Court denies applicability of entry tax on scheduled goods, overturns penalty citing reasonable basis.

The Court declined to frame the first question on the applicability of the levy under Section 3 of the Odisha Entry Tax Act on scheduled goods imported from outside India, citing a settled legal position. Regarding the levy of penalty under Section 10(2) of the Act, the Court found that the non-payment of Entry Tax had a reasonable basis, leading to the conclusion that the penalty was not justified. Consequently, the Court set aside the penalty imposed, allowed the revision petition, and directed the issuance of an urgent certified copy of the order.

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Issues Involved:
1. Interpretation of Section 3 of the Odisha Entry Tax Act, 1999 on scheduled goods imported from outside India
2. Levy of penalty under Section 10(2) of the Act

Analysis:

1. Interpretation of Section 3 of the Odisha Entry Tax Act:
The revision petition raised two questions related to the Order passed by the Orissa Sales Tax Tribunal. The first question queried the applicability of the levy under Section 3 of the Odisha Entry Tax Act on scheduled goods imported from outside India. The Court referred to a Supreme Court decision in State of Kerala v. Fr. William Fernandez, (2021) 11 SCC 705, which settled the issue. Consequently, the Court declined to frame the first question, affirming the settled legal position on the matter.

2. Levy of Penalty under Section 10(2) of the Act:
Regarding the second question on the levy of penalty under Section 10(2) of the Act, the Court considered the legal position as of October 2017. It noted that many Dealers-Assessees were under a genuine impression that Entry Tax was not payable on imported goods until the legal position was clarified. The Court observed that under Section 10(2) of the OET Act, the Assessing Authority has discretion to levy a penalty when there is an escapement or under-assessment of tax without any reasonable cause. In this case, the Court found that the non-payment of Entry Tax by the Petitioner had a reasonable basis, indicating no willful or deliberate attempt to evade payment. Therefore, the Court held that the levy of penalty was not justified.

In conclusion, the Court answered the second question in favor of the Petitioner, setting aside the penalty imposed in the Assessment order and subsequent orders. The revision petition was allowed, and the Court directed the issuance of an urgent certified copy of the order.

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