M.K. Kunhikannan Nambiar Manjeri Manikoth, Naduvil (dead), AIR 1996 SC 906; Tayabbhai M. Bagasarwalla v. Hind Rubber Industries Pvt. Ltd., AIR 1997 SC 1240). In Sultan Sadik v. Sanjay Raj Subba, AIR 2004 SC 1377, it has been held that there cannot be any doubt that even if an order is void or voidable, the same requires to be set aside by the competent court. In M. Meenakshi Vrs. Metadin Agarwal (dead) by Lrs., (2006) 7 SCC 470, the Supreme Court considered the issue at length and observed that if the party Page 5 of 7 feels that the order passed by the court or a statutory authority is non-est/void, he should question the validity of the said order before the appropriate forum resorting to the appropriate proceedings. The Court observed as under:
"It is well settled principle of law that even a void order is required to be set aside by a competent Court of law, inasmuch as an order may be void in respect of one person but may be valid in respect of another. A void order is necessarily not non-est. An order cannot be declared to be void in collateral proceedings and that too in the absence of the authorities who were the authors thereof."
Similar view has been reiterated by this Court in Sneh Gupta Vrs. Devi Sarup, (2009) 6 SCC 194.
From the above, it is evident that even if an order of quasi judicial functionary is void ab initio, declaration to that effect has to be obtained by the person aggrieved from the competent court. More so, such a declaration cannot be obtained in collateral proceedings. Present writ petition being filed at the instance of the dealer- assessee, the department cannot be granted relief, if any, prayed for.
9. Considering the rival contentions raised by learned counsel for the parties and after going through the records, this Court is of the considered view that the Petitioner has participated in the assessment proceeding under Section 42-A of the OVAT Act, which is resulted in passing of assessment order dated 29.09.2016 under Annexure-2. After final orders of assessment being passed, the withdrawal of said order by way of issue of office order unilaterally without notice is in violation of principles of natural justice. Such an action of withdrawal of final orders of assessment cannot be countenanced under law as there exists no provision in the OVAT Act. As the Page 6 of 7 statute does not authorize withdrawal of assessment order in the completed assessment proceedings invoking power under Section 42A of the OVAT Act, the Office Order No.7630/CT, dated 01.12.2016 under Annexure-4 issued by Opposite Party No.2 is liable to be quashed and is hereby quashed. Consequently, notices for the audit visit dated 08.12.2016 under Annexure-5 issued by Opposite Party No.3 under the OVAT Act for the tax periods from 01.04.2013 to 30.09.2015 are set aside.
10. Accordingly, the writ petition stands disposed of.
(DR. B.R. SARANGI)
ACTING CHIEF JUSTICE
(M.S. RAMAN)
Laxmikant JUDGE
Signature Not Verified
Digitally Signed
Signed by: LAXMIKANT MOHAPATRA
Designation: SENIOR STENOGRAPHER
Reason: Authentication
Location: HIGH COURT OF ORISSA, CUTTACK
Date: 15-Dec-2023 10:17:10
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