Assessment Cannot be Reopened merely on the basis of Audit Objection: Orissa High Court

sales tax, tax, assessment, basis

The Orissa High Court ruled that assessment can not be reopened merely on the basis of audit objection.


The Audit Assessment under Rule 12(3) of the CST(O) Rules had been concluded by Order by the Sales Tax Officer, for the tax periods from 01.07.2007 to 31.03.2010, wherein the claim of exemption of penultimate sale in course of export under Section 5(3) of the CST Act was allowed on appreciation of Certificate of Export in Form H required to be furnished under Rule 12(10) of the Central Sales Tax (Registration and Turnover) Rules, 1957 to the extent of Rs.12,23,71,036/- as against disclosed total turnover of Rs.12,64,00,682/- representing such sales.


Advocate Pranaya Kishore Harichandan, appearing for the petitioner, contended that the assessment order thus passed under Rule 12(4) of the CST(O) Rules is untenable in the eye of law as the statute is silent about conferment of power of “review”.

It is further contended that while passing Audit Assessment Order the Assessing Authority having verified the books of account and found no discrepancy and accepted the return figures, he ought not to have initiated proceeding under Rule 12(4) of the CST(O) Rules on the self-same material fact. 

Susanta Kumar Pradhan, Additional Standing Counsel (CT & GST) made a valiant attempt to justify the action of Assessing Authority in proceeding with the reassessment and raising demand by rejecting the turnover relating to sales in course of export which was allowed by the Sales Tax Officer in the Audit Assessment. 


The division bench of the Chief Justice S. Muralidhar and Justice M. S. Raman said that though more than 6 years have elapsed in the meantime neither record is produced nor does the CT&GST Organisation opposite parties file counter-affidavit in the matter. Therefore, it is inclined to proceed with the matter on its merit on the basis of material as available on record.

The court concluded that the initiation of proceeding for reassessment was not in consonance with the statutory requirement. This view is further fortified by proposition as propounded by the Supreme Court of India in the case of Commissioner of Income Tax v/s Chhabil Dass Agarwal, in the context of exercise of writ jurisdiction under Article 226 of the Constitution of India when alternative statutory remedy is available.

It was observed by the court that the Supreme Court has recognized some exceptions to the rule of alternative remedy, viz., where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice.

The court set aside the Assessment Order passed under Rule 12(4) of the Central Sales Tax (Odisha) Rules, 1957, by the Sales Tax Officer pertaining to tax periods from 01.07.2007 to 31.03.2010.

Case title: Birsa Minerex v/s Sales Tax Officer  

Citation: W.P. (C) No.21222 of 2015

Date: 17.11.2022

Click here to read the Order/Judgment 

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