TaxTMI 
TaxTMI 
2023 (4) TMI 760
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....arising out of Assessment framed vide Order dated 19.08.2015 under Section 43 of said Act, 2004 read with Rule 50 of the Odisha Value Added Tax Rules, 2005 by the Joint Commissioner of Sales Tax, Ganjam Range, Berhampur pertaining to the tax periods from 01.03.2009 to 31.03.2012. FACTS OF THE CASE: 2. The assessee-petitioner being a registered dealer under the Odisha Value Added Tax Act, 2004 (for short referred to as "OVAT Act"), carries on its business in edible oil, pulses, dal, sugar, coconut oil, vanaspati ghee and wheat on wholesale-cum-retail basis. On the allegations contained in the Fraud Case Report bearing No.12/2011-12 submitted by the Assistant Commissioner of Sales Tax, Enforcement Range, Berhampur, proceeding for assessment under Section 43 of the OVAT Act was initiated. Consequent upon participation of the dealer in the said proceeding and furnishing explanation(s) in respect of the objection/allegation, the Joint Commissioner of Sales Tax, Ganjam Range, Berhampur (for brevity referred to as "Assessing Authority") passed Assessment Order dated 19.08.2015 by raising demand to the tune of Rs.1,57,878/- comprising tax of Rs.52,626/- and penalty of Rs.1,05,252/- i....
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....f payments thereof. With respect to second allegation qua M/s. Sai Ram Enterprises, Antei the learned Sales Tax Tribunal observed that the dealer failed to produce delivery challan for 10.56 MT of peas out of 50.56 MT of peas sent for cleaning purpose to M/s. Sai Ram Enterprises, which the petitioner claimed to have received by making own arrangement. 2.5. Upholding the allegations of suppression with regard to above counts, the learned Tribunal quantified total suppression to be of Rs.6,00,332/- and by applying rate of tax @ 4% tax was calculated to Rs. 24,013/-. 2.6. Besides aforesaid amount of tax, the learned Tribunal also imposed penalty of Rs. 48,027/- under Section 43(2) of the OVAT Act, which is equal to twice the amount of tax so determined. 2.7. Thus, the learned Odisha Sales Tax Tribunal interfered with the confirming order of the Appellate Authority and thereby reduced the demand accordingly. 3. Still aggrieved, the petitioner-dealer, with a prayer to set aside the Order-in-Second Appeal dated 11.05.2017 (Annexure-3) moved this Court by way of instant revision under Section 80 of the OVAT Act, and posited the following questions of law: I. Wh....
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....noted down in the written slips Nos. 1 to 51 and for transportation the names of the transporters are mentioned therein. The corresponding invoices were prepared after the sale being materialized. Further, with regard to slip Nos. 53 and 54, it was clarified before the authority by the petitioner that though amount of payments were reflected, since the petitioner did not receive full payments, the sales were not fructified and no despatches were made. As regards slip Nos. 55 to 89, they are mere orders received from brokers and such transactions were taken into account books after sales got materialised with the customers. The learned Tribunal while discarding such explanation with regard to aforesaid 89 slips, determined the sale suppression to the tune of Rs. 4,20,812/-. Sri Kar argued that such finding of fact is based on surmises and conjectures, as the said Tribunal in respect of Seizure No. 4 relating to 19 numbers of written slips, wherein similar nature of transactions were recorded, has accepted that the allegation of suppression could not be established by the taxing authorities. He pressed into service the following observation made by the Tribunal (paragraph-7 of its Or....
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....r of Sales Tax, Enforcement Range, Berhampur. The amount of tax of Rs.24,013/- on the quantified suppression to the extent of Rs.6,00,332/- by the Tribunal being paltry, the matter does not deserve consideration. However, in reply to the contentions raised in the revision petition based on which the arguments were advanced by the counsel for the petitioner, Sri Sunil Mishra, learned Additional Standing Counsel brought to the notice of this Court that the assessee-dealer did not discharge its burden at the time of inspection and in order to escape the rigours of penalty under Section 43(2) on account of tax liability determined in the assessment, the petitioner has taken false pleas before the taxing authorities. As against total demand of Rs.1,57,878/- inclusive of penalty raised in the assessment which was confirmed by the Appellate Authority, the learned Sales Tax Tribunal having intervened with concurrent finding, the impugned order needs no further consideration. Factual disputes settled by the learned Sales Tax Tribunal does not get attracted to be considered in the present proceeding under revisional jurisdiction of this Court under Section 80 of the OVAT Act. QUESTIONS OF....
