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2008 (7) TMI 861 - HC - VAT and Sales TaxCollection of tax and penalty - Whether there can be any levy of tax and penalty on the goods which are in transit without any way-bill and entered inside the State avoiding the border check gate? Whether the STO (V) who collected tax and penalty from the petitioner under receipt No. 83753 dated November 27, 1998 is competent to collect such tax and penalty? Held that - STO(V) is fully justified in imposing penalty as provided under section 16C of the OST Act in respect of the goods carried in the vehicle without being covered by the way-bill and entered inside the State avoiding border check gate. It is found that the STO besides levying penalty of ₹ 19,200 has also levied tax of ₹ 9,600. The revisional authority has rightly allowed adjustment of such tax in the quarterly return, the appellant being a registered dealer under the OST Act. Further since the goods in question were not covered by way-bill, there was no occasion for the STO(V) to allow opportunity to rectify the defect. W.P. dismissed.
Issues Involved:
1. Levy of tax and penalty on goods in transit without a way-bill. 2. Competence of the Sales Tax Officer (Vigilance) to collect tax and penalty. Detailed Analysis: 1. Levy of Tax and Penalty on Goods in Transit without a Way-Bill: The petitioner challenged the levy of tax and penalty on goods in transit, arguing that since the sale was not completed, the State had no power to levy tax. The petitioner relied on the decision in Orient Paper & Industries Ltd. v. State of Orissa [1995] 97 STC 490 and Utkal Galvanisers Limited v. Commissioner of Commercial Taxes [1997] 104 STC 222. However, the court noted that the goods were transported without a statutory way-bill and had entered the State avoiding the border check gate, which indicated an intention to evade tax. The court distinguished the petitioner's case from the cited cases, emphasizing that the cited cases involved bona fide dealers following legal procedures, unlike the petitioner who violated statutory provisions. The court referenced several legal precedents, including the Supreme Court's rulings in A.B.C. (India) Limited v. State of Assam [2005] 142 STC 88 and Sodhi Transport Co. v. State of U.P. [1986] 62 STC 381, which upheld the legality of check-posts and inspection of goods in transit to prevent tax evasion. The court also cited Indian Charge Chrome Ltd. v. State of Orissa [1994] 92 STC 294 and Kamal Kumar Goyal v. State of Orissa [1975] 35 STC 343, which validated the regulatory measures under the Orissa Sales Tax Act and Rules. The court elaborated on the statutory provisions under the Orissa Sales Tax Act and Rules, including sections 16A, 16AA, 16B, 16C, and 16D, and rules 94, 94A, 94B, and 94C, which provide for the establishment of check-posts, inspection of goods, and imposition of penalties for non-compliance. The court concluded that the STO (V) was justified in imposing the penalty as the goods were transported without a way-bill and had avoided the border check gate. 2. Competence of the Sales Tax Officer (Vigilance) to Collect Tax and Penalty: The petitioner contended that the STO (Vigilance) was not empowered to collect tax and penalty, relying on the decision in Dutta Traders v. Sales Tax Officer, Vigilance, Balasore Circle [2000] 120 STC 294. However, the court noted that this decision was reversed by the Supreme Court in Sales Tax Officer v. Dutta Traders [2007] 9 VST 425, which held that the Sales Tax Officer (Vigilance) was entitled to assess and recover tax. Consequently, the court concluded that the STO (Vigilance) had the authority to levy and recover the penalty from the petitioner. Conclusion: The court dismissed the writ petition, finding it devoid of merit. The court upheld the imposition of tax and penalty by the STO (Vigilance) and confirmed the competence of the STO (Vigilance) to collect such tax and penalty. The revisional authority's decision to adjust the tax in the quarterly return was also upheld. The petitioner's arguments were rejected, and the statutory provisions and legal precedents supporting the actions of the STO (Vigilance) were affirmed.
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