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Orissa High Court
G.K.MISRA,S.ACHARYA
Bisra Limestone - Appellant
Versus
Sales Tax Officer, Rourkela Circle, Uditnagar - Respondent
O. J. C. No. 10 of 1967
Decided On : 04/03/1970
CENTRAL SALES TAX ACT, 1956 - SECTION 10(B), 10-A(1) - PENALTY FOR FALSE REPRESENTATION - REQUIREMENT OF MENS REA - INTERPRETATION OF "TAX WHICH WOULD HAVE BEEN LEVIED" - SCOPE OF CERTIFICATE OF REGISTRATION - EXEMPTION OF GASOLINE UNDER SECTION 8(2-A).
Fact of the Case:
The petitioner, a limited liability company, purchased various goods, including drilling rods, laboratory chemicals, M.S. rods, tyre-tube, Leyland Dumper, Dumper spares, and gasoline, claiming that they were covered by its certificate of registration under the Central Sales Tax (Registration and Turnover) Rules, 1957. The Sales Tax Officer imposed a penalty on the petitioner for making a false representation that the goods were covered by the certificate of registration.
Finding of the Court:
The court held that the imposition of the penalty was in violation of the principles of natural justice as the notice to show cause did not specify the period for which the penalty was imposed. It also held that there was no finding that the petitioner purchased the goods on a false representation and that the penalty exceeded 1½ times the tax payable at the concessional rate. The court further held that the goods purchased were covered by the certificate of registration and that gasoline was exempt from Central Sales Tax during the relevant period.
Issues: 1. Whether the imposition of the penalty was in violation of the principles of natural justice? 2. Whether there was a finding that the petitioner purchased the goods on a false representation? 3. Whether the penalty exceeded 1½ times the tax payable at the concessional rate? 4. Whether the goods purchased were covered by the certificate of registration? 5. Whether gasoline was exempt from Central Sales Tax during the relevant period?
Ratio Decidendi: 1. The notice to show cause did not specify the period for which the penalty was imposed, violating the principles of natural justice. 2. There was no finding that the petitioner purchased the goods on a false representation. 3. The penalty exceeded 1½ times the tax payable at the concessional rate. 4. The goods purchased were covered by the certificate of registration. 5. Gasoline was exempt from Central Sales Tax during the relevant period.
Final Decision: The court quashed the impugned order imposing the penalty and directed the Sales Tax Officer to re-examine the entire matter in accordance with law and the observations made in the judgment.
Judgement
G. K. MISRA, C. J. :- The petitioner is a limited liability company governed by the Indian Companies Act, 1956. It has its registered Office in Calcutta and its place of business is at Biramitrapur in the district of Sundergarh. The Petitioner is a lessee of mines for mining limestone and dolomite, that is for winning and getting the same from the earth and processing and selling them in the State of Orissa. It holds a certificate of registration under the Central Sales Tax (Registration and Turnover) Rules, 1957 (Annexure-A). The relevant entry in tile Certificate of Registration is to the effect that for use in mining the petitioner can purchase machinery, plant (Productive and Auxiliary) tools ... .equipment. The Petitioner's case is that in accordance with the entry in the certificate of Registration it purchased the following goods : (i) Drilling rods, (ii) Laboratory chemicals, (iii) M. S. Rods, (iv) Tyre-Tube, (v) Leyland Dumper, (vi) Dumper spares and (vii) Gasoline. According to the petitioner these goods are covered by the entry in the certificate of registration and it is entitled to purchase them on payment of concessional rate of sales tax as prescribed in Section 8 of the Central Sales Tax Act, 1956 (hereinafter to be referred to as the Act).
On 29-9-66, Opposite Party No. 1 (Sales Tax Officer, Rourkela Circle), served a notice on the petitioner stating that the aforesaid goods were not specified in the certificate of registration, but that they were purchased on a false representation made by the petitioner that they were covered by the certificate of registration. He was called upon to show cause why penalty should not be imposed for making a false representation. The notice did not specify the period during which the purchase took place. Despite that, the petitioner showed cause and at the time of hearing, Opposite Party No. 1 clarified the position by saying that the transactions took place between 30-11-64 and 22-3-65. Ultimately, penalty was imposed on the petitioner in respect of the period between 1-8-64 and 30-11-64. The Sales Tax Officer was of opinion that the petitioner was to pay penalty of Rs. 48,000/- but taking a lenient view of the matter penalty of Rs. 25,000/-was imposed.
This writ application was filed under Articles 226 and 227 of the Constitution for quashing the impugned order imposing penalty - dated 9-11-66.
2. Mr. B. M. Patnaik for the patitioner raised the following contentions :-
(i) The imposition of the penalty was in violation of the principles of natural justice, inasmuch as no notice was given of the period for which the penalty was imposed.
(ii) Opposite Party No. 1 did not record any finding (hat the petitioner purchased the goods on a false representation.
(iii) The penalty is illegal as it exceeds 1½ times the tax payable at the concessional rate.
(iv) (a) The impugned goods purchased by the petitioner were covered by the certificate of registration.
(b) Gasoline in respect of which penalty was imposed, was not subject to Central Sales Tax during the relevant period, under Section 8(2-A) of the Act.
Mr. Patnaik also raised another contention based on Article 14 of the Constitution, but ultimately he wanted the point to be left open and accordingly we do not propose to deal with it in this judgment.
3. The first contention of Mr. Patnaik is that there was a violation of the principles of natural justice as the notice to show cause did not specify the period in respect of which the penalty was levied on the ground of purchase on false representation. This contention is sound. As already stated at the time of hearing, clarification was made that the relevant period was 30-11-64 to 22-3-65. But the penalty has been imposed for the period 1-8-64 to 30-11-64 which was anterior to the period in respect of which notice had been given. On this ground, the order
imposing penalty is liable to be quashed. The Sales Tax Officer would re-examine the entire matter in respect of the relevant p
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