Orissa High Court
M/S.Aryan Ispat & Power Pvt. Ltd vs State Of Odisha on 11 October, 2023
Author: B.R. Sarangi
Bench: B.R. Sarangi
ORISSA HIGH COURT : CUTTACK
STREV No. 95 OF 2014
In the matter of an application under Section 9(2) of
the Central Sales Tax Act, 1956
read with
Section 24 of the Odisha Sales Tax Act, 1947.
---------------
M/s.Aryan Ispat & Power Pvt. Ltd.
at Bomlai, Rengali, Sambalpur
represented by
Sri Brijendra Kumar Chandrakar
Authorised Signatory ... Petitioner
-VERSUS-
State of Odisha
represented by
the Commissioner of Sales Tax
Odisha, Cuttack ... Opposite Party
Counsel appeared for the parties:
For the Petitioner : Mr. Sumit Lal &
Ms. Zenish Wallace,
Advocates
For the Opposite Party : Mr. Sunil Mishra,
Standing Counsel
(Commercial Tax and Goods &
Services Tax Organisation).
P R E S E N T:
THE HONOURABLE ACTING CHIEF JUSTICE DR. B.R. SARANGI
AND
THE HONOURABLE MR. JUSTICE MURAHARI SRI RAMAN
STREV No.95 of 2014 Page 1 of 28
Date of Hearing: 11.10.2023 :: Date of Judgment: 11.10.2023
JUDGMENT
MURAHARI SRI RAMAN, J.--
THE CHALLENGE:
Seeking revision of Order dated 09.12.2013 passed by the Odisha Sales Tax Tribunal in Second Appeal bearing No. 70 (C) of 2007-08 preferred by the State of Odisha through Commissioner of Sales Tax, Odisha, against Order dated 28.04.2007 passed by the Assistant Commissioner of Sales Tax, Sambalpur Range, Sambalpur, in the First Appeal bearing No. AA 263 (SAIC) of 2006-07 quashing Order dated 30.05.2006 imposing penalty under Section 10A of the Central Sales Tax Act, 1956, pertaining to transactions of financial year 2004-05, the petitioner-company filed this petition under Section 9(2) of the Central Sales Tax Act, 1956 read with Section 24 of the Odisha Sales Tax Act, 1947.
2.1. This Court, while entertaining the sales tax revision, vide Order dated 22.11.2022, admitted the petition for adjudication of the following question of law:
<Whether in the facts and circumstances of the case, the Division Bench of the Orissa Sales Tax Tribunal was justified in upholding the imposition of penalty under Section 10(d) of the CST Act while holding that Petitioner was served with show cause notice under section 10(b) of the CST Act and not under Section 10(d) of the CST Act?= FACTS:STREV No.95 of 2014 Page 2 of 28
3. The petitioner, a private limited company, in order to carry out business in manufacture and sale of sponge iron and billets, got registered under the provisions of the Central Sales Tax Act, 1956 (<CST Act=, for short) and the Odisha Sales Tax Act, 1947 (<OST Act=, for brevity) and allotted Registration Certificate No. SAI-C- 3835.
3.1. For the purpose of utilization in the <foundation for the construction= and <civil works= including <construction of compound wall=, <Cement=, worth Rs.16,31,112/- was purchased from Century Cement, Baikunth (outside the State of Odisha) at concessional rate of tax provided under sub-sections (1) and (4) of Section 8 of the CST Act on the strength of declaration in Form C prescribed under Rule 12(1) of the Central Sales Tax (Registration and Turnover) Rules, 1957 (hereafter be referred to as <CST (R&T) Rules=).
3.2. The Sales Tax Officer, Sambalpur-I Circle, Sambalpur, invoked Section 10A of the CST Act for alleged offence committed under Section 10(b) and imposed penalty by Order dated 30.05.2006 holding that <the dealer has purchased cement at a concessional rate of tax by giving declaration Form C which are not used in manufacturing or processing of goods for sale=.
