TMI Blog2003 (7) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... ting Division and also doing research and development work. It has six Refineries, where crude oil is refined into various petroleum products, one of which is situated in the State of Bihar at Barauni and the matter in this case relates to the imposition of penalty with regard to non-filing of return within time regarding the import of crude oil in its Refinery at Barauni. Crude oil is imported by the petitioner from inside and outside the country. 3.. The petitioner is a registered dealer under the Finance Act, under the Central Sales Tax Act, 1956 (hereinafter referred to as the "C.S.T. Act") and also under the Act. The petitioner imported crude oil for the aforesaid assessment years 1993-94, 1994-95 and 1995-96 through Oil India Limited, O.N.G.C. and during financial year 1998-99 imported crude oil partly from Assam oil field and partly from indigenous and partly imported. 4.. The Government of Bihar promulgated Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Ordinance, 1993 being Ordinance No. 11 of 1993 on February 20, 1993, which was effective from February 25, 1993. According to the charging section 3 of the Act, entry tax was levied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same was admitted and the interim order passed in the case filed by the Bihar Chambers of Commerce was ordered to govern the case of the petitioner also. On March 2, 1995*, both the writ applications, one filed by the writ petitioner and the other filed by the Bihar Chambers of Commerce, were finally disposed, of which is reported in [1995] 97 STC 538 (Pat); (1995) 1 PLJR 716 (Bihar Chamber of Commerce v. State of Bihar) and this Court held that the provision of the Act does not satisfy the requirement of article 301, read with article 304(b) of the Constitution and, section 3 of the Act is ultra vires articles 301 and 304(b) of the Constitution of India. This Court further held that the proviso to section 3 and provision of section 6 of the Act were ultra vires article 14 of the Constitution and restrained the State from enforcing the provisions of the said Act. 5.. The State Government filed S.L.P. Nos. 14636-14644 of 1995 before the Apex Court, which was admitted on July 28, 1995 and an interim order was passed to the effect that pending further orders, the assessment shall be made but the recovery shall be stayed. The said matter was finally disposed of by the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of entry tax. The petitioner also approached the Commissioner of Commercial Taxes informing that as it was running through serious financial difficulties, payment of entry tax be not enforced until its request for waiver of entry tax was disposed of by the Government of Bihar. On June 10, 1997, the petitioner filed returns for the financial years 1992-93, 1993-94, 1994-95 and 1995-96 after payment of entry tax in respect of all the said financial years amounting to Rs. 40,39,49,054. The petitioner also filed return for the financial year 1996-97 and paid entry tax payable in terms of the said return. Thereafter, it received notices all dated June 21, 1997 for the financial years 1992-93, 1993-94, 1994-95, 1995-96 and 1996-97. The said notices were issued under sections 16(8) and 16(9) of the Finance Act, copies of which have been annexed as annexures 12 series to the writ application. On July 14, 1997, the assessment orders for the aforesaid five years were passed by respondent No. 5. The question of payment of penalty was also considered by authority and it was held that no penal provision is attracted in view of the prolonged judicial litigation and status of the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the vires of the Act was challenged before this Court and this Court declared the Act to be ultra vires and the apex Court, thereafter, set aside the order and held the same to be intra vires and valid. It is also admitted that the assessment orders were passed earlier and no penalty was imposed. Their case is that the audit party of Accountant-General, Bihar, pointed out that the petitionerdealer had not deposited the admitted tax on or before the due dated prescribed under the Act, so penalty under section 16(9) of the Finance Act, read with section 7(4) of the Act had to be imposed for belated payment and only thereafter, the authorities under the Act issued the aforesaid notices. The petitioner appeared and after hearing it, the orders of penalty have been passed for the aforesaid years and a direction has been issued for payment of the money. It is admitted that all taxes with regard to the period 1992-93 to 1995-96 were paid on June 10, 1997 but the same were paid after more than fourteen months from the expiry of due date. So far as the assessment year 1998-99 is concerned, the tax was paid, but for the months of April, 1998 to October, 1998, the same was delayed by ten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate not exceeding five per centum of the import value of such goods as may be specified by the State Government. Section 5 of the Act requires registration in such manner and within such period as may be prescribed by the Rules. Section 7(4) of the Act provides that subject to the other provisions of the Act, all the provisions relating to offences and penalties of the Bihar Finance Act relating to assessment, reassessment, collection and enforcement of payment of tax required to be collected shall apply mutatis mutandis in relation to the process connected with such assessment, reassessment, collection or enforcement of payment of tax under this Act as if the tax under the Act is payable under the said Act. Section 8 of the Act provides that the provisions of the Finance Act and the Rules framed thereunder shall apply subject to the provision of the Act with regard to assessment, reassessment, collection, enforcement of payment of tax and penalty payable by a dealer. Section 9 empowers the State Government to make Rules and in exercise of the said power on May 17, 1993, Rules have been framed, which contain a detailed provision and rule 3 deals with the registration and rule 4 con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercised only when there is a glaring and patent mistake and it cannot be exercised only on the ground of earlier erroneous decision on question of fact or law. Only because the matter has been considered by the authorities and after taking to consideration the factual and legal position other view is possible, the review is not permissible. (ii) That the order imposing penalty is in the nature of quasijudicial proceeding and even if a minimum penalty is provided for a default, the authority is not bound to impose penalty in exercise of discretion. (iii) That no sanction has been taken at the time of issuance of the notice under rule 32 of the B.S.T. Rules and as such initiation of the proceeding for review is impermissible in law. (iv) that a period of twelve months is provided for review of the order under rule 32(2) of the B.S.T. Rules. In this case as the review matter has been raked up after four years, the same is barred by limitation. (v) that the review proceedings has been initiated not on the basis of satisfaction of the assessing authorities that the mistake apparent from the record has been committed, on the other hand, the same has been initiated on the basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f fact and law. This question was considered by the apex Court in the case of T.S. Balaram, Income-tax Officer v. Volkart Brothers reported in [1971] 82 ITR 50, while dealing with the provisions under section 154 of the Income-tax Act, 1961, which permitted rectification on the ground of mistake apparent from the record and it was held as follows: "A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on point on which there may conceivably be two opinions". 