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TMI Blog2007 (10) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... rate defiance of law and/or establishes the petitioner's dishonest conduct and also establishes its conscious disregard of its statutory obligation and therefore, levy of penalty in the present case is wholly justified. But since we have determined the suppression of sales at ₹ 928.50 paise and further, answer the question No. 1 by directing enhancement of turnover to ₹ 18,570 and levy of tax thereon, we, therefore, answer question No. 2 framed above, in favour of the Revenue and hold that in the facts and circumstances of the case, levy of penalty under section 12(8) of the Act is justified but should be limited to an amount would extent equal to the tax amount that would be determined on the basis of the answer to question No. 1 framed above. Revision allowed. - - - - - Dated:- 4-10-2007 - GANGULY A.K. C.J. AND MAHANTY I. , JJ. I. MAHANTY J. The petitioner, M/s. Bansi Tyres Services has filed this revision under section 24(2)(b) of the Orissa Sales Tax Act, 1947, inter alia, seeking to raise certain questions of law arising out of the order dated May 20, 1993, passed by the Orissa Sales Tax Tribunal, Cuttack. By the order dated July 14, 1997, this court was p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odhan Jethmal (Private) Ltd. v. State of Orissa [1970] 26 STC 536 as well as on a decision of this court in the case of Badriprasad Agarwalla v. State of Orissa [1993] 91 STC 114. The second contention of the learned counsel for the petitioner is that the penalty of Rs. 10,000 imposed on the petitioner was wholly unjustifiable and was imposed mechanically without any application of discretion. Mr. Sahoo further submitted that the liability to pay penalty does not arise merely upon the proof of any default. In this regard, Mr. Sahoo relied upon a decision of the Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa [1970] 25 STC 211; AIR 1970 SC 253 in which the honourable Supreme Court has held that the liability to pay penalty does not arise merely upon proof of default . . . An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut of this sales of Rs. 712 had not been reflected in the sales register. Slip No. 3: In this slip, the sales on February 15, 1983 and February 16, 1983 of the business has been written. Out of this sale of Rs. 216.50 has not been accounted for in the sales register and the expenditure of Rs. 156.50 paid to Sri S. Paul of Calcutta Co. has not been reflected in regular books of account. On the basis of the aforesaid vigilance report, the assessing officer came to the following conclusion: As per this sale the dealer is seen to have effected sales of Rs. 4,989.08 on February 16, 1983 and Rs. 3,040.95 on February 15,1983. The charges of suppression of purchases and sales have clearly been established. The total suppression detected stand at Rs. 11,000 apparently. Having due regard to the suppression detected, size and location of the business and nature of trade, the escaped G.T.O. which is also the escaped T.T.O. is determined at Rs. 2,00,000. This is computed as follows: 8% Rs. 1,00,000 12% Rs. 1,00,000 Tax payable comes to Rs. 20,000. Penalty of Rs. 20,000 is imposed under section 12(8) of the O.S.T. Act. Tax and penalty which comes to Rs. 40,000 shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Slip No. 2: relates to sale of Rs. 712 which the petitioner had not reflected in the sale register and Slip No. 3 relates to sale amount of Rs. 216.50 which had not been accounted for apart from expenditure of Rs. 156.50 which had not been reflected in regular books of account. Obviously non-disclosure of expenditure is of no relevance to suppression of sales amounting to Rs. 712 in Slip No. 2 and further suppression of sale amounting to Rs. 216.50 paise in Slip No. 3, taken together establish suppression of sales to an extent of Rs. 928.50 paise. But the assessing officer erroneously computed total suppression at Rs. 11,000, and then enhanced the petitioner's turnover to Rs. 2,00,000 , i.e., nearly 20 times of the amount of suppression. Therefore, taking the total suppression as Rs. 928.50 paise and adopting the same multiplier of 20 the turnover enhancement would work out to Rs. 18,570. In this case, we answer the question of law framed herein above to the following effect: In the facts and circumstances of the present case, suppression of sales has been determined by us to be Rs. 928.50 paise and therefore, the enhancement of sales turnover amount by the auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the dealer shall pay, by way of penalty, in addition to the tax assessed under this subsection, a sum not exceeding one and a half times of the said tax so assessed. It is clear from the above that levy of penalty shall not be made automatically or as a matter of course and that is why, the Legislature has used the term may which clearly manifest that such levy depends upon exercise of judicial discretion on the part of the Sales Tax Officer before making such levy. In the case at hand, it is clear that there was no reasoning in the order passed under section 12(8) of the Act to justify levy of such penalty. From the operative portion of the re-assessment order under section 12(8) of the Act, it clearly reveals that penalty has been levied in a mechanical manner and no reason whatsoever has been stated in the order for the levy of such penalty. From Slip No. 2 and Slip No. 3 which were detected by the Inspector of Vigilance, the total suppression has been determined to Rs. 928.50 paise. Therefore, one we have come to a finding that the petitioner has, in fact, suppressed the sales, then in terms of the judgment in the case of Hindustan Steel Ltd. [1970] 25 STC 211 (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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