2010 (7) TMI 916 - HC - VAT and Sales Tax

Whether, on the facts and in the circumstances of the case, the STO is justified in imposing tax, surcharge and penalty amounting to ₹ 4,51,693 under the OST Act and tax and penalty of ₹ 55,536 under the OET Act totalling to ₹ 5,07,229 for the alleged violation of declaration given in transit passes issued at the Unified Check Gate, Girisola? Held that - Levy of tax, surcharge and penalty under the OST Act under annexure 1 is found to be just and proper. The issue involved under the OST Act and OET Act is same. The provisions contained in section 16AA of the OST Act and rule 94C of the OST Rules are similar to the provisions contained in sections 24 and 25 of the OET Act. Tax and penalty under the OET Act have been levied on the similar grounds on which tax and penalty are levied under the OST Act. For the reasons stated in the foregoing paragraphs, the levy of tax and penalty under the OET Act is also held to be valid. Writ petition is dismissed

Issues Involved:
1. Justification of tax, surcharge, and penalty under the Orissa Sales Tax Act (OST Act).
2. Justification of tax and penalty under the Orissa Entry Tax Act (OET Act).
3. Compliance with Section 16AA of the OST Act and Rule 94C of the OST Rules.
4. Validity of the orders passed by the Sales Tax Officer (STO) and the Additional Commissioner.

Issue-wise Detailed Analysis:

1. Justification of tax, surcharge, and penalty under the Orissa Sales Tax Act (OST Act):
The primary issue is whether the STO was justified in imposing Rs. 4,51,693 towards tax, surcharge, and penalty under the OST Act. The petitioner, a registered company in Jharkhand, was transporting super white kerosene from Andhra Pradesh to Jharkhand. The vehicle carrying the kerosene was intercepted at the Girisola Unified Check Gate, and the STO issued show-cause notices for alleged violations of the declaration furnished under Section 16AA of the OST Act. The petitioner argued that there was no evidence of selling the goods within Orissa and that the driver's innocence was exploited to obtain a statement. The court examined Section 16AA of the OST Act and Rule 94C of the OST Rules, which mandate that the driver must deliver the transit pass at the exit check-post. Failure to do so raises a rebuttable presumption that the goods were sold within the state. The petitioner failed to rebut this presumption convincingly, as the driver did not deliver the transit passes on multiple occasions, and the provided acknowledgments were deemed false and fabricated. Thus, the court upheld the STO's imposition of tax, surcharge, and penalty.

2. Justification of tax and penalty under the Orissa Entry Tax Act (OET Act):
The issue under the OET Act was similar to that under the OST Act. The STO imposed Rs. 55,536 towards tax and penalty under the OET Act for the same alleged violations. The court noted that the provisions of Sections 24 and 25 of the OET Act are similar to Section 16AA of the OST Act and Rule 94C of the OST Rules. Given the same grounds for the imposition of tax and penalty under both Acts, the court found the levy under the OET Act to be valid as well.

3. Compliance with Section 16AA of the OST Act and Rule 94C of the OST Rules:
Section 16AA of the OST Act and Rule 94C of the OST Rules require the driver to declare that goods will not be unloaded, delivered, or sold within the state and to deliver the transit pass at the exit check-post. The court highlighted that non-compliance with these requirements leads to a presumption of sale within the state. The petitioner's failure to deliver the transit passes on multiple occasions and the false acknowledgments provided by the consignee led to the conclusion that the statutory requirements were not met. The court emphasized that statutory procedures must be followed strictly, and any deviation raises valid grounds for the imposition of penalties.

4. Validity of the orders passed by the Sales Tax Officer (STO) and the Additional Commissioner:
The petitioner challenged the orders of the STO and the Additional Commissioner, arguing that the imposition of tax, surcharge, and penalty was unjustified. However, the court found that the STO and the Additional Commissioner had acted within their authority and followed due process. The petitioner's failure to rebut the presumption of sale within the state and the fabricated evidence presented led the court to uphold the orders. Consequently, the court dismissed the writ petition and affirmed the validity of the STO's and Additional Commissioner's orders.

Conclusion:
The court dismissed the writ petition, upholding the imposition of tax, surcharge, and penalty under both the OST Act and the OET Act. The petitioner's non-compliance with statutory requirements and failure to provide credible evidence led to the conclusion that the STO and the Additional Commissioner acted correctly in their decisions. No order as to costs was made.

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