If Self-Assessment for Tax periods prior to 1st October 2015 not accepted by Department, then Such Assessment can’t be sought to be re-opened: Orissa HC [Read Order]

The Orissa High Court held that if self-assessment for tax periods prior to 1st October, 2015 not accepted by the Department, then such assessment cannot be sought to be re-opened.

The Petitioner, M/s. Keshab Automobiles is a registered dealer carrying on business in automobiles parts of all types of vehicles and lubricants both on wholesale as well as retail basis.

The original return filed by the Petitioner for the aforementioned period was not acknowledged by the Department. Basing on a fraud case report received from the STO, Investigating Unit, Jajpur Road, the assessment for the above period was sought to be reopened under Section 43 of the OVAT Act. By an order dated 19th December, 2012 the STO made a reassessment and raised a demand of Rs. 3,92,434/- towards tax and Rs.2,61,622.50 towards penalty under Section 43(2) of the OVAT Act. The JCST and the Tribunal also affirmed the aforementioned order. It is significant that before the Tribunal none appeared for the Assessee/Appellant.

Mr. Sunil Mishra, learned Additional Standing Counsel for the Opposite Party (Department) submitted that the first level change was brought about in the OVAT Act in 2010 when all the returns had to be filed only online. Therefore, the actual “acceptance” of the return in physical mode was no longer possible. If the return was defective, notice would be issued to the Assessee to rectify the defects. Otherwise, the returns filed under Section 39 of the Act by way of „self assessment‟ was „deemed‟ to be accepted. He placed reliance on certain portions of the „White Paper on State Level Value Added Tax‟ brought out by the Empowered Committee of the State Finance Commissions on 17th January, 2005.

The division bench of Chief Justice S. Muralidhar and Justice B.P. Routray held that a comparison of the language used in the amended Section 43 (1) of the OVAT Act with its version prior to 1st October, 2015 makes it clear that a new system has been put in place as far as reopening of returns filed as “self-assessment” is concerned. Now such reopening is permitted even if there was no formal acceptance of the return originally filed. The concept of a “deemed” acceptance of the return has been introduced for the first time since 1st October, 2015. This is not a mere procedural change. Further, the amending statute itself makes it clear that the amendments are with effect from 1st October, 2015 and not with retrospective effect from an earlier date. Therefore, the Court is precluded from presuming that the amendment to Sections 39 (2) and 43 (1) of the OVAT Act and correspondingly to Rule 50 of the OVAT Rules are either merely clarificatory or retrospective.F

“If the self-assessment under Section 39 of the OVAT Act for tax periods prior to 1st October, 2015 are not „accepted‟ either by a formal communication or an acknowledgment by the Department, then such assessment cannot be sought to be re-opened under Section 43 (1) of the OVAT Act and further subject to the fulfillment of other requirements of that provision as it stood prior to 1st October, 2015,” the court said, while holding that reopening of the assessment sought to be made in the present case under Section 43 (1) of the OVAT Act is held to be bad in law.

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