M/S. Krishna Cement Limited vs State Of Orissa
2021 Latest Caselaw 12000 Ori

        IN THE HIGH COURT OF ORISSA AT CUTTACK

             STREV Nos.66, 68, 69, 70, 71 & 72 of 2006

     M/s. Krishna Cement Limited,
     Mandiakudar, Sundargarh                  ......               Petitioner
                                                       (In all the cases)

                                  -versus-

     State of Orissa, represented by the
     Commissioner of Sales Tax,
     Orissa, Cuttack                          ......         Opposite Party
                                                       (In all the cases)

     Appearing for the Parties (in all the cases) :-
          For the Petitioner : Mr. Siddhartha Ray and
                               Mr. S. Dey, Advocates.
          For the Opp. Party : Mr. S.S. Padhy, A.S.C. (CT & GST)

                CORAM:
                THE CHIEF JUSTICE
                JUSTICE A. K. MOHAPATRA

                                JUDGMENT

23.11.2021

Dr. S.Muralidhar, CJ.

1. The present six Revision Petitions involve an identical question of law and are accordingly being disposed of by this common judgment.

2. All the revision petitions arise out of a common order dated 4th April, 2006 passed by the Full Bench of Orissa Sales Tax

Tribunal, Cuttack in S.A. No.1314 to 1319 of 2001-2002. By the said order the Tribunal confirmed the common order of the Assistant Commissioner of Commercial Taxes (ACCT), Sundargarh Range, Rourkela in the First Appeals filed by the Petitioner assessee against the order of penalty imposed under Section 9-B(3) of the Orissa Sales Tax (OST) Act by the Sales Tax Officer (STO), Rourkela-II, Circle- Panposh for the years 1990-91, 1991-92, 1992-93, 1993-94, 1994-95 and 1995-96. By the said order the ACCT set aside the order of penalty and remanded the matters to the STO for a fresh consideration.

3. The net result of the above order is that the Petitioner assessee was to produce necessary books of account before the STO within a period of two months from the date of service of notice on it by the assessing STO and to complete the proceeding under Section 9-B(3) of the OST Act afresh within three months thereafter. If the Assessee failed to produce the details and the books of account within that period, the STO was free to draw an adverse inference.

4. While admitting the present petitions on 10th January 2007, the following question of law was framed for consideration by this Court:

"Whether the Sales Tax Officer is within his jurisdiction in imposing penalty u/S. 9-B(3) of the O.S.T. Act, 1947 in absence of any delegation of power by the Commissioner of Sales Tax after substitution of Section 9-B(3) with effect from 12.3.1983."

5. The background facts are that, the Petitioner set up a factory at Mandiakudar, P.O. - Kansbahal, District- Sundargarh for manufacturing Portland cement. According to the Petitioner, the installed capacity was 7200 MT. The Unit went into expansion/ modernization / diversification after the Industrial Policy Resolution (IPR), 1989 came into force. The installed capacity was enhanced to 18,000 MT. According to the Petitioner it enjoyed a tax holiday for the expanded unit for the years 1990-91 till 1996-97.

6. For the period 1990-91 the assessment Under Section 12(4) of the OST Act was completed on 27th January, 1992. On 9th January, 1997 the STO, Rourkela Circle issued a show-cause notice to the Petitioner under Section 9-B(3) of the OST Act for the periods 1990-91 till 1995-96 on the allegation that despite the tax holiday the Petitioner had collected sales tax on transactions and failed to deposit it with the Government. The above notice was based on fraud case report submitted by the STO, Rourkela Intelligence Bureau.

7. The Petitioner states that on 29th November, 1997 it produced the books of account along with the relevant documents including the profit and loss account and balance-sheet before the STO. The Petitioner asked the STO to give in writing the allegations so that the Petitioner could meet the charges.

8. On 30th November, 1997 the Petitioner wrote to the STO questioning his jurisdiction to initiate penalty proceeding under Section 9-B (3) of the OST Act. In particular it was contended that since there was no delegation of power under Section 9- B(3) of the OST Act by the Commissioner, initiation of the penalty proceeding was without jurisdiction.

