2022 (1) TMI 104 - HC - VAT and Sales Tax

Jurisdiction - power of Sales Tax Officer to impose penalty u/s 9-B(3) of the O.S.T. Act, 1947 - absence of any delegation of power by the Commissioner of Sales Tax after substitution of Section 9-B(3) with effect from 12.3.1983 - penalty u/s on the ground that the Petitioner s application for summoning witnesses was not entertained by the STO - HELD THAT - In the present case, as noted by the Tribunal in the impugned order, the Tribunal at the outset noticed that in terms of the latest circular / notification, the STO has been delegated with the power to impose penalty under Section 9-B(3) of the OST Act not exceeding two times only of the tax so realized. It is also noticed by the Tribunal that, the power to impose penalty exceeding two times of the tax lies only with the Commissioner. However, in the present case the STO proposed to impose penalty not exceeding two times the tax. This was not to be disputed in the Tribunal by the counsel for the Petitioner. Consequently, as per the Circular in force, the STO did not exceed his jurisdiction in initiating the penalty proceeding. The question framed by this Court by the order dated 10th January, 2007 is answered with the affirmative, i.e. in favour of the Department and against the Petitioner assessee by holding that the STO was within jurisdiction in imposing the penalty, since the proposed penalty did not exceed twice the tax involved - Petition dismissed.

Summary

Issues:
Identical question of law in six Revision Petitions regarding the imposition of penalty under Section 9-B(3) of the Orissa Sales Tax (OST) Act without delegation of power by the Commissioner of Sales Tax.

Detailed Analysis:

1. Common Order by Tribunal and ACCT:
- The Revision Petitions stemmed from a common order by the Full Bench of Orissa Sales Tax Tribunal confirming the Assistant Commissioner of Commercial Taxes' decision to remand the penalty imposition matters to the Sales Tax Officer for fresh consideration.

2. Question of Law Framed:
- The primary question for consideration was whether the Sales Tax Officer had the jurisdiction to impose penalties under Section 9-B(3) of the OST Act without a delegation of power by the Commissioner of Sales Tax post the amendment in 1983.

3. Background and Allegations:
- The Petitioner, engaged in cement manufacturing, faced penalty proceedings for allegedly collecting sales tax despite enjoying tax holidays and not depositing it with the Government.
- The STO initiated penalty proceedings based on a fraud case report from the Intelligence Bureau.

4. Contentions and Jurisdiction Challenge:
- The Petitioner challenged the STO's jurisdiction to impose penalties citing the lack of delegation of power by the Commissioner post-amendment in 1983.
- The Petitioner also disputed the quantum of penalty imposed by the STO based on discrepancies in sales figures.

5. Appeals and Tribunal Decision:
- The Petitioner appealed to the ACCT, seeking to set aside the penalty order and verify the Books of Account.
- Further appeals were filed before the Tribunal, which dismissed them, leading to the current Revision Petitions.

6. Court's Analysis and Decision:
- The Court limited its consideration to the delegation of power and the impact of the 1983 amendment to Section 9-B(3) of the OST Act.
- It upheld the Tribunal's finding that the STO did not exceed his jurisdiction as the proposed penalty did not surpass twice the tax amount, as allowed by the Circular in force.
- The Court dismissed the Revision Petitions, affirming the STO's jurisdiction in imposing the penalty within the prescribed limits.

7. Final Verdict:
- The Court answered the question framed in favor of the Department, dismissing the Revision Petitions and vacating any interim orders previously issued.

This detailed analysis highlights the legal intricacies surrounding the imposition of penalties under the OST Act and the Court's specific focus on the delegation of power and penalty quantum limitations.