3.3. Against such levy of penalty, the petitioner preferred appeal under Section 9(2) of the CST Act read with STREV No.95 of 2014 Page 3 of 28 Section 23(1) of the OST Act before the Assistant Commissioner of Sales Tax, Sambalpur Range, Sambalpur (<first appellate authority=), which came to be disposed of in favour of the petitioner on consideration of the fact that the subject goods <cement= was incorporated in the certificate of registration granted by the Sales Tax Officer, Sambalpur-I Circle, Sambalpur under Section 7(2) of the CST Act. It was the case of the petitioner before the first appellate authority that though the show-cause notice bearing No.23365, dated 31.12.2005 under Section 10A in connection with alleged commission of offence under Section 10(d) of the CST Act was issued, the same remained unattended; however, said authority proceeded with the subsequent show notice bearing No.1807/CT, dated 06.02.2006 issued specifying misutilisation of declaration Form C falling within scope of circumstance enumerated under Section 10(b) of the CST Act. The appellate authority observed as follows:
<The 10A penalty record maintained by the learned Assessing Officer reveals that on 31.12.2005 order was passed to issue show-cause notice under Section 10A of the CST Act for 2004-05 fixing date to 13.01.2006. On 06.02.2006 he called for the record and passed order that notice should have been issued under Section 10(b) in place of 10(d) of the CST Act and accordingly show cause notice was issued fixing date to 20.02.2006. However, taking the written submission of the appellant submitted before the learned Assessing Officer into consideration, penalty order was passed.= STREV No.95 of 2014 Page 4 of 28 3.4. It was held by the first appellate authority that:
<*** in order to impose penalty on a dealer for making an unauthorized purchase the authority must arrive at a definite finding about the false representation. The finding should be based on cogent material on record. In the absence of such a finding, any order imposing penalty will not be sustainable under the law.
In view of the available material on record, in my considered opinion, I hold that there is absence of mens rea to constitute offence under Section 10(b) of the CST Act in this case.= 3.5. The State of Odisha, being aggrieved by said Order of the first appellate authority, carried the matter to the Sales Tax Tribunal. Allowing the second appeal, the learned Tribunal set aside the Order of the first appellate authority and directed the Sales Tax Officer to complete assessment afresh.
3.6. Aggrieved thereby, the petitioner preferred this revision petition before this Court.
ARGUMENTS:
4. This Court heard Sri Sumit Lal, Advocate for the petitioner and Sri Sunil Mishra, learned Additional Standing Counsel for the Commercial Tax and Goods and Services Tax Organisation.
5. Sri Sumit Lal, learned counsel at the outset submitted that the Revenue having not disputed the fact of existence of commodity, <cement=, in the Registration STREV No.95 of 2014 Page 5 of 28 Certificate granted by the Sales Tax Officer, the Odisha Sales Tax Tribunal committed gross error in holding that <there is no absence of mens rea to constitute an offence under Section 10(b) of the CST Act=. Justifying the Order of the first appellate authority, Sri Sumit Lal vehemently submitted that it is sufficient compliance if the goods4 Cement4 is specified in the Registration Certificate as required under Section 8(3) of the CST Act, which was allowed to be incorporated by the Sales Tax Officer on consideration of requirement of the petitioner in course of business at the time of grant of Registration Certificate. As long as the goods appear in the Certificate of Registration, the petitioner cannot be imputed with charge of <falsely= represented for availing concessional rate of tax as enabled by sub-section (1) read with sub-
section (4) of Section 8 of the CST Act.