16.. The question for consideration in the present case is whether the assessing authority while passing earlier assessment orders committed a glaring and patent mistake or not. It appears that assessment orders for four years, i.e., 1993-94, 1994-95, 1995-96 and 1996-97 were separately passed on July 14, 1997, which have been annexed as annexures 13 series. From perusal of the assessment orders, it is clear that the assessing authority has taken note of the controversy about the application of law with regard to the crude oil imported by the petitioner, the judgment rendered by the High Court and apex Court. After the judgment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the knowledge of the assessing authority and if after having considered the matter the assessing authority did not impose penalty, the order may be erroneous in law, but it cannot be said that there is a glaring mistake apparent on the face of the record. The review in these cases amounts to reconsideration of the matter only on the ground that on a rehearing of the matter a different view can be taken. Point No. (ii): 18.. Even assuming that the review is permissible under section 47 of the Finance Act, the question is as to whether this was a case where a penalty should have been imposed or not. The detailed facts have been narrated above. After the Act came into force with effect from February 25, 1993, controversy arose as to the liability of the petitioner to pay tax under the Act. The matter was challenged before this Court and this Court accepted the stand of the petitioner and held the Act to be ultra vires and, thereafter, the matter was considered by the apex Court and on February 6, 1996 it held the Act to be intra vires. Thereafter, the petitioner applied for registration immediately on May 17, 1996 and the registration was granted on February 27, 1997. It f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority treated the appellant-company as a dealer with regard to supply of those materials and also directed to pay tax and penalty for failure to register itself as a dealer. The appellant, before the apex Court, challenged the matter before the higher authorities and, thereafter, the matter came to the High Court and it lost there also. Then, the matter went before the apex Court and the apex Court held that the supply of building materials to the contractors was a sale and, therefore, the appellant was a dealer and was required to be registered as a dealer under the Act. With regard to default, the apex Court held that the appellant-company was under bona fide belief that the company was not a dealer and as such no case for penalty was made out. The apex Court also held that even if a minimum penalty is prescribed, the authority is vested with the power to come to the conclusion that no case for penalty is made out in case of bona fide or technical mistake. It is apt to quote the observation made by the apex Court in this connection, which is a s follows: "Under the Act penalty may be imposed for failure to register as a dealer: section 9(1) read with section 25(1)(a) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave acted dishonestly and in conscious disregard of law. In this connection, it is relevant to quote, paragraph 22 of the judgment (23 in STC), which runs as follows: "22. But so far as levy of penalty is concerned, we do not think that the sales tax authorities were justified in levying it. Till the judgment of the Madras High Court, on July 15, 1991, in Perambalur Sugar Mills Ltd. v. State of Tamil Nadu [1992] 86 STC 17, the correct position of law within the State of Tamil Nadu was not free from doubt. Even thereafter, the Sales Tax Tribunal had in subsequent orders held that transport subsidy was not includible in the taxable turnover. Such a view was held by the Tribunal till March 19, 1993. It appears that on bona fide belief that planting and transport subsidies were not includible in the taxable turnover, the appellants had not included those amounts in their turnover and for that reason non-inclusion of these two items in the turnover do not seem to be intentional. Though we have now held that the appellants were not right in not including the amounts of planting subsidy and transport subsidy in the taxable turnover, considering the facts and circumstances of the case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. (iv): 23.. The review proceeding was initiated under rule 32(3) of the B.S.T. Rules. The Rule runs as follows: "32. Review.-(1) When any authority appointed under section 9 reviews under section 47 any order passed under the Act it shall record reasons for doing so. (2) Save with the previous sanction of the Commissioner or an authority specifically authorised by him in this behalf no authority appointed under section 9, other than the Commissioner, shall review any such order except before the expiry of twelve months from the date of passing of the order which is sought to be reviewed. (3) Save with the previous sanction of the Commissioner or an authority specifically authorised by him in this behalf, no authority appointed under section 9, other than the Commissioner, shall review any order which has been passed by any of its predecessors in office." 24.. From a perusal of sub-rule (2) of rule 32 of the B.S.T. Rules, it appears that the said sub-rule is applicable in a case where review is considered by the authority which has passed the assessment order and in that case there is a period of limitation of twelve months for exercising the said power, which has to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the same judgment at paragraph No. 12 it has been held that no doubt the information submitted by the audit party may not be an information for the purpose of the Act but the assessing authority may draw attention of the Income-tax Officer to the defects. In the present case, the audit report has only drawn attention of the assessing authority to the mistake and as such there is no force in the submission advanced on behalf of the petitioner that initiation of the review proceeding is vitiated in law. 28.. In the result, except point Nos. I and II, other points raised by the petitioner are rejected. As I have already held that this was not a fit case for imposing penalty, the writ application filed by the petitioner is allowed and the orders dated September 6, 2002 imposing penalty under section 7(4) of the Act, read with section 16(9) of the Finance Act, as contained in annexures 17 series, and the demand notices dated September 7, 2002, issued in pursuance thereof, as contained in annexures 16 series, are quashed. In the facts and circumstances, there shall be no order as to costs. 29.. Any amount of penalty, paid in pursuance of the interim order passed by this Court dat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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