Patna High Court
M/S Swastika Smokeless Coke Company ... vs The State Of Bihar And Ors on 25 January, 2024
Bench: Chief Justice, Rajiv Roy
IN THE HIGH COURT OF JUDICATURE AT PATNA
Miscellaneous Appeal No.111 of 2017
======================================================
M/s Swastika Smokeless Coke Company Pvt. Ltd son of Late Surajdeo
Prasad resident of New Diliyan, Old G.T. Road, Dehri-On-Sone, District -
Rohta.
... ... Appellant/s
Versus
1. The State Of Bihar and Ors
2. The Commercial Taxes Tribunal, Bihar, Patna through its Secretary.
3. The Commissioner of Commercial Taxes, Vikash Bhawan, New Secretariat,
Patna.
4. The Commercial Taxes Officer, Aurangabad Circle, Aurangabad.
... ... Respondent/s
======================================================
with
Miscellaneous Appeal No. 112 of 2017
======================================================
M/s Swastika Smokeless Coke Company Pvt. Ltd. son of Late Surajdeo
Prasad resident of New Diliyan, Old G.T. Road, Dehri-On-Sone, District -
Rohta.
... ... Appellant/s
Versus
1. The State Of Bihar and Ors
2. The Commercial Taxes Tribunal, Bihar, Patna through its Secretary.
3. The Commissioner of Commercial Taxes, Vikash Bhawan, New Secretariat,
Patna.
4. The Commercial Taxes Officer, Aurangabad Circle, Aurangabad.
... ... Respondent/s
======================================================
Appearance :
For the Appellant/s : Mr. S.D. Sanjay, Sr. Advocate
Mr. Lokesh Kumar, Advocate
Mr. Vishal Kumar, Advocate
For the Respondent/s : Mr. Ajeet Kumar, GA-9
Mr. Nalim Vilochan Tiwary, AC to GA-9
(In Miscellaneous Appeal No. 112 of 2017)
Patna High Court MA No.111 of 2017 dt.25-01-2024
2/6
Appearance :
For the Appellant/s : Mr. S.D. Sanjay, Sr. Advocate
Mr. Lokesh Kumar, Advocate
Mr. Vishal Kumar, Advocate
For the Respondent/s : Mr. Ajeet Kumar, GA-9
Mr. Nalim Vilochan Tiwary, AC to GA-9
======================================================
CORAM: HONOURABLE THE CHIEF JUSTICE
and
HONOURABLE MR. JUSTICE RAJIV ROY
ORAL JUDGMENT
(Per: HONOURABLE THE CHIEF JUSTICE)
Date : 25-01-2024
The above appeal arises from the orders of the
Tribunal which confirmed the penalty orders passed under
Section 16(8) and 16(9) of the Bihar Finance Act, 1981. The
assessment years are 2000-01 and 2001-02. The assessment
order passed under Section 17(2) was on account of the late
filing of returns and delayed payment of tax; which resulted in
imposition of penalty under Section 16(8) and 16(9).
2. The imposition of penalty was subjected to a
revision before the Commissioner of Commercial Tax and
then an appeal before the Tribunal; both of which proved
unsuccessful. Though, there are no questions of law framed in
the appeal, on a reading of the memorandum and orders
impugned, we frame the following question of law:
'Whether, the penalty imposed under
Section 16(8) and 16 (9) of the Bihar Finance Act,
1981, was in a mechanical and routine manner, thus
Patna High Court MA No.111 of 2017 dt.25-01-2024
making it perverse and un-reasonable?'
3. The quantum assessed to tax was not
challenged and the challenge is/was only against the penalty.
Section 16(8) makes mandatory the imposition of penalty on
failure to furnish any returns within the due date, for every
day of default, at the rate not exceeding 50 rupees. Sub-
Section 9 of Section 16 requires a penalty on failure to pay the
tax within the due date at the minimum rate of 2.5% and not
exceeding 5% for the first 3 months and then at the minimum
rate of 5% and the maximum 10% for the further periods in
which delay continues.
4. The learned counsel for the appellant relied on
the decision in M/s Indian Oil Corporation Ltd. v. State of
Bihar & Others, reported in (2003) 3 PLJR 561 from which
we extract paragraph 19 hereunder: -
"...Section 16(9) of the Finance Act provides for
minimum or maximum penalty and question to be
considered is as to whether in such cases any
discretion is left to the authority not to impose the tax.
In other words, where in view of the nature of the
provisions, minimum penalty has to be imposed by the
authority and it has no discretion. The law is well-
settled that the order imposing penalty is quasi judicial
in nature and it involves exercise of judicial discretion.
It is not an order which has to be passed by the
authority mechanically. It is equally well-settled that
unless the party, under obligation to pay tax, has acted
Patna High Court MA No.111 of 2017 dt.25-01-2024
dishonestly, intentionally, in defiance of law or in
conscious disregard of obligation and is guilty of
conduct contumacious, the penalty ordinarily will not
be imposed. Even in a case where minimum penalty is
prescribed the authority is not debarred from
exercising the judicial discretion and on consideration
of fact it can come to the conclusion that no case for
imposition of penalty is made out. However, such
power is to be exercised, when there is a technical or
venial breach of the provisions of the Act or where the
breach was bona fide and not intentional..."
The learned counsel vehemently argued that though a
minimum and maximum penalty is mandatory as per the
provision, the Assessing Officer still has the discretion to
absolve the assessee from the penalty, if sufficient cause is
shown and it is proved that the breach was bona fide and not
intentional.
5. We have to specifically notice the judgment of
the Hon'ble Supreme Court in Hindustan Steel Ltd. v. State
of Orissa reported in (1970) 25 STC 2011 relied on in the
cited decision. Therein, the appellant was engaged in
construction work which was carried on through contractors.
There was supply of material to the contractors and the
appellant had not registered under the Orissa Sales Tax Act,
which led to the Assessing Officer levying tax and penalty for
failure to register itself as a dealer. The Hon'ble Supreme
Patna High Court MA No.111 of 2017 dt.25-01-2024
Court accepted the argument of the assessee that the
appellant-company was under a bonafide belief that the
company was not a dealer requiring registration under the Act.
A technical or bona fide mistake would not necessarily lead to
the imposition of even a minimum penalty as prescribed,
when the authority vested with such powers comes to the
conclusion that no case of penalty is made out, is the binding
declaration.
6. In the present case, the only contention of the
petitioner who is a registered dealer was that, on the division
of erstwhile State of Bihar and Jharkhand, the assessee
labored under a confusion as to the returns being filed and tax
being paid.
7. We find the same to be not a bonafide belief
since the assessee was all along a registered dealer and even
after the bifurcation of the States, remained within the State of
Bihar. The bonafides of the explanation having been found
against the assessee, there is no ground for answering the
question of law in the affirmative. The breach of the appellant
assessee was neither technical or venial nor was it bonafide or
unintentional. Admittedly, the penalty imposed under Section
16(8) and 16(9) were at the minimum of the rates prescribed.
Patna High Court MA No.111 of 2017 dt.25-01-2024
We answer the question of law against the assessee and in
favor of the revenue.
8. The appeal stands rejected.
(K. Vinod Chandran, CJ)
( Rajiv Roy, J)
sharun/-
AFR/NAFR
CAV DATE
Uploading Date 06.02.2024
Transmission Date