5.1. Sri Sumit Lal further urged that the Sales Tax Officer was unsure of the specific violation. Notice dated 31.12.2005 specifying that the petitioner was <found to have attracted penal provision under Section 10(d) of the CST Act, 1956 for misutilisation of C Form=, directed it to appear before the Sales Tax Officer on 13.01.2006, but said notice was served on the petitioner on 14.01.2006. However, discarding said notice, subsequent notice was issued on 06.02.2006 calling upon the petitioner to show cause as the petitioner was <found to have attracted penal provision under Section STREV No.95 of 2014 Page 6 of 28 10(b) of the CST Act for misutilisation of C Form=. Consequent upon such notice, the petitioner participated in the proceeding contending that the goods, <cement=, being specified in the Registration Certificate, was purchased on availing concessional rate of tax in terms of sub-section (1) read with sub-section (4) of Section 8 on the strength of declaration in Form C prescribed under Rule 12(1) of the CST (R&T) Rules. Therefore, the Sales Tax Officer committed error of record. He further brought to the notice of this Court that notice dated 12.01.2006 has come to be served on the petitioner specifying therein as to why <cement= would not be deleted from the Certificate of Registration. Essentially, it is the submission of the learned counsel for the petitioner, Sri Lal, is that from the above notice it is ex facie clear that the Sales Tax Officer was conscious of the fact that the goods, <cement=, was specified in the Registration Certificate as on the date of transactions of purchase from outside the State of Odisha during the period 2004-05, as such, the notice contemplating <false representation= under Section 10(b) of the CST Act without proof of mens rea by the Revenue cannot be held to be tenable. The Tribunal could not have gone beyond the records and remanded the matter to the Sales Tax Officer to frame fresh <assessment= as if the Order of the Sales Tax Officer was emanating from an <assessment=.
STREV No.95 of 2014 Page 7 of 285.2. Sri Lal, learned Advocate urged that there was no material before the Tribunal to hold that <we are of the considered opinion there is no absence of mens rea to constitute an offence under Section 10(b) of the CST Act=. In view of such, it is ununderstable as to why the Sales Tax Tribunal remitted the matter to the Sales Tax Officer with a direction to complete <the assessment afresh=. Therefore, the order of remit to the Sales Tax Officer would result in empty formality.
5.3. Sri Sumit Lal, learned counsel for the petitioner placed reliance on the decision of this Court in the case of South Eastern Coal Fields Limited Vrs. Sales Tax Officer, MANU/OR/0039/2008 = (2008) 14 VST 298 (Ori). He submitted that the contention that when the petitioner was called upon to file show cause reply in respect of allegation of <false representation= as contemplated under Section 10(b) of the CST Act, no penalty under Section 10A could be imposed for purported commission of offence under Section 10(d) of said Act by the Sales Tax Officer is countenanced by applying ratio of said Judgment of this Court. Therefore, this Court, while admitting the revision petition on 22.11.2022, directed the counsel for the Revenue, Sri Sunil Mishra, as follows:
<3. Learned counsel appearing for the Petitioner states that the above question stands answered in favour of the Petitioner by the judgment in South Eastern STREV No.95 of 2014 Page 8 of 28 Coal Fields Limited Vrs. Sales Tax Officer MANU/OR/0039/2008.
4. Mr. Mishra, learned ASC states that he may be granted a short adjournment to examine the said decision.=
6. Sri Sunil Mishra, learned Standing Counsel for the Revenue urged that the said reported Judgment of this Court may not strictly be made applicable inasmuch as there was notice bearing No.23365/CT, dated 31.12.2005 contemplating action under Section 10A for cement being used other than for the purpose it was available to be purchased at concessional rate of tax in terms of Section 8(3). Though subsequent notice bearing No.1807/CT, dated 06.02.2006 specified the case of the petitioner attracted violation contained in Section 10(b) of the CST Act, the context essentially would mean provisions of Section 10(d). There, being mistake, the Tribunal appreciating the fact on record, rightly remitted the matter to the Sales Tax Officer.
6.1. Since the Sales Tax Tribunal categorically observed that <we are of the considered opinion there is no absence of mens rea to constitute an offence under Section 10(b) of the CST Act=, it was correct to say that the first appellate authority should have issued appropriate notice. Therefore, the order remitting the matter to the Sales Tax Officer does not suffer from illegality.
