Orissa High Court
M/S. United Electricals & ... vs State Of Odisha on 7 December, 2022
IN THE HIGH COURT OF ORISSA AT CUTTACK
STREV No.17 of 2016
M/s. United Electricals & Engineering .... Petitioner
Pvt. Ltd.
Mr. C.R. Das, Advocate
-versus-
State of Odisha .... Opposite Party
Mr. S.K. Pradhan, ASC
CORAM:
THE CHIEF JUSTICE
JUSTICE M. S. RAMAN
ORDER
07.12.2022
Order No.
10. 1. While admitting the present revision petition of the Petitioner-
Assessee against the impugned order dated 7th October, 2015 of the
Odisha Sales Tax Tribunal (Tribunal) dismissing S.A. No.353
(VAT) of 2013-14 filed by the Assessee, this Court framed the
following questions for consideration vide order dated 31st August,
2016:
"I. Whether, the Division Bench-II, Odisha Sales
Tax, Tribunal is right in law in holding the imposition of
penalty equal to two times of tax assessed under Section
43-(2) of the OVAT Act in absence of observation by the
Assessing authority that the underassessment tax is
without any reasonable cause?
II. Whether, the facts and circumstances of the
case, the Division Bench-II, Odisha Sales Tax Tribunal,
Cuttack, is right in law to hold Section-43 provides for
best judgment assessment, whose part and parcel is
imposition of penalty. If the use of word "may" is
liberally used then the purpose of escape assessment
under VAT regime would disappear?"
2. As far as question I is concerned, it is seen that in the assessment
order dated 5th February, 2013 while raising a demand on the basis
'erroneous claim of Input Tax Credit (ITC)', the Sales Tax Officer
(STO), Ganjam-I Circle, Berhampur proceeded to impose penalty
under Section 43(2) of the Odisha Value Added Tax Act, 2004
(OVAT Act) without actually coming to any conclusion that ITC
with differential tax wrongly availed by the Petitioner-Assessee was
"without reasonable cause".
3. As explained by this Court in National Aluminium Co. Ltd. v.
Deputy Commissioner of Commercial Taxes, (2012) 56 VST 68
(Ori) read with clarificatory order dated 8th March, 2021 in
RVWPET Nos.211, 212 & 213 of 2013 (National Aluminium Co.
Ltd. v. Deputy Commissioner of Commercial Taxes), 2021 (I) OLR
828, there is a discretion in the Assessing Officer under Section
43(2) of the OVAT Act to impose penalty. It is imperative for the
Assessing Officer to be satisfied that the escapement of under
assessment of tax "is without any reasonable cause".
4. As far as present case is concerned, the assessment order of the
Assessing Officer does not record the satisfaction of the Assessing
Officer that wrongful availment of ITC by the Petitioner was
"without reasonable cause". Thus, the essential component of
Section 43(2) of the OVAT Act for attracting the penalty, viz., the
satisfaction of the Assessing Officer that the escapement of tax was
without reasonable cause, is absent in the present case.
5. Accordingly, the question I is answered in the negative, i.e., in
favour of the Petitioner and against the Department and the
impugned order of the Tribunal and the corresponding orders of the
First Appellate Authority and the Assessing Officer levying penalty
on the Petitioner under Section 43 (2) of the OVAT Act are hereby
set aside.
6. In view of the answer to question I, question II need not be
answered.
7. The STREV is, accordingly, disposed of.
(Dr. S. Muralidhar)
Chief Justice
(M. S. Raman)
Judge
MRS/Laxmikant
