Orissa High Court
M/S. Gupta Distributors vs State Of Orissa Represented By on 22 March, 2022
IN THE HIGH COURT OF ORISSA AT CUTTACK
STREV No.2 of 2008
M/s. Gupta Distributors, Cuttack .... Petitioner
Mr. Jagabandhu Sahoo, Senior Advocate
-versus-
State of Orissa represented by .... Opposite Party
Commissioner of Sales Tax, Cuttack-1
Mr. S.S. Padhy, Additional Standing Counsel
CORAM:
THE CHIEF JUSTICE
JUSTICE R.K. PATTANAIK
ORDER
Order No. 22.03.2022
07. 1. The present revision petition by the Assessee arises from an
order dated 19th May, 2007 passed by the Orissa Sales Tax
Tribunal, Cuttack (Tribunal) in SA No.816-817 of 2000-01 for
the year 1997-98. The aforementioned appeal by the Assessee
before the Tribunal arose from an order dated 19th April, 2000 of
the Assistant Commissioner of Sales Tax (ACST), Cuttack-I
Range in Appeal No.AA 136-CUI.W.99-2000.
2. While the first appellate authority reduced the enhancement of
the taxable turnover for the year in question, as ordered by the
Sales Tax Officer (STO) by the assessment order dated 27th
February, 1999, from Rs.30,79,000/- to Rs.15,39,000/- thereby
reducing the demand from Rs.3,38,048/- to Rs.1,40,930/-, the
Tribunal has in the impugned order restored the order of the STO
holding the reduction in enhancement by the ACST to be
unwarranted.
3. While admitting the present revision petition on 20th February
2008, this Court framed the following question of law for
consideration:
"Whether in the facts and circumstances of the case
the enhancement of turnover in the absence of any
material to establish that goods found short have been
sold is lawful and valid as per the ratio of Mahabir
Rice Mill v. State of Orissa 1983 54 STC 218 (Ori)?"
4. This Court has heard the submissions of Mr. Jagabandhu
Sahoo, learned Senior Counsel appearing for the Petitioner and
Mr. S.S. Padhy, learned Additional Standing Counsel for the
Sales Tax Department.
5. The Court finds that the Tribunal has while discussing the
judgment of the ACST noted that the ACST "has also vividly
examined the alleged contents, explanation advanced by the
dealer and agreed with the findings of the STO that the materials
and documents furnished by the dealer are all managed and
manufactured after the detection was made, which is based on
afterthought." It was held that despite the ACST agreeing with
the findings of the STO, it reduced the enhancement by 50%
"without assigning any cognate reason".
6. However, on perusal of the order of the ACST, the Court finds
that the order is an elaborate one discussing in detail the fraud
reports on the basis of which the enhancement was sought to be
made. In particular, the ACST appears to have carefully analyzed
the materials placed on record and found that explanation was
available for at least 50% of the so called sale suppression. It is
on that basis that the enhancement as ordered by the STO was
reduced by almost 50%. The order of the ACST when read
carefully does not give impression that it was done in a flippant
manner or without discussing the evidence. On the contrary, the
discussion is elaborate and involves very minute analysis of the
entire evidence. The Court is therefore not able to concur with
the Tribunal for reversing the order of the ACST and restoring
the order of the STO as far as the enhancement of taxable
turnover is concerned.
7. The main charge against the Assessee was regarding
unexplained shortage of stocks. As explained by this Court in
Laxminarayan Sawalram v. State of Orissa (order dated 20th
July, 1971 in OJC No.286 of 1968), unless the Department is
further able to show that the suppressed stocks were sold by the
Assessee, there cannot be an automatic enhancement of the
taxable turnover.
8. For the aforementioned reasons, the Court is unable to sustain
the reasoning of the Tribunal for restoring the order of the STO
and reversing the order of the ACST. The question framed by
this Court is answered in the negative by holding that the
enhancement of turnover, in the absence of any material to
establish that the goods found short have been sold, is neither
lawful nor valid and is contrary to the law explained by the Court
in Mahabir Rice Mills (supra). The question is accordingly
answered in favour of the Assessee and against the Department.
Accordingly, the order of the Tribunal is set aside and the order
of the ACST is restored to file.
9. The revision petition is disposed of in the above terms.
10. Urgent certified copy of this order be issued as per rules.
(Dr. S. Muralidhar)
Chief Justice
(R.K. Pattanaik)
Judge
M. Panda