9. The Petitioner also contended that under Section 9-B(3) of the OST Act, as it stood prior to its amendment with effect from 12th March, 1983, the STO could impose penalty of a sum not exceeding twice the amount of tax so realized. After 12th March, 1983, under the amended provision the Commission had power to impose penalty of a sum not exceeding thrice the amount of tax so realized. It was contended that the said power was not exercised by the Commissioner after that date.

10. By order dated 28th December, 1997 the STO again forced for penalty for the aforementioned period. It is contended that in the quantum order, i.e. the order passed under Section 12(4) of the OST Act, the STO has taken the exempted sale of cement at Rs.56,21,019/- and the Petitioner had actually effected sales to the government department a sum of Rs.28,35,974/-. Therefore, while imposing penalty, the STO had taken the period of sale of cement to be to the tune of Rs.68,83,702.56/-.

11. Aggrieved by the order of the STO, the Petitioner filed an appeal before the ACCT, Sundargarh to set aside the order of

penalty and direct the STO to verify the Books of Account and direct the Petitioner to produce such Books of Account.

12. Aggrieved to the extent that the ACCT failed to deal with the Petitioner's contention regarding the sales figures in the assessment order being contrary to the figures computed by the STO while imposing penalty and further since there was no delegation of powers after the amendment in 1983, the STO lacked jurisdiction to impose the penalty, the Petitioner filed appeals before the Tribunal. By the impugned order dated 4th April, 2006 the learned Tribunal dismissed the appeals.

13. This Court heard the submissions of Mr. Siddhartha Ray, learned counsel for the Petitioner and Mr. S.S. Padhy, learned ASC for the Department.

14. Mr. Ray referred to the decisions in Dredging Corporation of India, Paradeep Port v. State of Orissa (1994)(II) OLR 172 and Andaman Timber Industries v. Commissioner of C.Ex., Kolkata-II (1977) 39 STC 478 (SC) in support of the proposition that the Petitioner's request for examining witnesses was not even considered by the STO. Mr. Ray submitted that it was incumbent on the Tribunal to have invalidated the entire initiation of the penalty proceedings on the above ground.

15. At the outset, it must be noted that the question framed by this Court while admitting the revision petitions was clearly limited to delegation of power by the Commissioner of Sales Tax to the STO and the effect of the amendment to Section 9-B (3) of the OST Act with effect from 12th March, 1983. Consequently, this Court is not inclined to entertain any other plea advanced on behalf of the Petitioner and in particular a challenge to the penalty order under Section 9-B(3) of the OST Act on the ground that the Petitioner's application for summoning witnesses was not entertained by the STO.

16. In the present case, as noted by the Tribunal in the impugned order, the Tribunal at the outset noticed that in terms of the latest circular / notification, the STO has been delegated with the power to impose penalty under Section 9-B(3) of the OST Act not exceeding two times only of the tax so realized. It is also noticed by the Tribunal that, the power to impose penalty exceeding two times of the tax lies only with the Commissioner. However, in the present case the STO proposed to impose penalty not exceeding two times the tax. This was not to be disputed in the Tribunal by the counsel for the Petitioner. Consequently, as per the Circular in force, the STO did not exceed his jurisdiction in initiating the penalty proceeding.

17. The above legal position was unable to be disputed by the learned counsel for the Petitioner Assessee. As regards the other

issues no question was framed by this Court while admitting the revision petitions.

18. For the aforementioned reasons, the question framed by this Court by the order dated 10th January, 2007 is answered with the affirmative, i.e. in favour of the Department and against the Petitioner assessee by holding that the STO was within jurisdiction in imposing the penalty, since the proposed penalty did not exceed twice the tax involved.

19. The revision petitions are accordingly dismissed. The interim order passed by this Court on 5th February, 2007 in STREV No.68 of 2006 stands hereby vacated.

(Dr. S. Muralidhar) Chief Justice

(A. K. Mohapatra) Judge

S.K. Parida