TMI Blog2008 (11) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... iled under those two Acts. However, this order will not stand on the way of Department for initiation of fresh proceeding in accordance with law. - W.P. (C) No. 6978 of 2008 - - - Dated:- 11-11-2008 - CHAUHAN B.S. C.J. AND MAHAPATRA B.N. , JJ. B.N. MAHAPATRA J. In this writ petition, the petitioner challenges the action of opposite parties in levying penalty of Rs. 35,000 under section 73(10) of the Orissa Value Added Tax Act, 2004 (hereinafter referred to as the OVAT Act ) and Rs. 3,500 and Rs. 7,000 towards tax and penalty, respectively, under the Orissa Entry Tax Act, 1999 (hereinafter referred to as the OET Act ) on the ground that the same were levied without passing any speaking order and affording any opportunity of hearing to the petitioner. The short facts giving rise to this writ petition are that the petitioner is a registered dealer under OVAT Act having TIN No. 21591107414. The departmental officer visited the place of business of the petitioner on February 2, 2008 and on inspection found excess stock of kids and ladies wears worth Rs.1.75 lakhs which were not accounted for in the books of account, register or document maintained in the course of business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as, the STO ), which the STO refused to accept. Thereafter, the petitioner opted to pay the amount of tax and penalty in shape of cash and the STO received the same. Receipt No. 062913 dated February 4, 2008 was issued to the petitioner against collection of penalty amounting Rs. 35,000 under section 73(10) of the OVAT Act, Rs. 3,500 and Rs. 7,000 towards tax and penalty under OET Act. There is no violation of the principles of natural justice and section 73(10) does not contemplate any provision for passing any speaking order before imposing such penalty as provided in the said section. In view of the rival contentions, the following questions fall for consideration by this court: (i) Whether, on the facts and circumstances of the case, the assessing officer is justified in collecting penalty to the tune of Rs. 35,000 under section 73(10) of the OVAT Act and penalty of Rs. 7,000 under the OET Act without affording reasonable opportunity of being heard to the petitioner? (ii) Whether, on the facts and circumstances of the case, learned assessing officer is justified in imposing and collecting penalty to the tune of Rs. 35,000 under section 73(10) of the OVAT Act and Rs. 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . . . . So far as the first question is concerned, provisions contained in section 73(10) of the OVAT Act make it clear that penalty under the said section can be imposed in respect of possession of goods not accounted for in the books of account equal to five times of the tax leviable or 20 per cent of the value of the goods, whichever is higher. Further, penalty under this section can be imposed only after giving the dealer an opportunity of being heard and after holding such further enquiry as the authorized officer concerned may consider necessary. In the present case, the concerned officer has collected Rs. 45,500 vide receipt dated February 4, 2008 (annexure 2 series) from the petitioner under the following heads: ET at two per cent Rs. 3,500 ET penalty Rs. 7,000 VAT penalty under section 73(10) Rs. 35,000 Total: Rs. 45,500 The receipt does not reveal under which provision of the OET Act or Rules, the tax amounting Rs. 3,500 and penalty of Rs. 7,000 have been collected. However, the receipt shows that pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alth-tax [1987] 163 ITR 1 (Raj), G. R. Engineering Works (P.) Ltd. v. Additional Commercial Tax Officer [1976] 37 STC 516 (Karn), Braja Lal Banik v. State of Tripura [1990] 78 STC 283 (Gauhati) at 297]. The honourable Supreme Court in Commissioner of Income-tax v. S.V. Angidi Chettiar [1962] 44 ITR 739 held that the power to impose penalty depends upon the satisfaction of the ITO in the course of the proceedings under the Act. It cannot be exercised if he is not satisfied and has not recorded the satisfaction about the existence of the conditions specified in clauses (a), (b), and (c) before the proceedings are concluded. In the absence of any evidence on record about satisfaction of ITO, penal provisions of section 271(1)(c) were not attracted. Therefore, even though section 73(10) is silent about passing of any order of penalty before it is collected, the authorized officer is bound to pass such order justifying the levy of penalty. The honourable Supreme Court in P. Ramachandra Rao v. State of Karnataka AIR 2002 SC 1856 held that the primary function of judiciary is to interpret law. It may lay down principles, guidelines and exhibit creativity in the field left open and unoccup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be exercised with proper judicial discretion [vide Rajam Textiles v. State of Tamil Nadu [1977] 39 STC 124 (Mad)]. In Patnaik Co. (P.) Ltd. v. State of Orissa [1975] 36 STC 362, this court observed that the expression may direct in sub-section (5) of section 13 shows that the imposition of penalty on the dealer for nonpayment of the tax in time is not mandatory but discretionary. Even though how discretion is to be exercised by the taxing authority is not indicated, it must be exercised judicially and not arbitrarily. This is possible only when a speaking order is passed. In the present case, no speaking order imposing penalty has been passed before penalty under section 73(10) under the OVAT Act was collected. Same is the situation in respect of collection of tax and penalty under the OET Act. This is certainly unfair. Besides, section 73(10) provides that in addition to giving an opportunity of hearing to the petitioner the officer should hold further enquiry as he may consider necessary before imposing penalty under section 73(10). There is no material on record to show that any further enquiry as contemplated under section 73(10) of the OVAT Act has been conducted be ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
