Orissa High Court
Shree Plastics Pvt. Ltd. vs State Of Odisha Represented ... on 13 July, 2022
IN THE HIGH COURT OF ORISSA AT CUTTACK
STREV No. 15 of 2013
Shree Plastics Pvt. Ltd., Berhampur .... Petitioner
Mr. P.K. Harichandan, Advocate
-versus-
State of Odisha represented through .... Opposite Party
Commissioner of Sales Tax, Odisha
Mr. Sunil Mishra, ASC
CORAM:
THE CHIEF JUSTICE
JUSTICE R. K. PATTANAIK
ORDER
Order No. 13.07.2022
Dr. S. Muralidhar, CJ.
06. 1. The Assessee has filed this revision petition against an order
dated 1st September 2012, passed by the Orissa Sales Tax Tribunal,
Cuttack (Tribunal) in SA No.78(E)/ 2011-12 for the period from 1st
April 2006 to 30th November. 2009. By the impugned order, the
Tribunal allowed the appeal filed by the State and set aside an order
dated 9th March, 2010 of the Joint Commissioner of Sales Tax
(JCST), partly allowing the appeal filed by the Assessee and
modifying the assessment order of the Sales Tax Officer (STO),
Ganjam-I Circle under Section 10 of the Orissa Entry Tax Act,
1999 (OET Act), reducing the tax demand from Rs.2,93,132.00 to
Rs.1,46,566.00.
2. While admitting this revision petition on 6th July 2015, the
following question was framed by this Court for consideration:
"Whether, under the facts and circumstance of the case,
the Tribunal is right in holding that penalty u/S.10 of
the OET Act is chargeable when the dispute with regard
to Levy of Tax on the goods in question is pending
before the Apex Court and penalty is not mandatory?"
3. The background facts are that the Petitioner is a unit,
manufacturing PVC suction and Garden pipes. After receipt of the
Vigilance Case Report dated 4th December, 2009 from the ACCT,
Vigilance, Berhampur, the Assessing Officer, i.e., the STO initiated
proceedings under Section 10 of the OET Act and issued notice to
the Petitioner. The Petitioner states that it produced its Books of
Account and other relevant documents. It has confronted with the
Vigilance Report alleging that the dealer had purchased
machineries and packing materials from outside the State on which
the entry tax had not been paid.
4. The Petitioner sought to explain before the STO in the
assessment proceedings that in view of the Judgment dated 18th
February, 2008 of this Court in Reliance Industries Limited v.
State of Odisha (2008) 16 VST 85 (ORI), the Petitioner withheld
the payment of OET on the disputed goods. However, in view of
the interim order passed by the Supreme Court of India on 3rd
February, 2010 in the appeals filed by the State of Orissa, the
Assessee agreed to pay the entry tax. This was noted by the STO in
the assessment order dated 26th May 2010. The balance entry tax
payable was determined as Rs.97,710.69 and penalty under Section
10 of Rs.1,95,421.38 was levied.
5. Aggrieved by the above assessment order, the Petitioner
preferred an appeal before the Deputy Commissioner of Sales Tax
(DCST), Ganjam Range. The Assessee contended that there was no
purchase or sales suppression and therefore, there was no
reasonable cause in terms of Section 10 (2) of the OET Act for
penalty to be levied on the Petitioner. The DCST, by its order dated
9th March 2010, deleted the penalty but imposed interest of
Rs.48,855.34 under Section 7(5)(i) of the OET Act, as the
Petitioner had arbitrarily withheld the tax. According to the
Petitioner, thereafter, the Petitioner deposited the entire tax amount
together with the interest.
6. Meanwhile, the State filed an appeal against the order of the
DCST before the Tribunal urging that the DCST had deleted the
penalty without any valid ground. The Petitioner also filed a cross-
objection before the Tribunal. After hearing both the appeal as well
as the cross-objection, the impugned order was passed by the
Tribunal deleting the interest while confirming the tax and penalty
as levied by the STO.
7. It must be noted that by the order dated 6th July, 2015, this Court
directed that no coercive steps should be taken against the
Petitioner in relation to the tax and penalty till the disposal of the
petition.
8. This Court has heard the submissions of Mr. P.K. Harichandan,
learned counsel appearing for the Petitioner and Mr. Sunil Mishra,
learned Additional Standing Counsel for the Department.
9. Relying on the order dated 8th March 2021 in RVWPET Nos.211,
212 and 213 of 2013 (NALCO v. DCCT), Mr. Harichandan, learned
counsel for the Petitioner, contended that even in terms of Section
43(2) of the Orissa Value Added Tax Act, 2004 (OVAT Act), there
was a discretion in the Assessing Officer whether or not to levy
penalty and further, it can be levied only if the escapement of tax
was "without reasonable basis". It is submitted that the same
wording occurs in Section 10 (2) of the OET Act. In the present
case, since the Petitioner bonafide felt justified in withholding the
entry tax component on account of the judgment of this Court in
Reliance Industries Ltd. (supra) there was no reasonable basis for
the STO to have levied penalty in terms of Section 10 (2) of the
OET Act.
10. Section 10(2) of the OET Act reads as under:
"(2) If the assessing authority is satisfied that the
escapement 1[or under assessment of tax on account of
any reason(s) mentioned in sub-section (1) above] is
without any reasonable cause, he may direct the dealer
to pay in addition to the tax assessed under sub-section
(1), by way of penalty, a sum equal to twice the amount
of tax additionally assessed under this section."
11. That can be no doubt that the levy of penalty does not have to
be automatic. It is contingent on the STO being satisfied that the
escapement of tax was "without any reasonable cause". In the
present case, the justification put forth by the Petitioner is that in
terms of the decision of this Court in Reliance Industries Ltd.
(supra) it withheld the payment of entry tax. However, in the said
decision handed down by this Court on 18th February 2008, the
challenge to the validity of the OET Act was negatived. The
Petitioner did not choose to join the Petitioners who had challenged
the vires of the OET Act or even the requirement thereunder of
having to pay entry tax on the goods purchased from outside the
State. The decision of this Court was applicable to those who had
approached it. Even, the interim order passed by the Supreme Court
was confined to those parties who had approached the Court. The
Petitioner could not have taken advantage of it. Therefore, the
Petitioner had no reasonable cause to withhold payment of entry tax
when it fell due.
12. Consequently, the Court is of the view that the penalty under
Section 10 (2) of the OET Act was rightly levied on the Petitioner
by the STO. In other words, the Court does not find any error
having been committed by the STO in exercising the discretion in
terms of Section 10 (2) of the OET Act to levy the penalty.
13. Accordingly, the question framed is answered in the
affirmative, i.e., in favour of the Department and against the
Assessee. It is clarified that since the Tribunal has deleted the levy
of interest as ordered by the DCST, it is not payable by the
Assessee and any amount paid under that head will be adjusted
again the penalty to be paid by the Assessee in terms of the
impugned order of the Tribunal.
14. The revision petition is accordingly dismissed in the above
terms.
(Dr. S. Muralidhar)
Chief Justice
(R. K. Pattanaik)
Judge
S. Behera
