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 bench of Justice Arindam Sinha and Justice Sanjay Kumar Mishra 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.
The petitioner/assessee has raised the issue whether the department can undertake audit and does not report on it within time prescribed by section 41(4), can the belated report be relied upon for consequent proceeding taken by it.
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.
The court 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 assessment order and all proceedings and orders consequent are set aside.
Case Details
Case Title: M/s. Aman Enterprises Versus State of Odisha and others
Case No.: STREV No.9 of 2022
Date: 27.11.2024
Counsel For Petitioner: R.P. Kar, Sr. Advocate and S.A. Mohanty, Advocate
Counsel For Respondent: S. Mishra
