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TMI Blog1991 (3) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... l so purchased was not used in the manufacture of goods for sale? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the imposition of penalty under section 45(1)(b) of the Gujarat Sales Tax Act, 1969, by the learned Assistant Commissioner in suo motu revision was legal and valid (although the assessing officer had not imposed any penalty under the said provisions of law)?" 2.. Relevant facts giving rise to the present reference are required to be stated and are as under: (i) The applicant is a public limited company carrying on business of extraction of oil from oil-cakes by solvent extraction process and of selling the oil so extracted. It is registered both under the Gujarat Sales Tax Act, 1969 and under the Central Sales Tax Act, 1956. During the calendar year 1973, the applicant had purchased certain quantity of hexine oil both from the State of Gujarat as well as from outside the State of Gujarat for use in the process of extraction of oil. The quantities of hexine oil so purchased were admittedly stored in the same containers and from the same containers the oil was used in the process of extraction of oil. (ii) Bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e oil purchased and covered by certificate issued in form 19 under the said Act and in form "C" under the Central Act was used for purpose other than that of extraction of oil for the purpose of the company, the assessing officer had failed to notice that there was liability of applicant to pay purchase tax under section 16(1)(a) of the said Act. The Assistant Commissioner, therefore, invoked his revisional power under section 67 of the said Act, and after issuing notice to the applicant proceeded to pass the order to levy purchase tax of Rs. 14,362.08 under section 16(1)(a) of the said Act, and he also imposed penalty of Rs. 1,436.20 under section 45(1)(b) of the said Act. (viii) Being aggrieved by the said order of the Assistant Commissioner, the applicant carried the matter to the Tribunal in further revision and the Tribunal by its judgment and order dated 29th December, 1979, confirmed the order passed by the Assistant Commissioner. (ix) When the Tribunal was, thereafter, moved by the applicant under section 69 to refer certain questions of law for our decision, the Tribunal has referred the above referred questions of law for our decision. 3.. In order to answer questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant has incurred liability to pay purchase tax under section 16(1)(a) of the said Act, and that the Sales Tax Officer had failed to levy purchase tax. Mr. R.D. Pathak, learned counsel for the applicant, submits that the Sales Tax Officer has not considered the liability of the applicant to pay purchase tax under section 16(1)(a) and since the question of liability to pay purchase tax was not at all considered by the Sales Tax Officer, the said liability could not have been fastened by the Assistant Commissioner while exercising his revisional powers. We are afraid we cannot accept such a specious contention. From the language of section 67 it becomes clear that the revisional authority has power to revise the order of the subordinate officer and to pass any order which such authority thinks to be just and proper. Such a revisional power cannot be restricted to a case where the subordinate authority has positively exercised power and has committed some error or illegality in exercise thereof. Even in cases where the authority has either failed or omitted to exercise power to levy tax, the revisional authority can exercise its power. The order of assessment is one composite whole a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he applicant itself for manufacturing de-oiled cakes for sale by itself. In the absence of any satisfactory evidence on this aspect and failure of the applicant to establish that there was no contravention of any of the recitals contained in the certificate of form 19 we are of the opinion that it could not be said that the lower authorities were wrong in levying purchase tax on 30 per cent of the purchase of hexine oil made by the applicant-company against certificate in form 19 from the dealers inside the State of Gujarat. It is undoubtedly true that while fixing the liability the Assistant Commissioner of Sales Tax has adopted a rough and ready formula. He has, in fact, found that hexine oil which was purchased against form 19 and against form "C" was kept in common storage tank. The applicant was not in a position to state as to which quantity of hexine oil out of the said mixed up quantity of hexine oil was used for manufacturing de-oiled cakes for third parties on job-work basis. He, therefore, applied the method of proportion. He found that the goods manufactured by the applicant during the relevant year for third parties on job-work basis worked out to approximately 30 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said record the Assistant Commissioner of Sales Tax found out that there was breach of recitals contained in the certificate in form 19. In his submission, once the breach was noticed, the liability to pay purchase tax arises under section 16(1)(a) of the said Act. He submits that, in fact, the Sales Tax Officer has issued notice for initiation of penalty proceedings, and therefore, it could not be said that penalty proceedings were not initiated by the Sales Tax Officer. He submits that simply because he has failed to assess the applicant to purchase tax and to impose penalty it could not be said that the revisional authority thereafter has no power to impose penalty while exercising revisional jurisdiction. 7.. Before we proceed to deal with these rival submissions, and to answer the third question referred to us for our decision, it would be necessary for us to state that from the record of the case, the learned Assistant Government Pleader was in a position to show to us the notice issued by the Sales Tax Officer to the applicant under section 45(1)(b) of the said Act. The said notice is dated 28th October, 1975 and it specifically calls upon the applicant to show cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it cannot encroach upon the field of another authority. However, that would not mean that there is total bar on exercising revisional power on proper enquiry being made by the revisional authority into the order passed by the subordinate authority or into the facts arising from the record and material before the subordinate authority. Before the said Division Bench it was found that the Sales Tax Officer had not issued any show cause notice to impose penalty under section 36(1) of the Bombay Sales Tax Act and not purported to invoke the original penalty jurisdiction. The Division Bench, therefore, found that the Assistant Commissioner while exercising revisional power could not exercise penalty jurisdiction when Sales Tax Officer has not invoked that power at all. The Division Bench also referred to the Division Bench judgment of the Madras High Court in the case of Ramaswamy Pillai reported in [1968] 22 STC 224. In the case before the Madras High Court original authority had issued show cause notice for penalty. However, while passing the order of assessment, it was absolutely silent as regards imposition of penalty. Even if no penalty was imposed, the order of original auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stinct and different. 10.. Keeping this distinction in mind we shall have to decide as to whether the revisional authority can impose penalty, and if so, under what circumstances. We are of the opinion that the proceedings to levy penalty under section 45 of the said Act are independent and distinct proceedings. Language of section 45 suggests that the authority empowered to impose penalty has discretion. He may or may not impose penalty. He may impose any amount of penalty so as not to exceed the limit prescribed by section 45(1)(b). Penalty will not be imposed merely because it is lawful to do so. In fact, it is the exercise of quasi-judicial powers by quasi-judicial authority. In the case of Nowroji N. Vakil Co. v. State of Gujarat [1979] 43 STC 238, the Division Bench of this Court with reference to penalty proceedings observed as under: "An order imposing penalty under section 45(1) is the result of a quasicriminal proceeding and penalty will not ordinarily be imposed thereunder unless the concerned dealer either acted deliberately in contravention of the certificate or in conscious disregard of the declaration or was guilty of conduct contumacious or dishonest. Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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