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TMI Blog2023 (4) TMI 760X X X X Extracts X X X X X X X X Extracts X X X X ..... tain rule of law to be followed and reposes conduct and application of mind, testing whether the delegates of it acted rationally, fairly without fear and favour taking all relevant fact and material considerations. Discretion conferred, if unqualified and untrammelled, it has to be exercised sparingly with abundant caution when facts and circumstances warrant. Such being conceptual understanding of the term discretion based on well-settled dicta of different Courts and its application to fact-situation of given case, considering the present case in the said perspective, it seems that the learned Odisha Sales Tribunal, while considering certain allegations out of eight categories as reflected in the Assessment Order based on the contents of Fraud Case Report as unsustainable but for two, failed to apply its judicial discretion while imposing penalty by invoking powers under Section 43(2) of the OVAT Act. Discretion as applied by the Tribunal should have been supported by independent reason for exercise of said power. In the case at hand, the learned Odisha Sales Tax Tribunal after computing the tax effect on establishing suppression of turnover to the tune of Rs. 6,00,332/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e scope in interfering with the factual adjudication made by the learned Odisha Sales Tax Tribunal, Cuttack, question Nos. I, II and III are answered against the petitioner-assessee and in favour of the Revenue-opposite party. So far as question No. IV is concerned, this Court, having noticed infirmity in exercise of power and improper use of discretion to impose of penalty under Section 43(2) of the OVAT Act by the learned Odisha Sales Tax Tribunal, answers said question in the affirmative, i.e., in favour of the assessee-dealer and against the opposite party- Revenue. The sales tax revision petition is disposed off. - STREV NO. 53 OF 2017 - - - Dated:- 17-4-2023 - HONOURABLE DR. JUSTICE B.R. SARANGI AND HONOURABLE MR. JUSTICE MURAHARI SRI RAMAN Counsel appeared for the parties: For the Petitioner : M/s. Rudra Prasad Kar, Aditya Narayan Ray, Niranjan Paikray, and Bhabani Prasad Mohanty, Advocates For the Opposite Party : Mr. Sunil Mishra, Additional Standing Counsel (CT GST Organisation) MURAHARI SRI RAMAN, J. M/s. Dhabaleswar Traders, a partnership firm, has approached this Court invoking provisions of Section 80 of the Odisha Value Added Tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peas established by the learned Assessing Officer in the assessment order. Hence, in absence of supporting documentary evidences to the effect the contentions raised in the grounds of appeal is not convincing as true and correct. In this context the opinion of the forum is that the learned Assessing Officer has rightly assessed the dealer-appellant which needs no interference. In the result appeal fails and the assessment is confirmed. 2.2. Alleging the first appellate order is perverse being passed without assigning any plausible/cogent reason and outcome of non-application of independent mind, the petitioner carried the matter before the Odisha Sales Tax Tribunal under Section 78 of the OVAT Act which was registered as S.A. No.80 (VAT) of 2016-17. 2.3. The learned Sales Tax Tribunal, out of eight counts of allegations suggested on the basis of incriminating materials seized by the Investigating Officials, while accepting the explanation and arguments of the counsel for the petitioner-dealer, vide Order 11.05.2017 held that on account of following aspects the suppression has been established: i. Hand written slips numbering 1 to 89 which involved an amount of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Odisha Sales Tax Tribunal came to sustain the finding of suppression of sales of the authorities below without ascribing any cogent reason and therefore, the order is perverse being outcome of non-application of mind? IV. Whether on the facts and in the circumstances of the case, the assessing authority was justified in framing assessment on best of his judgment without rejecting the books of account and / or returns? V. Whether on the facts and in the circumstances of the case, the order of the learned Odisha Sales Tax Tribunal sustaining penalty under Section 43(2) of the Odisha Value Added Tax Act, 2004 and the order of imposition of penalty is legally untenable as it has not ascribed any reason and mechanical in nature? VI. Whether on the facts and in the circumstances of the case, the order of the learned Odisha Sales Tax Tribunal is not justified in confirming imposition of penalty under Section 43(2) the Odisha Value Added Tax Act, 2004, which is contrary to the amendment of sub-section (2) of Section 43 by virtue of the Odisha Value Added Tax (Amendment) Act, 2015? VII. Whether on the facts and in the circumstances of the case, the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra Prasad Kar went on to contend that the learned Tribunal should have appreciated the explanation offered by the petitioner with respect to 89 slips amounting to Rs. 4,20,812/-. 