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TMI Blog1989 (11) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... disputedly, purchase of paddy attracted levy of purchase tax under the Act and rate of tax payable on such purchase was 7 per cent at the relevant time. Nevertheless, the petitioner paid tax at the rate of 3 per cent on the ground that it was entitled to a rebate of 4 per cent on the purchase turnover. According to the Sales Tax Officer, the payment of tax at the reduced rate attracted action under section 13(4)(a) of the Act. He passed orders purported to be under the said provision. When demands raised by these purported orders were not paid within the time stipulated in the enclosed notices of demand, action was initiated under section 13(5) of the Act and penalty was imposed for each of the periods. The matter was agitated in a revisional proceeding before the Commissioner of Sales Tax (opposite party No. 3). On purported delegation of power by the Commissioner, the Additional Commissioner of Sales Tax (opposite party No.2) heard the revision application and dismissed the same. A further attempt was made by the petitioner to get the order imposing penalty and the revisional order passed by the Additional Commissioner revised by the Commissioner. The Commissioner, however, rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usly urged that the orders passed under section 13(4)(a) had become final as the revision applications filed by the petitioner before the revisional authority were rejected and therefore, it is not open to the petitioner to agitate the matter in the present writ applications without a specific prayer to nullify those orders. Further, the petitioner which is a Government of India undertaking and established under a Central Act is required to act in a manner in consonance with law and payment of tax at the rate of 3 per cent knowing full well that the rate applicable was 7 per cent shows the contumacy. In any event as decided by this Court in the case of Commissioner of Income-tax, Orissa v. Gangaram Chapolia [1976] 103 ITR 613 [FB] mens rea is not an essential ingredient for determining the question of legality of penalty imposed under the Act. Therefore, the orders imposing penalty as confirmed by the Additional Commissioner are in order. Further, in view of the decision of this Court in the case of Orient Paper Mills v. State of Orissa [1988] 70 STC 333; [1988] 1 OLR 467, the Commissioner had no jurisdiction to revise an order passed by the Additional Commissioner and therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that the dealer shall, by way of penalty, pay a sum not exceeding onetenth per centum of the tax due or five rupees whichever is higher for every day after the due date during which the dealer fails to submit the required returns. Explanation.-A return unaccompanied by a receipt from the treasury showing full payment of the admitted tax or composition money or by a crossed cheque or crossed bank draft covering the admitted tax or composition money, as the case may be, and by a dealerwise list of sales to the registered dealers in duplicate in respect of which deduction is claimed under item (ii) of sub-clause (a) of clause (A) of sub-section (2) of section 5 in respect of the period to which the return relates, shall not be deemed to be a return for the purpose of this section and, in case such cheque or bank draft is dishonoured for payment, the return shall not be deemed to be a return for the purpose of this section: Provided that an annual return shall not be invalid if treasury receipts showing full payment of the admitted tax or composition money, for the whole of the year or if the crossed bank draft or crossed cheque covering such tax or money have been previously fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout showing full payment of tax admitted to be due, a notice demanding payment thereof can be issued. This obviously means that when the tax admitted by the assessee to be due as per the return filed action under section 13(4) can be initiated. There is always distinction between two expressions "tax due" and "tax payable ". In the concept of admitted tax, a process of self-assessment is involved. This is different from quantification of liability by the assessing officer. This is very apparent from the language used in sub-sections (1), (2) and (3) of section 13. Sub-section (1) uses the expression "tax payable". In sub-sections (2) and (3), which deal with filing of returns in different situations, the expression used is "tax due". Sub-section (2) also provides that the dealer has to pay tax due according to the return in the prescribed manner. The dealer is required in law to calculate his tax liability and give the details of the turnovers and the tax admitted to be payable, and the return is required to be filed under rule 20 which reads as follows: "20. Returns.-(1) Within one calendar month of the expiry of each quarter of a year, every registered dealer, other than tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted to be payable in terms of a return. There is no question of any determination and no order is envisaged under section 13(4)(a). Therefore, if any order was passed by the Sales Tax Officer the same was unauthorised. This was the view expressed by a Bench of this Court in the case of Mahadev Ram Udmi Ram (O.J.C. No. 528 of 1982 decided on 23rd March, 1982). It was held as follows: "The only point canvassed before us is that on the returns filed by the petitioner which are annexure I series, there was no scope for raising the demand under annexure 2. Section 13(4)(a) of the Orissa Sales Tax Act under which the impugned demand has been made under annexure 2 provides: '(4) The amount of- (a) Tax due where the returns are furnished without receipt showing full payment thereof, or *** *** *** shall be paid by the dealer into Government Treasury within thirty days from the date of service of the notice issued by the Commissioner for the purpose.' The power which has been exercised by the officer is available to be invoked where on the return admitted tax can be computed not to have been paid. The returns as filed do not indicate any foundation upon which hands could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 13(4)(a) without an assessment under section 12 as provided under the law. The Additional Commissioner has in his impugned order mentioned that the revision petitioner has not challenged the order under section 13(4)(a) and therefore, he has held the order to be valid and has upheld the penalty order passed under section 13(5). He could no doubt have looked into the correctness or otherwise of the order under section 13(4)(a) but he has not taken trouble of doing that." The orders purported to have been passed under section 13(4)(a) were, therefore, without jurisdiction. 10.. The other issue that survives for adjudication is as to whether penalties as imposed under section 13(5) can be sustained. The petitioner has referred to several documents to show that it was acting bona fide. Correspondence were exchanged between the Finance Secretary, the Commissioner of Sales Tax and the officials of the petitioner-Corporation relating to rate at which tax was to be paid. On perusal of these documents there can be no scope for any doubt that the petitioner was acting under a bona fide belief that it was entitled to a rebate of 4 per cent, and tax payable by it was 3 per cent eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty under section 13(5), disposed of the matter laconically. The only assigned reason to uphold the penalty was that the order under section 13(4)(a) was valid and strictly in accordance with law and therefore, the levy of penalty cannot be called in question. The approach is lackadaisical, and shows nonapplication of mind. He has not discussed the explanations and submissions made on behalf of the assessee in support of its claim of bona fides. He has also not taken note of the cancellation of penalty imposed under section 11(3). Non-consideration of relevant materials vitiates his order. 11.. The learned Standing Counsel, however, strenuously urged that the ratio of the decision in the case of Hindustan Steel Ltd. [1970] 25 STC 211 (SC), is not applicable to proceedings under section 13(5) as, according to him, a Full Bench of this Court in the case of Gangaram Chapolia [1976] 103 ITR 613, so decided. It is further submitted that the levy of penalty under section 13(5) is automatic in case of failure to comply with the notice of demand, and even no opportunity to the assessee before levy of penalty is stipulated. On a close reading of the decision in the case of Gangaram C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing authority." We concur with the views expressed. Even though a hearing has not been specifically provided for, before imposition of penalty under section 13(5), yet principles of natural justice require extending such an opportunity. Our view finds support from decision of the Supreme Court in the case of Nand Lal Raj Kishan v. Commissioner of Sales Tax, Delhi reported in [1961] 12 STC 324. In that case the Supreme Court was dealing with the legality of demanding additional security. The relevant section 8A of the Bengal Finance (Sales Tax) Act, 1941, which was in force in Delhi did not provide for any enquiry before demand of security. It did not provide for an opportunity being given to the person against whom the order was proposed to be passed, of being heard before such an order was passed. The court overruled the contention that the authority proposing to demand security was not fettered by any restriction and that no opportunity was required to be extended before demand of the security. The court at page 329 held as follows: "As to the last contention that the section does not provide for any enquiry or any opportunity being given to the person against whom the order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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