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....ed the fact that Investigating Officials found that payments were received on different dates on these transactions. Further, as to slip Nos.55 to 89, the supply orders procured through brokers were accounted for as and when the sales were fructified. 9.1. Section 2(45) of the OVAT Act stipulates that it is "transfer of property in goods" for "cash, deferred payment or other valuable consideration" attracts attributes of "sale" and as per Section 2(46), "sale price" is the consideration received or receivable for the sale of any goods. 9.2. The learned Sales Tax Tribunal confirmed the finding of the Assessing Authority that the Investigating Officials on verification found signatures of transporters on the slip Nos.1 to 51 and evidences of consideration being received on account of the transactions reflected in slip Nos.53 and 54 as also slip Nos.55 to 89 were on record. Such is the factual finding which seldom gives scope for this Court to re-appreciate the evidence. 9.3. Much emphasis has been laid by the learned counsel for the petitioner in connection with slip Nos.55 to 89 which contained alleged transactions of sale effected by procuring orders through brokers. It is....
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....elivery challan(s) as proof of receipt of 40.00 MTs of peas, there was no plausible explanation put forth in not producing the delivery challan with respect to 10.56 MTs of peas. The plea of self-arrangement (without delivery challan) has been disbelieved by the learned Tribunal. 10.1. It may be pertinent to say that aforesaid observations of the learned Odisha Sales Tax Tribunal are essentially facts based on analysis of material particulars on record. Having regard to the evidence on record, the learned Tribunal has interfered with the concurrent finding of the statutory authorities and reduced the demand of tax to Rs.24,013.28P. 10.2. The factual dispute before the statutory authorities including the Tribunal has been considered on the basis of material on record and the factum of receipt of consideration has also not been successfully dispelled by the petitioner. Therefore, the fact of suppression of turnover to the extent of Rs.6,00,332/- has been found to be established by all the fora below. Such questions of fact cannot be re-adjudicated in the revision proceeding before this Court, as they are not questions of law. 11. It is further contended that the best judgmen....
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....th concurrent findings of fact by the lower authority, unless the case involves any question of law. Traditionally, in exercise of revisional jurisdiction, High Court does not interfere with concurrent finding of fact, unless the findings recorded by the lower authorities are perverse or based on an apparently erroneous principles which are contrary to law or where the finding of the lower authority was arrived at by a flagrant abuse of the judicial process or it brings about a gross failure of justice. Refer, Agarwal Oil Refinery Corporation Vrs. Commissioner of Trade Tax, (2011) 13 SCC 275. 12.4. All the questions at issue had to be tried in the light of evidence, oral or otherwise, and surrounding circumstances, before the lower authorities. Where High Court's jurisdiction is confined to questions of law, if appellate Court recorded definite findings, it is not open to the High Court to attempt to re-appreciate that evidence. See, Raruha Singh Vrs. Achal Singh, AIR 1961 SC 1097; Commissioner of Sales Tax Vrs. Kumaon Tractors & Motors, (2002) 9 SCC 379; Commissioner of Sales Tax Vrs. Mohan Brickfield, (2006) 148 STC 638 (SC). 12.5. The position of law that issues of fact de....
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.... evidence is not the normal rule and the power thereunder would be sparingly exercised where the findings are absolutely perverse. A finding can be said to be perverse if it is founded on no evidence to support the same or totally against the weight of evidence. So also, it can be said to be perverse if material evidence was missed out for consideration or a totally irrelevant and immaterial aspect formed the foundation for such a finding. Regard may be had to Hero Vinoth (Minor) Vrs. Seshamal, (2006) 5 SCC 545, wherein the following principle has been laid down: "*** in a case where from a given set of circumstances two inferences of fact are possible, the one drawn by the lower appellate Court will not be interfered by the High Court in second appeal. Adopting any other approach is not permissible. ***" 12.9. On noticing above principles, this Court is of the view that interference with the finding of fact is not warranted if it involves re-appreciation of evidence. This Court, therefore, does not find perversity in concurrent finding of fact by the authorities including the learned Odisha Sales Tax Tribunal that the transactions recorded in the seized documents being....
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....n answering question as to whether imposition of penalty under Section 43(2) of the OVAT Act can only be levied if the escapement is without any reasonable cause, it has been held as follows: "36. VAT is indirect tax on consumption of goods. It is the form of collecting sales tax under which tax is collected in each stage on the value added to the goods. The basic object of VAT Scheme is to provide voluntary and self-compliance. It goes without saying that to plug the leakage of revenue, the Legislature enacted law authorizing imposition of penalty for infraction of any statutory provision. We are conscious that generally penalty proceedings are quasi judicial in nature. Quantification of penalty under Section 43 of the OVAT Act is dependent upon the tax assessed under that Section. For the purpose of assessing tax, opportunity of hearing was afforded to the assessee, the explanation of the assessee and its books of account were examined and considered. Penalty is only quantified on the basis of the tax assessed. No discretion is left with the Assessing Officer for levying any lesser amount of penalty. Penalty is not independent of the tax assessed. If the tax is assessed,....
