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TMI Blog2023 (4) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... pare parts and accessories of all types of above vehicles including tractors, spare parts and accessories of generator sets and pump sets (not operated with electricity), tyres and tubes of two, three and four wheelers and of tractor, lubricant, helmets, trolley and trailers being manufactured and sold along with its raw materials like iron rods, flats and hardware goods etc., which are covered under Schedule-I of the O.E.T. Act. The petitioner used to purchase the above goods from inside the State as well as from outside the State of Orissa. The petitioner maintains purchase and sale registers duly supported with purchase and sale bills and stock account for all types of vehicles, pump sets and generator sets. It maintains another register for claim of set off of entry tax on scheduled goods under the O.E.T. Act, as per the purchase value of the quantity of vehicles sold except tractor. 2.1 While making assessment under the O.S.T. Act for the year 2003-04, the above records of account, as maintained by the petitioner for its business both under the O.S.T. Act and the O.E.T. Act, were duly examined in comparison to the turnover of purchase of scheduled goods returned for 2003-04 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pulated throughout the year by disclosing the wrong amount of turnover in its return. Basing on these reasons, the books of account maintained for 2003-04 were accepted as true and correct and the petitioner was assessed by enhancing Rs.11,15,710.00 to the on T.T.O. with due consideration of non-maintenance of any stock account for Schedule-I goods by the petitioner allowing it to manipulate such turnover as per its convenience as well as considering the ratio of this enhancement very reasonable consisting only 1% of the G.T.O. returned. Accordingly, the GTO determined at Rs.11,26,86,805.32, out of which the purchase of entry tax paid goods effected for Rs.5,31,94,746.16, which was allowed towards deduction after verification of the statement of such purchase in prescribed E-1 Form submitted by the petitioner. Accordingly, tax was determined and the total tax due came to Rs.59,58,393.00. 2.4 Therefore, considering the non-payment of the total tax, as admitted in the revised returns in full within its due time, as prescribed under the O.E.T. Act, the petitioner was issued with show cause notices repeatedly under Rule 10(2) of the O.E.T. Rules for such irregularities and finding no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Orissa Entry Tax Rules read with Section 12(4-a) of the Orissa Sales Tax Act, for which a huge demand of Rs.5,07,672/- was made under the O.E.T. Act. The Assessing Authority held that for non-maintaining the stock register by the petitioner for Schedule-I goods the entire assessment to be adjudicated under best judgment assessment under Section 7(4) of the O.E.T. Act with an intention to impose huge penalty under Section 7(5) of the O.E.T. Act. But as a matter of fact there was no adverse material available on record to reject the books of account and the Assessing Authority found no discrepancies in number of occasions in case of vehicles, pumps and generator sets as stated in the order of assessment. But determination has been made by the Assessing Authority for non maintenance of stock account in case of spare parts, which was not a genuine ground to reject the books of account by the Assessing Authority on presumption basis without any actual discrepancy/adverse detection made or any cogent materials found prompted for resorting to best judgment assessment. 5. In Khali Mohapatra v. State of Orissa, S.J.C. No. 114 of 1986 decided on 02.12.1994, it has been held that even if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nspecting Asstt. CIT (2006) 7 SCC 483, the apex Court, while considering Section 271(1)(a) of the Income Tax Act 1961, observed that the 'penalty' is a punishment imposed on a wrongdoer. 9. In Consolidated Coffee Ltd v. Agricultural Tax Officer, (2001) 1 SCC 278, while considering the provisions contained in Section 42(1)(i) of the Income Tax Act 1961, the apex Court observed that the word 'penalty' occurring in Section 42 (1)(ii) of the Act does not mean 'interest'. It is imposed on the assessee who fails to pay tax in time and the quantum of the penalty increases with the delay. 10. In Karnataka Rare Earth v. Senior Geologist, Deptt. Of Mines & Geology, (2004) 2 SCC 783, the apex Court held that 'penalty' is a liability imposed as a punishment on the party committing the breach. 11. In Pratibha Processors v. Union of India, AIR 1997 SC 138, the apex Court observed that 'penalty' is ordinarily levied on an assessee for some contumacious conduct or for a deliberate violation of the provisions of the particular statute. 12. In Associated Cement Co. Ltd. v. Commercial Tax Officer, (1981) 4 SCC 578, the apex Court held that 'penalty' ordinarily becomes payable when it is found tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arguments advanced on behalf of the Department and the assessee. No definite conclusions on the vital aspects have been arrived at by the Tribunal as is evident from the paragraphs quoted above. The tribunal was duty bound to examine the point raised by the parties and to record definite conclusion in respect of each one of them." 16. Therefore, once the Assessing Authority has come to a conclusion that there is no mistake in the books of account, imposition of penalty under Section 7(5) of the O.E.T. Act cannot be sustained in the eye of law. 17. While dealing with the provisions under Section 43(2) of the Orissa Value Added Tax Act, 2004, a similar question had come up for consideration in M/s National Aluminium Comply Limited v. Deputy Commercial Taxes, Bhubaneswar-III Circle, Bhubaneswar, 2021 (1) OLR 828, wherein this Court held that imposition of penalty under Section 43(2) of OVAT Act, 2004 was not automatic and that there is a discretion in the Assessing Authority in this regard upon finding that there has been an escapement or underassessment of tax. Similar view has also been taken in M/s Jagadamba Polymers Pvt. Ltd. v. State of Odisha, STREV No.12 of 2015 disposed of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity in the present case. Therefore, the order so passed by the Assessing Authority under Section 7(4) of the O.E.T. Act cannot be sustained in the eye of law. As a consequence thereof, the imposition of penalty under Section 7(5) of the O.E.T. Act also cannot be sustained in the eye of law. 21. No doubt, the petitioner has filed all the monthly statements and returns, as shown in the monthly statements and also paid due admitted tax before filing the said return. As such, the petitioner is in no way a defaulter in payment of admitted tax under the O.E.T. Act. Therefore, the provisions contained under Section 7(5) of the O.E.T. Act is not applicable, in view of the ratio decided by this Court in the cases of M/s National Aluminium Company Ltd. and M/s Jagdamba Polymers Pvt. Ltd. (supra). 22. As a consequence thereof, the order dated 24.07.2013 passed by the Odisha Sales Tax Tribunal, Cuttack in S.A. No.79(ET)/2006-07 under Annexure-3 quashing the order dated 28.03.2006 passed by the Asst. Commissioner of Sales Tax, Koraput Range, Jeypore in First Appeal Case No. AAE(KOI) 106/2004-05 under Annexure-2 and confirming the order of assessment dated 07.01.2005 passed by the Sales Tax O ..... 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