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TMI Blog2010 (2) TMI 1088X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent No. 3 to the petitioner to produce the accounts and documents for the purpose of making assessment together with any objection, which the petitioner may have, the notice having been issued on the ground that the petitioner had not furnished returns correctly for the assessment year 2003-04. The notice also directed the petitioner to show cause as to why the petitioner shall not be made liable to pay, in addition to the amount, which may be assessed as tax, penalty under the provisions of section 13 of the TST Act. The notice was followed by an order of assessment, dated May 18, 2009 whereby respondent No. 3, while assessing a sum of Rs. 9,45,61,497 as tax payable by the petitioner, imposed interest of a sum of Rs. 7,29,956.87 and penalty of Rs. 35,03,793.10. A notice of demand was accordingly raised, on May 18, 2009, itself. As against the amount assessed as tax payable by the petitioner and interest charged on the said unpaid amount of tax, while the petitioner preferred a statutory appeal, it has assailed the penalty, imposed by the order, dated May 18, 2009, aforementioned in this writ petition and also the notice of demand issued in this regard. It is, thus, the impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned order and the notice of demand, it needs to be pointed out that under section 8(1) of the TST Act, every registered dealer shall furnish such returns of his turnover by such dates and to such authorities as may be prescribed. In the case of any other dealer, whose business, in the opinion of the prescribed authority, is such as to render him liable to pay tax under the TST Act for any year or part thereof, the prescribed authority may serve, within three years of the completion of that year, a notice, in the prescribed form, upon the dealer requiring him to furnish return of his turnover and such dealer shall thereupon furnish the return within the period and to the authority mentioned in the notice. Section 8(3) gives a right to a dealer to furnish a revised return at any time before the assessment is made on the original return if the dealer discovers any omission or other error in any return furnished by him either under sub-section (1) or sub-section (2) of section 8. When a prescribed authority is satisfied that the returns furnished by a registered dealer under sub-section (1) or under sub-section (2) of section 8 thereof are correct and complete, he shall, by an order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of any proceedings under this Act is satisfied that any dealer,- (a) has without reasonable cause, failed to furnish the return which he was required to furnish under section 8 or section 11, or has, without reasonable cause, failed to furnish it within the time allowed and in the manner required, or (b) has without reasonable cause, failed to comply with a notice under sub-section (2) of section 9, or (c) has concealed the particulars of his turnover or deliberately furnished inaccurate particulars of such turnover, or (d) has evaded in any way the liability to pay tax, he may direct that such dealer exceeding one and half times that amount but which shall not be less than 10 per cent that amount. (2) No order under sub-section (1) shall be made unless the dealer has been heard or has been given a reasonable opportunity of being heard. (3) (deleted) (4) The penalty payable under the section shall be paid by such date as may be specified in the notice of demand and, where no such date is specified, it shall be paid within thirty days of the service of the notice. 13A. (1) If the Commissioner is satisfied that any transporter has delivered taxable goods to any person witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en given to the petitioner before the impugned order imposing penalty was passed, what needs to be noted is that the notice, dated June 11, 2009, aforementioned, is a notice, which was, admittedly, issued under section 9(2) of the TST Act. The questions, therefore, are as to what section 9(2) provides and whether a notice, under section 9(2) or 9(4), is sufficient compliance of the requirement of giving of notice under section 13(2) to the person on whom penalty is proposed to be imposed? Section 9(2), it may be borne in mind (as already pointed out above), empowers the prescribed authority to require a dealer to produce evidence in support of his return and sub-section (4) of section 9 empowers the prescribed authority to make assessment to the best of his judgment and determine the tax payable by the dealer on the basis of such best judgment assessment. Unless, therefore, a dealer fails to comply with a notice as regards production of evidence as may have been issued to him by a prescribed authority, the question of not complying with the requirement of section 9(2) or section 9(4) does not arise at all. This apart, a mere failure to comply with a notice, which may have been issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the ground as to why penalty was sought to be imposed was known to the person on whom the penalty was proposed to be imposed. The imposition of penalty is not a routine affair nor can the penalty be imposed as an automatic consequence of the conditions prescribed by clauses (a), (b), (c) and (d) of section 13(1). The act of imposition of penalty on failure to perform a statutory obligation is an exercise of discretion of a prescribed authority and such discretion has to be exercised judicially and on consideration of all relevant circumstances. The petitioner rightly contends that in order to justify imposition of penalty, the authority concerned must not only have reasons to hold that there has been a default, but must also be satisfied that there was no good and sufficient reasons for the default. The order, imposing penalty, must assign reasons reflecting that the authority has applied his mind judicially to the facts and circumstances of a given case and has considered the explanation, if any, submitted by the assessee. Section 13 is a complete code inasmuch as section 13 not only embodies the conditions, which may make the assessee liable to suffer imposition of penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of penalty. In Hindustan Steel Ltd. v. State of Orissa reported in [1970] 25 STC 211 (SC); [1969] 2 SCC 627, the apex court had, which dealing with imposition of penalty under the Orissa Sales Tax Act, 1947, which provide for imposition of penalty on a person for his failure to register himself as a dealer under the said Act, pointed out (at page 214 of STC): "8. Under the Act penalty may be imposed for failure to register as a dealer: section 9(1) read with section 25(1)(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. 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 lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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