Krishna Cement LTD vs. State

Held

The Court answered the framed question of law in the affirmative, in favour of the Department and against the Petitioner. The Court held that the Sales Tax Officer (STO) was within his jurisdiction in imposing the penalty. This was based on the finding that the proposed penalty did not exceed twice the tax involved. The Tribunal had noted that as per the prevailing circular/notification, the STO was delegated the power to impose penalty under Section 9-B(3) of the OST Act up to a sum not exceeding two times the tax realized. The power to impose penalties exceeding this limit rested solely with the Commissioner. Since the STO in this case proposed to impose a penalty not exceeding two times the tax, it was considered within his delegated authority. The Court explicitly stated it would not entertain other pleas, such as the challenge to the penalty order on the ground of the STO's failure to entertain the Petitioner's application for summoning witnesses, as these were not part of the framed question of law.

Facts

The Petitioner, M/s. Krishna Cement Limited, is challenging orders imposing penalty under Section 9-B(3) of the Orissa Sales Tax (OST) Act, 1947. The penalties were imposed by the Sales Tax Officer (STO) for the periods 1990-91 to 1995-96. The Petitioner alleged a tax holiday for an expanded unit. The STO issued a show-cause notice based on a fraud case report, alleging collection and non-deposit of sales tax despite the tax holiday. The Petitioner produced books of account and questioned the STO's jurisdiction. The STO proceeded to impose penalty. The Assistant Commissioner of Commercial Taxes (ACCT) set aside the penalty order and remanded the matter to the STO for fresh consideration, with directions for the Petitioner to produce accounts. The Tribunal upheld the ACCT's order, dismissing the Petitioner's appeals. The Petitioner filed revision petitions before the High Court.

Key Issues

1. Whether the Sales Tax Officer (STO) was within his jurisdiction in imposing penalty under Section 9-B(3) of the Orissa Sales Tax (OST) Act, 1947, in the absence of any delegation of power by the Commissioner of Sales Tax after the substitution of Section 9-B(3) with effect from 12.3.1983? Petitioner's arguments: The Petitioner contended that after the amendment of Section 9-B(3) of the OST Act effective from March 12, 1983, the power to impose penalty shifted to the Commissioner. They argued that the STO lacked jurisdiction to initiate penalty proceedings as there was no specific delegation of this power to the STO. They also raised a secondary argument regarding the STO's failure to consider their request for examining witnesses, citing precedents like Dredging Corporation of India and Andaman Timber Industries. Revenue's arguments: The Revenue argued that the STO had the jurisdiction to impose the penalty. The judgment notes that the Petitioner's counsel could not dispute the legal position presented by the Revenue at the Tribunal stage. The Tribunal noted that as per the latest circular/notification, the STO was delegated the power to impose penalty under Section 9-B(3) not exceeding two times the tax realized, which was within the STO's purview.