DISCUSSIONS:
STREV No.95 of 2014 Page 9 of 287. The uncontroverted and undisputed fact remained that the commodity, <cement=, was specified in the Registration Certificate granted by the Sales Tax Officer, Sambalpur-I Circle, Sambalpur on the date of transaction of purchase during the period 2004-05, and said goods was not deleted. This fact is apparent from the statement made by the petitioner that the Sales Tax Officer had issued notice on 12.01.2006 inviting reply to show cause as to why said goods would not be deleted. It is also fact that during 2004-05, the petitioner purchased cement against declaration in Form C in order to avail benefit under Section 8 of the CST Act.
7.1. There is no dispute about the fact that notice bearing No.23365/CT, dated 31.12.2005 was issued calling upon the petitioner to file show cause on 13.01.2006 as to why penalty under Section 10A of the CST Act would not be imposed as the petitioner was <found to have attracted penal provision under Section 10(d) of the CST Act, 1956 for misutilisation of C Form=. The first appellate authority, on perusal of relevant record concerning penalty proceeding under Section 10A of the CST Act, has observed that the Sales Tax Officer subsequent to issue of said notice has passed orders by stating <notice should have been issued under Section 10(b) in place of 10(d) of the CST Act= and, therefore, he issued subsequent Notice bearing No.1807/CT, dated 06.02.2006, which stands as follows:
STREV No.95 of 2014 Page 10 of 28<Office of the Commercial Tax Officer, Sambalpur-I Circle, Sambalpur No. 1807/CT. Dt. 06.02.2006 NOTICE U/S. 10A OF THE CST ACT
1. Name and Address M/s. Aryan Ispat & of the dealer Power (P) Ltd, Bomlai, Rengali, Sambalpur
2. R.C. No. of the dealer TIN-21681705224 SAIC-3835 It appears that you have purchased the following goods against declaration Form C for the year 2004-2005.
Commodity Value (Rs.)
Cement 16,31,112.00
As such you are found to have attracted penal provision U/s. 10(b) of the C.S.T. Act 1956 for mis-utilisation of 8C9 form.
You are therefore called upon to show cause on 20.02.2006 as to why penalty shall not be imposed U/s.
10-A of the CST Act 1956, failing which action will be taken as per provisions of law.
Sales Tax Officer, Sambalpur I Circle, Sambalpur= 7.2. The Order dated 30.05.2006 of the Sales Tax Officer depicts as follows:
<*** The dealer has been called upon to show cause as to why penalty shall not be imposed under Section 10A of STREV No.95 of 2014 Page 11 of 28 the CST Act, 1956 against which the learned Advocate for the dealer has filed a written submission on 23.03.2006 in which it is stated that the goods purchased on the strength of 8C9 Form are included in the certificate of registration granted by the Sales Tax Officer, Sambalpur. Since the submission furnished appeared unconvincing, cross-examination of 8C9 Form utilization statement furnished at the time of proceeding have been made. ***= 7.3. Observing so, the Sales Tax Officer proceeded as if the notice was in connection with inquiry under Section 10(d) of the CST Act concluded by imposing penalty under Section 10A.
7.4. Sri Sumit Lal, learned counsel for the petitioner contended that the aforesaid fact recorded by the Sales Tax Officer in his order clearly shows that the petitioner was given opportunity to show cause in connection with proposed action under Section 10A on the alleged ground that the petitioner misutilised declaration in Form C qua Section 10(b). It is emphatically submitted by Sri Lal that the dealer-petitioner was not given opportunity to show cause for alleged offence under Section 10(d), as the earlier notice was never proceeded with. This cannot be construed to be an innocuous mistake on the part of the Sales Tax Officer, as urged by Sri Sunil Mishra, learned Standing Counsel. Such a stand before the Tribunal, as contended by the Standing Counsel, at this stage is contrary to what emanated from the observations made by the first appellate authority on perusal of the records of the Sales Tax Officer relating to STREV No.95 of 2014 Page 12 of 28 penalty under Section 10A. This Court on perusal of the order of the first appellate authority finds that said authority had recorded finding of fact as follows:
<*** Astonishingly though the appellant was served with show cause notice under Section 10(b) of the CST Act and the appellant through his learned Advocate responded against the charges of Section 10(b), but the learned Assessing Officer in his order of penalty stated to have held the appellant guilty of committing offence under Section 10(d) of the CST Act. ***= 7.5. On perusal of Order of the Sales Tax Tribunal, it appears that the Revenue had filed second appeal on the following grounds (paragraph 4 of the Order of Tribunal):
<(a) That the order of Ld. ACST is not just and proper.
