Krishna Cement LTD vs. State

Held

The Court held that the Sales Tax Officer (STO) was within his jurisdiction in imposing penalty under Section 9-B(3) of the OST Act. The Court noted that the question framed for consideration was limited to the delegation of power by the Commissioner of Sales Tax to the STO and the effect of the amendment to Section 9-B(3) with effect from March 12, 1983. The Court found that, as observed by the Tribunal, the STO had been delegated the power to impose penalties under Section 9-B(3) not exceeding twice the tax realized, according to the latest circular/notification in force. The Tribunal also noted that the power to impose penalties exceeding twice the tax lay only with the Commissioner. Since the STO proposed to impose a penalty not exceeding twice the tax, the Tribunal concluded that the STO had not exceeded his jurisdiction. The Petitioner's counsel was unable to dispute this legal position. The Court explicitly stated it was not inclined to entertain other pleas, such as the challenge to the penalty order on the ground that the Petitioner's application for summoning witnesses was not entertained by the STO, as these were not part of the framed question of law. The question of law was answered in the affirmative, in favour of the Department.

Facts

The Petitioner, M/s. Krishna Cement Limited, filed six revision petitions against a common order dated April 4, 2006, by the Orissa Sales Tax Tribunal. The Tribunal had confirmed a prior order by the Assistant Commissioner of Commercial Taxes (ACCT), which in turn had remanded matters back to the Sales Tax Officer (STO). The STO had initially imposed penalties under Section 9-B(3) of the Orissa Sales Tax (OST) Act for the periods 1990-91 to 1995-96. The Petitioner alleged tax collection and non-deposit despite a tax holiday. The STO issued a show-cause notice in 1997. The Petitioner produced books of account and questioned the STO's jurisdiction, particularly after the substitution of Section 9-B(3) in 1983. The STO proceeded to impose penalties, which the Petitioner appealed to the ACCT. The ACCT set aside the penalty orders and remanded the cases to the STO for fresh consideration, directing the Petitioner to produce accounts within two months and for the STO to complete proceedings within three months thereafter. The Petitioner's appeals to the Tribunal against this remand order were dismissed.

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 March 12, 1983? The Petitioner argued that the STO lacked jurisdiction to initiate penalty proceedings under Section 9-B(3) as there was no delegation of power by the Commissioner after the amendment in 1983. The Petitioner also contended that the amended provision gave the Commissioner the power to impose penalties not exceeding thrice the amount of tax realized, and this power was not exercised by the Commissioner after the amendment. The Petitioner further argued that the STO had taken exempted sales into account for penalty calculation, which was contrary to the assessment order. The Revenue contended that the STO had the delegated power to impose penalties not exceeding twice the amount of tax realized, as per a circular/notification in force, and therefore, did not exceed his jurisdiction. The Revenue also argued that other issues raised by the Petitioner were not part of the question of law framed by the Court.