5. The learned counsel for the petitioner with regard to non-receipt of delivery of 10.56 MT of peas out of total 50.56 MT unclean peas sent to M/s. Sai Ram Enterprises submitted that through delivery challans on different dates the petitioner received back 40.00 MT of cleaned peas, but got back 10.56 MT peas on its own arrangement. In absence of any further material particulars brought on record by the Revenue, the plea of the petitioner could not have been doubted. 6. Refuting the allegations as held to be suppressed transactions by the learned Tribunal, Sri Rudra Prasad Kar, learned Advocate stated that the sale transactions which got materialized are recorded and the petitioner having accounted for 50.56 MT of peas, there was no scope for imposition of penalty under Section 43(2) of the OVAT Act inasmuch as it is discretionary. The learned Tribunal having not ascribed reason, the impugned Order-in-Second Appeal is not tenable in the eye of law and thereby the same is liable to be wiped off. 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority raised doubt and suspicion and based on such suspicion, the conclusion could not be arrived at? III. Whether on the facts and in the circumstances of the case, the assessing authority was justified in framing assessment on best of his judgment without rejecting the books of account and/or returns? IV. Whether on the facts and in the circumstances of the case, the order of the learned Odisha Sales Tax Tribunal sustaining penalty under Section 43(2) of the Odisha Value Added Tax Act, 2004 and the order of imposition of penalty is legally untenable as it has not ascribed any reason and mechanical in nature? 8.1. Accordingly, this Court framed the aforesaid questions and proceeded to hear the matter on the consent of both the counsel for the respective parties. ANALYSIS AND DISCUSSIONS: 9. As against the allegation contained in 89 slips, it is the argument of the counsel for the petitioner that slip Nos.1 to 51 contained the name of transporter(s), but that ipso facto would not lead to indicate that sales were effected and they are construed to be fructified sales. In this regard the Assessing Authority merely recorded that the signature of transp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealer relating to sale suppression amounting to Rs. 7,15,319.00 ascertained from the small bound book containing 19 written pages mentioned in Seizure No.4 is surrounded by serious doubt and thus the benefit of doubt will certainly go in favour of the appellant-dealer. Therefore, it can clearly be said that this allegation has not been established conclusively. Per contra, with respect to transactions contained in slip Nos.55 to 89, the learned Tribunal has recorded the following finding: *** But, the visiting officials found out that those slips indicate that sales have been effected and payments have been made to the appellant-dealer on different dates. As the appellant-dealer has failed to adduce any convincing evidence contradictory to the allegation of sale suppression amounting to Rs.4,20,812.00, i.e., the value of goods relating to the transactions with regard to those 89 hand written slips, the same has clearly been established. 9.4. Such being the factual adjudication on due consideration of material available on record and the contentions of the advocate for the petitioner, this Court does not find force in the argument of Sri Kar. Interference in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of value declared by the assessee itself, which has been clearly stated by the Assessing Authority in his order of assessment. Perusal of the assessment order indicates that the demand is raised by confining to transactions alleged to have been suppressed as contained in the Fraud Case Report submitted by the Assistant Commissioner of Sales Tax, Enforcement Range, Berhampur. Therefore, it cannot be said that there was no basis for quantification of the suppression of transactions. 12.1. It is well-nigh recognized vide State of Andhra Pradesh Vrs. Repute Plastic Colours Ltd., (2002) 125 STC 282 (AP) affirmed in State of Andhra Pradesh Vrs. Repute Plastic Colours Ltd., (2008) 15 VST 1 (SC), that if the Court finds that the factual finding is based on some legally admissible evidence, there will not be any scope for the Court to upset the factual finding. The Court cannot go into the question of adequacy or inadequacy of the evidence on the basis of which the Tribunal has recorded the finding. 