Decided on November 03,1988


Cited Judgements :-



K.P.MOHAPATRA, J. - (1.)IN this writ petition the petitioner, a dealer under the Orissa Sales Tax Act (hereinafter referred to as "the Act"), has challenged the assessment under section 12 (4) for the assessment year 1987-88.
(2.)FACTS stated in the writ petition are that the dealer carrying on business in consumer goods in Bolangir as an agent of different reputed companies submitted returns for the assessment year 1987-88 revealing gross and taxable turnovers. At the time of assessment, a fraud report was taken into consideration and was also brought to the notice of the dealer. The fraud report related to two purchases made by another dealer of Bolangir, named, Manoranjan Dogra, of goods on credit on 18th May, 1987 worth Rs. 1,140 and Rs. 2,011. 20 in two separate transactions on the basis of two receipts. When confronted with these two transactions, one of the partners of the dealer produced two cash memos representing the aforesaid sales. The assessing officer, however, believed the credit receipts and the statement of Manoranjan Dogra to the effect that the purchases were on credit and held that apart from credit sales, the dealer had also effected cash sales on 18th May, 1987, but the credit sales had been suppressed. Accordingly, he disbelieved the accounts and proceeded with the assessment to the best of his judgment by taking into consideration the credit sales suppression to the extent of Rs. 3,151. 20 on 18th May, 1987 and enhanced the returned gross turnover by a sum of Rs. 12,00,000 thereby making a total tax demand of Rs. 83,452. The dealer averred that the assessment was vitiated by arbitrariness and non-application of mind, because the assessing officer was not solely guided by the fraud report in making the best judgment of assessment. He was influenced by a pre-assessment scrutiny report of the Assistant Commissioner of Sales Tax, Bolangir Range, who gave a direction to enhance the gross turnover of the dealer by Rs. 12,00,000 in view of the suppression of the credit sales to Manoranjan Dogra. The assessing officer did not exercise his independent judgment and having accepted the instruction of the Assistant Commissioner blindly made the enhancement resulting in additional tax demand. It is further averred that as he failed to exercise his jurisdiction under influence of the pre-assessment scrutiny report, it is a fit case for interference by this Court under articles 226 and 227 of the Constitution of India.
The opposite parties have filed their counter and have stated that the petitioner should avail of the efficacious remedy of appeal available to it according to the provisions of the Act and the Rules framed thereunder. Having not done so, the writ petition is liable to be dismissed in limine. According to section 3-A of the Act, the Commissioner of Sales Tax is competent to issue instructions and accordingly he gave administrative instructions in the form of circulars for pre-assessment scrutiny of assessment records by the Assistant Commissioners of Sales Tax of the Range in order to guide and advise the assessing officers in the matter of assessments so as to prevent loss of Revenue to the State exchequer on account of escapement of tax. It was clarified in one of such circulars that if an Assistant Commissioner of Sales Tax will make pre-assessment scrutiny of the assessment proceeding, the appeal arising therefore, if any, shall be heard not by him, but by an Additional Commissioner of Sales Tax of the Range. In accordance with the administrative instruction, the Assistant Commissioner of Sales Tax of Bolangir Range made pre-assessment scrutiny of the assessment proceeding of the dealer for the assessment year 1987-88 and in his confidential report gave advice and guidance to the assessing officer which was, however, not binding on him, but was instructive in nature. The assessing officer made the assessment to the best of his judgment without being influenced by such report and exercised the best of his judgment in making addition of Rs. 12,00,000 to the gross turnover. While doing so, the procedures were followed and the dealer was confronted with the fraud report strictly according to the principles of natural justice. Therefore, no illegality of any kind was committed by him. If the dealer is aggrieved by the assessment, he is free to prefer an appeal according to law which shall be disposed of by an Additional Commissioner of Sales Tax of the Range.

(3.)ACCORDING to section 3-A of the Act, the Commissioner of Sales Tax exercises powers and discharges functions contained therein. One of them is to inspect the records and to superintend the work of officers subordinate to him and their offices. The learned counsel appearing for both parties did not dispute the proposition at the time of hearing that in exercise of the above powers and in order to facilitate the discharge of functions, the Commissioner is competent to issue circulars for guidance of the Assistant Commissioners as well as the Sales Tax Officers. In exercise of such powers the Commissioner of Sales Tax issued a confidential circular on 14th May, 1987 for scrutiny of assessment records and orders the relevant part of which occurring in para 2 thereof was that the Assistant Commissioner should provide useful guidance to the officers to pass assessment orders. If the Range Assistant Commissioner has provided the guidance and the order of assessment of the Sales Tax Officer is appealed against, such appeal shall be heard by one of the Additional Commissioners of the Range concerned. This function of the Range Assistant Commissioners is called pre-assessment scrutiny. It is almost at par with the inspection of pending records by the District and Sessions Judges and the Chief Judicial Magistrates so as to give proper guidance to the civil and criminal judicial officers for expeditious disposal of suits and cases in accordance with law. Discharge of the function in accordance with the circular in order to give guidance to the Sales Tax Officers in respect of assessment, in our view, is unexceptionable.

Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.