(b) That the Ld. ACST quashed the order Ld. STO on the ground that there is no mens rea and 10(b) & 10(d) separate notice override each other.
(c) That 10(b) & 10(d) if happen to be separate parts necessary for issuing notice for one action, how can they override when they are separate, therefore they can co-join together rather than cancel out each other.
(d) That the order of the Ld. ACST as regards quashing of penalty under Section 10-A of the CST Act, needs to be quashed and that of the Ld. STO restored.= 7.6. No specific pleading was available before the Tribunal by the Revenue to the effect that the notice to show cause to the petitioner was in connection with offence under Section 10(d), but not under Section 10(b) of the CST STREV No.95 of 2014 Page 13 of 28 Act. Thus, the observation of the first appellate authority that the Sales Tax Officer while issuing subsequent notice dated 06.02.2006 consciously mentioned that earlier notice should have been issued for alleged offence under Section 10(b), but not Section 10(d). However, without ascribing any reason much less plausible reason, the learned Odisha Sales Tax Tribunal has come to conclude that <there is no absence of mens rea to constitute an offence under Section 10(b) of the CST Act=; yet having set aside the first appellate order, it remanded the matter to the Sales Tax Officer to <complete the assessment afresh=, as if the matter emanated from an assessment. It was not justified to jump to such a conclusion without examining contumacious conduct of the petitioner. There is no denying fact that cement was specified in the registration certificate. At the cost of repetition it is reiterated that the Sales Tax Officer has recorded as a matter of fact in his Order dated 30.05.2006 that the explanation of the petitioner was that cement was incorporated in the certificate of registration. Therefore, it is obvious that the petitioner was given opportunity to file reply in connection with alleged offence under Section 10(b) of the CST Act vide Notice dated 06.02.2006, but not Notice dated 31.12.2005.
7.7. Section 10 of the CST Act deals with penalties. Clause
(b) of Section 10 speaks that if a person being a STREV No.95 of 2014 Page 14 of 28 registered dealer falsely represents when purchasing any class of goods that goods of such class are covered by his certificate of registration; whereas Clause (d) of Section 10 spells out that if a person after purchasing any goods for any of the purpose specified in clause (b) or clause (c) or clause (d) of sub-section (3) of Section 8 fails without reasonable excuse, to make use of the goods for any such purpose.
7.8. This Court examined the perspective of Section 10(b) and Section 10(d) in the case of Jayshree Chemicals Ltd. Vrs. Additional Commissioner of Sales Tax, (1992) 87 STC 359 (Ori), wherein it has been observed as follows:
<*** Once it is accepted that there was absence of mens rea, resort to penal provision would not be proper unless it is established that the conduct of the assesse was contumacious or that there was deliberate defiance of the statutory provisions, or wilful disregard thereof. Mens rea plays a very vital role for determination of the question whether penalty is to be imposed on a particular goods.
8Mens rea9 means some blameworthy mental condition whether constituted by knowledge or intention or otherwise. The doctrine of mens rea is not abstruse. The principle is stated in the maxim: 8actus non facit reum, nisi mens sit rea9 or 8an act does not make one guilty unless the mind is also guilty9. Section 10(b) provides for an offence if any person being a registered dealer falsely represents when purchasing any class of goods that goods of such class are covered by his certificate of registration. The expression 8falsely represents9 clearly shows that element of mens rea is a necessary component of the offence.STREV No.95 of 2014 Page 15 of 28
Bouvier9s Law Dictionary explains the term 8false9 thus:
8Applied to the intentional act of a responsible being, it implies a purpose to deceive. *** It means more than incorrect or erroneous. It implies wrong or culpable negligence, and signifies knowingly or negligently untrue9.