12.2. It has been observed in V.M. Mohan Vrs. Prabha Rajan Dwarka, (2006) 9 SCC 606 that the High Court had reappreciated the evidence to come to the conclusion different from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 80 of the OVAT Act, this Court may interfere with the finding of the statutory appellate authority/Tribunal if there is error apparent on the face of the record or miscarriage of justice, but cannot assume power of appellate Court for reversing fact finding by re-appreciating the evidence or the materials produced before the Tribunal. Reference may be had to Laxmi Jewellers Vrs. State of Odisha, 2017 SCC OnLine Ori 95 = (2017) 100 VST 220 (Ori). 12.7. The distinction between appeal and revision is glaringly clear and implicit in the said two expressions. Whereas right of appeal is a substantive right, there is no such substantive right in making an application for revision. A right of appeal carries with it a right of rehearing on law as well as fact, unless the statute conferring the right of appeal limits the rehearing in some way. An appeal is a continuation of the proceedings; in effect the entire proceedings are before the Appellate Authority and it has power to review the evidence subject to the statutory limitations prescribed. On the contrary, in the case of revision, whatever powers the revisional authority may or may not have, he has no power to review the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law No. IV posed by the petitioner supra is very much relevant which deserves consideration in the circumstances of the instant case. 13.2. It is submitted by Sri Rudra Prasad Kar, learned counsel for the petitioner that though the learned Sales Tax Tribunal appreciated the fact in respect of certain transactions, other than those found established, that they are not suppressed transactions. Stemming on the statutory provision contained in Section 43(2) it is emphasized that penalty could not have been imposed mechanically without ascribing any reason for doing so. Merely because statute empowers the statutory authority to impose penalty, the same need not be exercised in every circumstance as if the same is concomitant to tax assessed. 13.3. Sri Sunil Mishra, learned Additional Standing Counsel made valiant attempt to justify the imposition of penalty by the learned Tribunal while determining the tax liability by reducing the original demand. He urged that by analysing evidence on record the learned Odisha Sales Tax Tribunal has established that there has been suppression in respect of slip Nos.1 to 89 and 29 written pages contained in the small bound book, and, therefore, u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of tax assessed. 13.5. Review of said Judgment on the said issue of imposition of penalty under Section 43(2) being sought for by the National Aluminium Co. Ltd., this Court allowed the review in National Aluminium Co. Ltd. Vrs. Deputy Commissioner of Commercial Taxes), 2021 (I) OLR 828 by observing thus: 6. While considering the second question viz., whether imposition of penalty under Section 43(2) of the Orissa Value Added Tax Act, 2004 (OVAT Act) can only be levied if the escapement is without any reasonable cause , an observation was made in paragraph 36 of the judgment that penalty is not independent of the tax assessed. If the tax is assessed, imposition of penalty under Section 42(5) is warranted. *** 8. Again in paragraph 39 of the judgment, it is observed as under: *** once the Assessing Officer comes to the conclusion that the dealer is indulged in fraudulent activities and assesses him under Section 43 of the OVAT Act, there is no need for the Assessing Officer to make further investigation to find out whether the escapement is without reasonable cause for the purpose of imposition of penalty under Section 43(2) of the OVAT Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, finds merit in the contention of the learned counsel for the Petitioner that the observation in the judgment dated 9th October 2012, on the aspect of penalty under Section 42 (5) of the OVAT Act was not warranted. All that was required to be observed was that since the question had been rendered academic in view of the finding on issue No.1, the imposition of penalty under Section 43(2) of the OVAT Act, was not automatic and that there is a discretion in the AO in this regard upon finding that there has been an escapement or under assessment of tax. 13.6. Faced with such situation with respect to legal position set at rest by interpreting the provisions provided in Section 43(2) vis- -vis Section 42(5) of the OVAT Act, the argument of Sri Sunil Mishra though appeared attractive, this Court refuses to subscribe to such argument which is contrary to what has been laid in National Aluminium Co. Ltd. Vrs. Deputy Commissioner of Commercial Taxes), 2021 (I) OLR 828. 