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....Union of India Vrs. Dharamendra Textile Processors and others (2008) Volume-18 VST 180 (SC), not considered the subsequent decision of the Supreme Court in Union of India Vrs. Rajasthan Spinning and Weaving Mills 2009 (Vol.238) ELT Page-3, both of which were in the context of Section 11 AC of the Central Excise Act, 1944. The wording of the said provision was not on par with the wording of Section 43(2) of the OVAT Act. The further grievance is that there was no occasion for the Court to have made any observations as regards the imposition of penalty under Section 42 (5) of the OVAT Act as the said provision was in the context of audit assessment and differently worded from Section 43(2) of the OVAT Act. *** 11. The Court notes that under Section 42(5) of the OVAT Act the penalty levied is "equal to twice the amount of tax assessed" under Section 42(3) or 42(4) pursuant to an audit assessment. There is no discretion with the Assessment Officer (AO) to reduce this amount of penalty. On the other hand, Section 43(2) of the OVAT Act is under the heading "Turnover escaping assessment", and is differently worded. It reads thus: '43 (2) If the assessing authori....
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.... of Rs. 48,026.56, twice the amount of tax demand is imposed under Section 43(2) of the OVAT Act and as such the appellant dealer is required to pay the tax and penalty amounting to Rs. 72,039.84 in total as per the provisions of law. 10. In the result, the appellant is allowed in part. The orders passed by the forums below are hereby set aside to the extent described above. The appellant dealer is directed to pay the tax demand of Rs. 24,013.28 along with penalty of Rs. 48,026.56 in accordance with law. The cross-objection is disposed of accordingly." 14.1. Aforesaid conclusion as recorded by the learned Tribunal in its second appellate order does not reveal that the discretion conferred under Section 43(2) has been utilized by assigning reason. It is manifest from the said order that the Odisha Sales Tax Tribunal straightway imposed penalty after determining the tax component on recording the finding that the suppression of turnover was established to the tune of Rs. 6,00,332/- 14.2. The discretionary exercise of power amounts to something that is not compulsory, but it is left to the discretion of the person or authority involved, such as a discretionary grant. It....
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....dual choice. It prescribes direction to the authority upon whom discretion is vested to act in conformity with statutory provisions and rule of law. It follows that the judgment of the delegatee of power, who is vested with discretion, is his own application of reasonable, conscience mind and thought unguided and uncontrolled by opinion/judgment of others. Discretion is the power delegated specially or implied from the wordings of the statute is oft coupled with responsibility and duty. 14.6. The significant words employed in Section 43(2) of the OVAT Act are "he may direct the dealer to pay, by way of penalty". The language itself gives clear indication of application of discretion. Discretion, as it appears from generic sense, may be unrestricted, but in its application it demands certain 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. Absolute discretion of unbridled and....
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....dings are quasi-criminal in nature. Though the language of the section does not give any indication as to how the discretion of the taxing authority is to be exercised, the onus on the dealer would be discharged by preponderance of probabilities as in a civil case and not beyond reasonable doubt. ***" 14.9. It has been clarified in K.L. Tripathi Vrs. SBI, (1984) 1 SCC 43 that exercise of discretionary power involves two elements- (i) objective, and (ii) subjective; and existence of the exercise of an objective element is a condition precedent for exercise of the subjective element. 14.10. 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....
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....m. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants' faith in the justice delivery system. (j) Insistence on reason is a requirement for both judicial accountability and transparency. (k) If a Judge or a quasi-judicial authority is not candid enough about his/her decision-making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism. (l) Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or "rubber-stamp reasons" is not to be equated with a valid decision-making process. (m) It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision-making not only makes the Judges and decision-makers less prone to errors but also makes them subject to broader scrutiny. [See David Shapiro in "Defence of Judicial Candor", (1987) 100 Harvard Law Review 731-37]. (n) Since the requirement to record reasons emanates from the broad ....
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....lusions reached. The reasons assure an inbuilt support to the conclusion and decision reached. The fair play requires recording of germane and relevant precise reasons when an order affects the right of a citizen or a person irrespective of the fact whether it is judicial, quasi-judicial or administrative. The recording of reasons is also an assurance that the authority concerned applied its mind to the facts on record and it is vital for the purpose of showing a person that he is receiving justice." 14.13. It is stated by Hon'ble Supreme Court in State Bank of India Vrs. Ajay Kumar Sood, 2022 SCC OnLine SC 1067 that individual judges can indeed have different ways of writing judgments and continue to have variations in their styles of expression. The expression of a judge is an unfolding of the recesses of the mind. However, while recesses of the mind may be inscrutable, the reasoning in judgment cannot be. While judges may have their own style of judgment writing, they must ensure lucidity in writing across these styles. 14.14. Looking at the impugned Order in such perspective, it can be safely said that the learned Tribunal has missed to ascribe reason for the conclusion a....
