In a recent case, the Orissa High Court has held that the department cannot initiate the proceeding consequent to delayed audit report under section 41(4) of Orissa Value Added Tax Act, 2004.
The petitioner, Aman Enterprises has filed for revision. It be admitted on substantial questions of law arising out of impugned order of the Tribunal. It is order dated 6th December, 2021 in SA nos.83(V), 131(V) and 362(V) of 2013-14.
It was argued that the mandatory nature of the time limits set out in Section 41(4) of the OVAT Act that the report must be submitted within seven days of the conclusion of the audit visit has been emphasized by this Court in its order, in the context of an identical provision i.e. Section 9-B (2) of the Orissa Entry Tax Act, 1999 (OET Act), in an order dated 28th June, 2022 in W.P.(C) No.9856 of 2010 (M/s. Grihasthi Udyog v. Commissioner of Sales Tax).
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With the said time limit not having been adhered to as far as the present case is concerned, the Court has no hesitation in concluding that all proceedings consequent to the said AVR including the impugned assessment order are unsustainable in law. The impugned assessment order and all proceedings and orders consequent thereto are accordingly set aside.”
Mr. Mishra, advocate, Standing Counsel appears on behalf of revenue and submitted there has been, inter alia, Special Leave Petition (Civil) diary no.29294 of 2018 that came up for hearing before the Supreme Court and order dated 6th November, 2024 was made.
Section 41 of the Orissa Value Added Tax Act, 2004 relates to the identification of the taxpayers for the tax audits. Section 41(4) states that after completion of tax audit of any dealer under sub-section (3), the officer authorised to conduct such audit shall, within seven days from the date of completion of the audit, submit the audit report, to be called “audit visit report”, to the assessing authority in the prescribed form alongwith the statements recorded and documents obtained evidencing suppression of purchases or sales, or both, erroneous claims of deductions including input tax credit and evasion of tax, if any, relevant for the purpose of investigation, assessment or such other purposes.
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The bench relied on the decision of M/s. Bateman Engineering (India) Private Limited v. Commissioner of Sales Tax, Orissa and others in which it was held that the mandatory nature of the time limits set out in Section 41(4) of the OVAT Act that the report must be submitted within seven days of the conclusion of the audit visit.
A division bench of Justice Arindam Sinha and Justice Sanjay Kumar Mishra held that with the time limit not having been adhered to as far as the present case is concerned, the Court has no hesitation in concluding that all proceedings consequent including the assessment order are unsustainable in law. The court set aside the assessment order and all proceedings.
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