2010 (7) TMI 915 - HC - VAT and Sales Tax

Whether the petitioner was found to have made under-value the transaction of marbles purchased by it, no proceeding under section 74(5) of the OVAT Act could have been initiated against him and that, the appropriate provision in the present circumstances ought to be section 101 of the OVAT Act and had a proceeding been initiated against the petitioner under section 101 of the OVAT Act, no penalty could have been levied in the present case? Held that - We are of the considered view that the documents submitted on behalf of the petitioner at the entry gate regarded were false and, therefore, clearly attract the applicability of section 74 of the OVAT Act, 2004. The writ petition succeeds only to the limited extent of remitting the matter back to the Sales Tax Officer (Vigilance), Sambalpur to re-compute the tax and penalty both under the Orissa Sales Tax Act, 1947 and Orissa Entry Tax Act, 1999 by taking the price of the marble at the check gate, i.e., at ₹ 38.45 per square feet and re-compute the tax and penalty leviable thereon and by issuing fresh demand on the petitioner after adjusting therefrom the tax and penalty already deposited by the petitioner pursuant to the interim direction passed in the writ application, while directing interim release of the vehicle/goods.

Summary

Issues:
Challenge to order confirming tax and penalty under OVAT Act and Entry Tax Act based on under-valuation of marble; Applicability of section 101 of OVAT Act in the case; Imposition of penalty under section 74(5) of OVAT Act; Discrepancy in declared and actual quantity of marble; Discretion of Sales Tax Officer in imposing penalty; Disagreement on valuation of marble for tax and penalty calculation.

Analysis:

The writ application challenged an order confirming tax and penalty under the Orissa Value Added Tax (OVAT) Act and the Entry Tax Act due to the under-valuation of marble. The petitioner argued that section 101 of the OVAT Act should apply instead of section 74(5) for penalty imposition. The court examined the discrepancy in the declared and actual quantity of marble, which led to the imposition of tax and penalty. The Sales Tax Officer found the petitioner had suppressed the actual quantity of marble, justifying the penalty under section 74(5) of the OVAT Act.

The court considered the applicability of section 101 of the OVAT Act, which deals with under-invoicing. However, based on the documents and re-measurement of marble, it was evident that the petitioner had provided false information, justifying the penalty under section 74(5). The court noted that the petitioner complied with interim orders for re-measurement, confirming the excess quantity of marble carried.

Regarding the discretion of the Sales Tax Officer in imposing penalties, the court referenced a Supreme Court decision emphasizing mandatory penalty imposition for false documents. The court rejected the petitioner's request to quash further penalties, citing legislative provisions mandating penalty imposition in such cases.

Lastly, the court addressed the valuation discrepancy in determining tax and penalty based on the selling price of marble. The court agreed with the petitioner that the purchase price should be considered for valuation. Consequently, the court remitted the matter back to the Sales Tax Officer for re-computation of tax and penalty based on the purchase price of marble, directing the issuance of a fresh demand after adjusting the amounts already deposited.

In conclusion, the writ application was disposed of with directions to re-compute tax and penalty under the OVAT Act and Entry Tax Act, considering the purchase price of marble, and issuing a fresh demand after adjusting the deposited amounts.