The Orissa High Court ruled that there is no warrant for imposition of penalty under Section 43(2) of the OVAT Act.
Facts
The assessee-petitioner being a registered dealer under the Odisha Value Added Tax Act, 2004, 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 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/- imposed under Section 43(2).
Submissions
Advocate Rudra Prasad Kar, appearing for the petitioner submitted that the explanation of the petitioner that the orders placed by the customers were 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 was materialized. Further, with regard to slip Nos.53 and 54, it was clarified before the authority by the petitioner that though the amount of payments were reflected, since the petitioner did not receive full payments, the sales were not fructified and no despatches were made.
Sunil Mishra, Additional Standing Counsel for the CT & GST Organisation, with his usual vehemence argued that the Tribunal, having shown indulgence with well-reasoned order, sustained two of the allegations out of eight objections suggested in the Fraud Case Report prepared by the Assistant Commissioner of Sales Tax, Enforcement Range, Berhampur.
He argued that 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.
Decision
The division bench of Justice B.R. Sarangi and Justice Murahari Sri Raman observed that 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 bench said that 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.
“Nonetheless, the learned Tribunal supported the concurrent finding of the authorities below in upholding suppression established in respect of similar transactions which formed part of slip Nos.1 to 89. In the former case the learned Tribunal observed that the allegation is shrouded with doubt. Agreeing with the contention of the learned counsel for the petitioner, there is no warrant for imposition of penalty under Section 43(2) of the OVAT Act” the court added.
Case title: M/s. Dhabaleswar Traders Rajastreet, Berhampur v/s State of Odisha
Citation: STREV NO. 53 OF 2017