14. It is urged by the learned counsel for the petitioner that when the Tribunal sought to exercise discretion in imposing penalty under Section 43(2), it should have given cogent and germane reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... folly, heady violence or rash injustice. When applied to a Court of Justice or Tribunal or quasi-judicial body, it means sound discretion guided by law. It must be governed by rule, not by humor; it must not be arbitrary, vague and fanciful but legal and regular. Discretion must be exercised honestly and in the spirit of the statute. It is the power given by a statute to make choice among competing considerations. It implies power to choose between alternative courses of action. It is not unconfined and vagrant. It is canalized within banks that keep it from overflowing. 14.4. In S.P. Road Link Vrs. State of Tripura, (2006) 144 STC 380 (Gau) reference has been made to Kumaon Mandal Vikas Nigam Ltd. Vrs. Girja Shankar Pant, (2001) 1 SCC 182 to observe that discretion means when it is said that something is to be done within the discretion of the authorities, that something is to be done according to the rules of reason and justice, not according to private opinion, according to law, and not humour. It is to be, not arbitrary, vague, and fanciful, but legal and regular. And it must be exercised within the limit, to which an honest man competent to the discharge of his o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conferred with discretion should be made by application of known principles and rules and, such decisions should be predictable and the citizen should know where he stands. Thus, discretion is fixed range within which any authority acts without violating legal obligation to act and refrain from acting. It is canalized within banks that keep it from overflowing. 14.8. In the case of Patnaik and Co. (P.) Ltd. Vrs. The State of Odisha and Others, (1975) 36 STC 362 (Ori) taking cognizance of the expression may direct that the dealer shall pay by way of penalty used in Section 13(5) of the Odisha Sales Tax Act, 1947, it has been observed that, 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 authority may not impose any penalty. There may be cases calling for imposition of maximum p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47. Summarising the above discussion, this Court holds: (a) In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially. (b) A quasi-judicial authority must record reasons in support of its conclusions. (c) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well. (d) Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power. (e) Reasons reassure that discretion has been exercised by the decision-maker on relevant grounds and by disregarding extraneous considerations. (f) Reasons have virtually become as indispensable a component of a decision-making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. (g) Reasons facilitate the process of judicial review by superior courts. (h) The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of Odisha, 2016 (II) OLR 1131 (Ori) discussed importance of assignment of reason in the following lines: 8. The meaning of the expression reason as stated by Franz Schubert: reason is nothing but analysis of belief. In Black s Law Dictionary, 5th Edition, reason has been defined as: a faculty of the mind by which it distinguishes truth from falsehood, good from evil, and which enables the possessor to deduce inferences from facts and from propositions. In other words, reason means the faculty of rational thought rather than some abstract relationship between propositions and by this faculty, it is meant the capacity to make correct inferences from propositions, to size up facts for what they are and what they imply, and to identify the best means to some end, and, in general, to distinguish what we should believe from what we merely do believe. The importance of giving reason, it reveals a rational nexus between facts considered and conclusions reached. 9. In Union of India Vrs. Madal Lal Capoor, AIR 1974 SC 87 and Uma Charan Vrs. State of MP, AIR 1981 SC 1915, the Apex Court held reasons are the links between the materials on whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any deduction from his turnover, (v) dealer has been allowed input tax credit to which he is not eligible, it is under two circumstances, viz., escapement or under-assessment , power to impose penalty is conferred under sub-section (2) by using discretion. 