Orissa High Court
M/S. P.P. Rice Mill vs State Of Odisha Represented By on 12 May, 2023
IN THE HIGH COURT OF ORISSA AT CUTTACK
STREV No. 44 of 2015
M/s. P.P. Rice Mill .... Petitioner
Mr. Jagabandhu Sahoo, Senior Advocate
Assisted by Ms. Kajal Sahoo & Mr. R. Ghosh, Advocate
-versus-
State of Odisha represented by .... Opposite Party
Commissioner of Sales Tax
Mr. Sunil Mishra, Additional Standing Counsel
CORAM:
THE CHIEF JUSTICE
JUSTICE G. SATAPATHY
ORDER
Order No. 12.05.2023
08. 1. Heard
2. Admit.
3. The following question of law is framed for consideration by this
Court:
"Whether the Tribunal was justified in interfering with
the order of the First Appellate Authority which had
limited the enhancement of the assess demand to thrice
the gross turnover?"
4. This is a petition by the Assessee against an order dated 18th
August, 2015 passed by the Odisha Sales Tax Tribunal (OSTT),
Cuttack (Tribunal) in S.A. Nos.20 and 21/2011-12. In turn, the said
appeals were filed - one by the State (S.A. No.20/2011-12) and the
other by the Assessee (21/2011-12) - against the order passed by the
Joint Commissioner of Sales Tax, Balasore Range, Balasore (JCST)
in Appeal Case No.AA-12/BD 2007-08, whereby the basis for the
demand raised by the Assessing Authority (AA), Bhadrak Circle for
the Assessment Year (AY) 2004-05 under Section 12(4) of the
Odisha Sales Tax Act, 1947 (OST Act) was reduced from eight
times of the gross turnover (GTO) to three times the GTO.
5. By the impugned order, the Tribunal has reversed the order of the
JCST and confirmed the order of the AA.
6. This Court has heard the submissions of Mr. Jagabandhu Sahoo,
learned Senior Counsel appearing for the Petitioner/Assessee and
Mr. Sunil Mishra, learned Additional Standing Counsel appearing
for the Department.
7. The Assessee is engaged in the process of converting paddy into
rice, broken rice, bran etc., and is registered under the OST Act. For
the AY 2004-05, the AA issued a notice to the Assessee under
Section 12 (4) of the OST Act and examined the books of account.
The Assessee was also confronted with the fraud case report
submitted by the Sales Tax Officer (STO), Investigation Unit,
Balasore consequent upon a surprise visit to the rice mill. The
allegation was that the STO (Enforcement), Balasore had reported
241.11 quintal of shortage of paddy and worked out the suppression
on that basis to be Rs.1,64,950/-. After considering the explanation
offered by the Assessee, which the AA did not accept, it was
concluded that there was sale suppression of 757.10 quintal of
broken rice and 2.99 quintal of bran, and, therefore, the total sale
suppression was worked out as Rs.4,70,810/-. On this basis, the
GTO was enhanced by Rs.37,66,480/-, i.e., eight times and a
demand was raised accordingly in the sum of Rs.1,51,348/-.
8. In the appeal, the JCST found the enhancement of the GTO by
eight times to be excessive. Accordingly, the JCST limited the
enhancement to three times the suppression detected and worked
out the tax accordingly. The demand, therefore, got reduced from
Rs.1,51,348/- to Rs.56,873/-.
9. This Court in its judgment in M/s. Radhakeshav Rice Mill Pvt.
Ltd. v. State of Odisha 2022(II) ILR-CUT 300, considered the
earlier judgments in Mahabir Rice Mill v. State of Orissa (1983)
54 STC 218 (Ori) and Laxminarayan Sawalram v. State of Orissa
(decided on 20th July, 1971 in O.J.C. No.286 of 1968) and
concluded that mere stock deficiency by itself could not be
sufficient justification for enhancement of the GTO unless it was
shown that the suppressed stock was in fact sold by the Assessee.
Even assuming that the Department had brought on record material
to show stock suppression, as pointed out by the JCST, it did not
justify the enhancement of the GTO by eight times. That certainly
was disproportionate and, therefore, rightly interfered with by the
JCST by reducing the enhancement on the basis of three times the
GTO.
10. The Court finds that the Tribunal has not really set out the
reasons why it was required to interfere with the well-reasoned
order of the JCST.
11. For the aforementioned reasons, the question framed in the
present petition is answered in the negative, i.e., in favour of the
Assessee and against the Department. Accordingly, the impugned
order of the Tribunal is hereby set aside and the order of the JCST
is restored to file.
12. Accordingly, the STREV is disposed of in the above terms.
(Dr. S. Muralidhar)
Chief Justice
(G. Satapathy)
Judge
S. Behera
Digitally Signed
Signed by: SUMANTA BEHERA
Designation: Jr. Stenographer
Reason: Authentication
Location: High Court of Orissa, Cuttack
Date: 13-May-2023 11:01:58
