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TMI Blog1975 (7) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... rs 1959-60 to 1967-68 there was a total assessment of Rs. 60,67,320.54 on the company. The petitioner paid the entire amount leaving a balance of Rs. 4 lakhs and odd. The State Government exploited the credit worthiness of the petitioner in the market and compelled the petitioner to raise loan from the State Bank of India to the extent of Rs. 85 lakhs in the years 1961 and 1964 and invest the same in Government securities for the benefit of the State. The State Government provided funds to the extent of Rs. 13 lakhs by way of advance to the petitioner for paying security deposit required by the State Bank for giving the above loan. The State Government in turn agreed to give preferential treatment in the matter of purchase of motor vehicles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assistant Sales Tax Officer (opposite party No. 2) took drastic action under section 13-A of the Orissa Sales Tax Act, 1947 (hereinafter to be referred to as the Act), in attaching the petitioner's accounts with different bankers on two occasions in June, 1969, and February, 1970. As a result of this action the credit facilities extended to it were largely squeezed. The petitioner was not able to raise funds from the banking and other financial institutions to meet the tax liabilities. The petitioner could not afford to fight against the State Government and claim compensation for non-fulfilment of their commitments in the matter of purchase of vehicles and payment of advance though the State Government were morally and legally liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents of Government roughly amounting to Rs. 1 1/2 lakhs. Notwithstanding the financial difficulties of the petitioner, opposite party No. 2 issued a notice under section 13(5) of the Act. The petitioner showed cause. By his order dated 29th April, 1969, opposite party No. 2 imposed a penalty of Rs. 34,581.15 for the quarter ending 31st December, 1967. By his order dated 30th April, 1970, he imposed a penalty of Rs. 1,38,232.40 in respect of the quarter ending 31st March, 1968. The petitioner filed two revisions before the Commissioner of Sales Tax (opposite party No. 1). In the first case the Commissioner reduced the penalty to Rs. 3,458.11, which is one per cent of the tax payable. The Commissioner by his order dated 6th May, 1971, reduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instalments from time to time so however as not to exceed one half of the total amount due.............." The underlined* expression shows that the imposition of penalty is not mandatory but is discretionary with the concerned taxing authority even if the tax is not paid by the dealer in time. The expression "may direct that the dealer shall pay by way of penalty" takes within its sweep the power of the Commissioner not to direct payment of such penalty. As to how this discretion is to be exercised has not been indicated in the section. One thing is however clear that the discretion must be judiciously and not arbitrarily exercised. The authority cannot impose the maximum penalty in all and every case. There may be cases where the author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 17 of 1973 (Commissioner of Income-tax, Orissa v. M/s. Gangaram Chapolia) and O.J.C. No. 684 of 1974 (M/s. Gangaram Chapolia v. Commissioner of Income-tax, Orissa) delivered on 2nd April, 1975. Those observations have no strict application to the facts of this case as they were made under the provisions of the Income-tax Act and with different wordings. Reference has been made to those observations only to give a clear picture of the nature of the onus on the dealer and the manner in which judicial determination is to be made by the taxing authority. 6.. We may now proceed to examine annexure 3 in the light of our observations made above. Opposite party No. 1 in a cryptic manner dealt with the case of the petitioner in paragraph 3 of h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances of the case. 7.. Opposite party No. 1 reduced the penalty to Rs. 1 lakh on the ground that the petitioner did face certain financial difficulties. If he would have discussed all the facts in their true perspective he might have recorded a different conclusion. What it would have been, we cannot speculate nor we have the jurisdiction to go into facts and consider the reasonableness of the penalty. 8.. On the aforesaid analysis, we quash annexure 3 dated 6th May, 1971. The case would go back to opposite party No. 1, who would apply his mind fully to the facts and circumstances averred by the petitioner and decide the case in accordance with law and the observations made above. 9.. In the result, the writ application is allo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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