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....ting the tax effect on establishing suppression of turnover to the tune of Rs. 6,00,332/-, as if there is absence of discretion in invoking power under Section 43(2) and construing the provision as mandatory in every circumstance, without discussing anything more, simply imposed penalty equal to twice the amount of tax so determined. Such exercise of power, in the opinion of this Court, is arbitrary, illogical and indicative of non-application of mind. Apt here to refer to a decision rendered in Shree Plastics Pvt. Ltd., Berhampur Vrs. State of Odisha, STREV No. 15 of 2013, vide Order dated 13.07.2022, wherein while considering pari materia provision contained in Section 10(2) of the Odisha Entry Tax Act, 1999 vis-à-vis Section 43(2) of the OVAT Act, 2004, following interpretation in National Aluminium Company Limited, 2021 (I) OLR 828, this Court stated as follows: "10. Section 10(2) of the OET Act reads as under: '(2) If the assessing authority is satisfied that the escapement or under assessment of tax on account of any reason(s) mentioned in subsection (1) above is without any reasonable cause, he may direct the dealer to pay in addition to the tax asse....
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....one part cannot be interpreted in a manner inconsistent with another part of the statute that would defeat the object and purpose of the Act and rules framed thereunder. In Mohammad Ali Khan and Others Vrs. Commissioner of Wealth Tax, AIR 1997 SC 1165, the following lines have been quoted from J.K. Cotton Spinning & Weaving Mills Co. Ltd. Vrs. State of Uttar Pradesh, AIR 1961 SC 1170: "The Courts always presume that the Legislature inserted every part thereof for a purpose and the legislative intention is that every part of statute should have effect." 18.1. It is also well-established that where language of any provision in a statute is clear, it is impermissible to vary the language unless the plain and unambiguous language leads to an absurd result. The language of Section 43(2) in unequivocal terms spells out that satisfaction of the Assessing Authority as to the reasonableness of the cause is imperative. In absence of such material borne on record, the very invocation of exercise of power to impose penalty is considered to be flawed. 18.2. In Khemka and Co. (Agencies) Pvt. Ltd. Vrs. State of Maharashtra, (1975) 2 SCC 22 Constitution Bench (5- Judge) of the Hon'b....
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....ch, with their general tendency to give the taxpayer the breaks are out of place where the legislation has a fiscal mission. Be it noted that individual cases of hardship and injustice do not and cannot have any bearing for rejecting the natural construction by attributing normal meanings to the words used since hard cases do not make bad laws. A fiscal statute shall have to be interpreted on the basis of the language used therein and not de hors the same. No words ought to be added and only the language used ought to be considered so as to ascertain the proper meaning and intent of the legislation. The Court is to ascribe the natural and ordinary meaning to the words used by the Legislature and the Court ought not, under any circumstances, to substitute its own impression and ideas in place of the legislative intent as is available from a plain reading of the statutory provisions. Reference be had to Cooke Vrs. Charles A Vogeler Co., (1901) AC 102 (HL); Cape Brandi Syndicate Vrs. Inland Revenue Commrs., (1921) 1 KB 64; Canadian Eagle Oil Co. Vrs. King, (1945) 2 AllER 499 (HL); Inland Commrs. Vrs. Ross & Coulter, Re Bladnoch Distillery Co., (1948) 1 AllER 616 (HL); Keshavji Ravji &....
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....said principles has been referred to by this Court in Manguli Behera Vrs. State of Odisha and Others, W.P.(C) No. 21999 of 2014 disposed of on 10.03.2016." 19.1. Aforesaid salutary principle has been noticed by this Court while dealing with assessment under the OVAT Act in the matters of Patitapabana Bastralaya Vrs. Sales Tax Officer and Others, (2015) 79 VST 425 (Ori) = 2015 (I) OLR 183; and Balaji Tobacco Store Vrs. Sales Tax Officer, 2015 SCC OnLine Ori 85. 19.2. Section 43(2) of the OVAT Act specifically requires satisfaction of the Assessing Authority to be recorded while proceeding to exercise said power to impose penalty. The authority has to determine whether a penalty should be imposed and if it decides to impose a penalty the extent of the penalty liable to be imposed has been fixed in the statutory provision under Section 43(2) of the OVAT Act. Sri Rudra Prasad Kar, learned counsel for the petitioner laid stress upon the fact that the learned Tribunal accepted the explanation proffered by the petitioner with respect to 29 written pages contained in small note book which related to transactions procured through brokers and held that the allegation in the Fraud Case ....