15.1. As is seen from the Order-in-Second Appeal that the learned Odisha Sales Tax Tribunal imposed penalty invoking provisions of Section 43(2) merely because it has found certain transactions as suppression of turnover and tax has been assessed under Section 43(1). On analysis of both the provisions contained in subsection (1) and sub-section (2), it would be pertinent to say that Section 43(2) of the OVAT Act confers discretionary power on the Authority to approach judiciously. It needs to be emphasized that when a statute confers powers on an authority to apply a standard, as laid down in Section 43(2) of the OVAT Act, it is expected of him to apply it on case to case basis, and not to fetter his discretion by declaration of rules or policy to be followed uniformly in all the cases. Generalization on matters which rest on discretion and the attempt to discover formulae of universal application when facts are bou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avour of the assessee and against the department. It is beneficial to extract the following observation of this Court appearing in the said Order: 3. As explained by this Court in National Aluminium Co. Ltd. Vrs. Deputy Commissioner of Commercial Taxes, (2012) 56 VST 68 (Ori) read with clarificatory order dated 8th March, 2021 in RVWPET Nos. 211, 212 213 of 2013 (National Aluminium Co. Ltd. Vrs. Deputy Commissioner of Commercial Taxes), [reported at 2021 (I) OLR 828], there is a discretion in the Assessing Officer under Section 43(2) of the OVAT Act to impose penalty. It is imperative for the Assessing Officer to be satisfied that the escapement of under assessment of tax is without any reasonable cause . 4. As far as present case is concerned, the assessment order of the Assessing Officer does not record the satisfaction of the Assessing Officer that wrongful availment of ITC by the Petitioner was without reasonable cause . Thus, the essential component of Section 43(2) of the OVAT Act for attracting the penalty, viz., the satisfaction of the Assessing Officer that the escapement of tax was without reasonable cause, is absent in the present case. 18. Penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly on the language used. If the meaning of the provision is reasonably clear, Courts have no jurisdiction to mitigate harshness. A Court of law, has nothing to do with the reasonableness or unreasonableness of a provision of a statute except so far as it may hold it in interpreting what the Legislature has said. If the language of a statute be plain, admitting of only one meaning, the Legislature must be taken to have meant and intended what it has plainly expressed, and whatever it has in clear terms enacted must be enforced though it should lead to absurd or mischievous results. The Court is not to be concerned with the question whether the policy that the provision embodies is wise or unwise, or whether it leads to consequences just or unjust, beneficial or mischievous. As long as there is no ambiguity in the statutory language, resort to any interpretative process to unfold the legislative intent becomes impermissible. The supposed intention of the Legislature cannot then be appealed to whittle down the statutory language which is otherwise unambiguous. If the intendment is not in the words use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at all. Other methods of performance are necessarily forbidden. The said principles have been followed subsequently State of Uttar Pradesh Vrs. Singhara Singh, AIR 1964 SC 358, Dhananjay Reddy Vrs. State of Karnataka, AIR 2001 SC 1512, Chandra Kishore Jha Vrs. Mahabir Prasad, AIR 1999 SC 3558, Gujrat Urja Vikas Nigam Ltd. Vrs. Essar Power Ltd., AIR 2008 SC 1921, Ram Deen Maurya Vrs. State of U.P., (2009) 6 SCC 735. 11. It is apt to refer here the legal maxim Expressio unius est exclusion alterius i.e. if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and any other manner are barred. Similar question had come up for consideration before this Court in Subash Chandra Nayak Vrs. Union of India, 2016 (1) OLR 922 and this Court in paragraph-8 observed as follows: *** the statute prescribed a thing to be done in a particular manner, the same has to adhered to in the same manner or not at all. The origin of the Rule is traceable to the decision in Taylor Vrs. Tailor, (1875) LR I Ch D 426 , which was subsequently followed by Lord Roche in Nazir Ahmad Vrs. King Emperor, AIR 1936 PC 253(2). But the said principle h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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