In Black9s Law Dictionary, it is stated:
8In law, this word usually means something more than untrue; it means something designedly untrue and deceitful, and implies an intention to perpetrate some treachery or fraud9.
Clause (b) of Section 10 uses the words 8falsely represents9 as an ingredient of a criminal offence. Therefore, 8mens rea9 is the dominant ingredient. Similarly Section 10(d) deals with a situation where a purchasing dealer in order to have the concessional rate applied to an inter-State sale in terms of Section 8(3)(b), without reasonable excuse uses the goods purchased for a purpose other than, and contrary to the declared purpose. The use of the expression 8without reasonable excuse9 in Section 10(d) amply reflects legislative intent that mens rea is an essential ingredient of the offence.= 7.9. In Hindustan Steel Ltd. Vrs. State of Odisha, (1970) 25 STC 211 (SC), the Hon9ble Supreme Court while considering an identical provisions contained in Section 25 of the Odisha Sales Tax Act, 1947, which deals with <Offences and Penalties=, laid down guidelines as follows:
<Under the Act penalty may be imposed for failure to register as a dealer: Section 9(1) read with Section 25(1)(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a STREV No.95 of 2014 Page 16 of 28 statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Those in charge of the affairs of the company in failing to register the company as a dealer acted in the honest and genuine belief that the company was not a dealer. Granting that they erred, no case for imposing penalty was made out.= 7.10. Section 10(b) of the CST Act uses the words <falsely represents= which would mean something done knowingly having knowledge. If anything is done bona fide, such act cannot be said to be false representation.
The language of Form C shows that declaration is required to be made, that the goods are covered by registration certificate, therefore, while issuing Form C in respect of the goods, it is incumbent upon the dealer to be clear that the goods in respect of which Form C is being issued is covered under the registration certificate. In the case at hand, the petitioner was not only a STREV No.95 of 2014 Page 17 of 28 registered dealer, but also authorised to purchase cement as the said commodity stood incorporated in the registration certificate on the date of transactions during the period 2004-05.
7.11. In Commissioner of Sales Tax Vrs. Sanjiv Fabrics, (2010) 35 VST 1 (SC) = (2010) 8 SCR 627, it has been laid down that the use of the expression 8falsely represents9 indicates that the offence under Section 10(b) of the CST Act, 1956, comes into existence only when a dealer acts deliberately in defiance of law or is guilty of contumacious or dishonest conduct. Therefore, in proceedings for levy of penalty under Section 10A of the Act, the burden would be on the Revenue to prove the existence of circumstances constituting the said offence. Furthermore, it is evident from the heading of Section 10A, <imposition of penalty in lieu of prosecution=, that for the breach of any provision of the Act, constituting an offence under Section 10, the ordinary remedy is prosecution which may entail a sentence of imprisonment and the penalty under Section 10A is only in lieu of prosecution. Therefore, all types of omissions or commissions in the use of Form C do not embrace in the expression <false representation=.
7.12. Thus, finding of mens rea is a condition precedent for levying penalty under Section 10(b) read with Section 10A, which is found to be absent from a bare reading of the Order of the Tribunal. In amplifying what has been STREV No.95 of 2014 Page 18 of 28 already referred to and stated above, it can further be stated that the use of the word 8falsely9 in Section 10(b) of the CST Act implies that the person making the representation knew that the certificate of registration does not cover that item but knowing fully well that it does not, states that it is covered. The expression 8falsely represents9 clearly leads to show that unless it is established that the conduct of the dealer was contumacious or that there was deliberate violation of the statutory provision or wilful disregard thereof, invocation of penal provisions under Section 10A of the CST Act is unwarranted. Reference may be had to State of TN Vrs. Nu-Tread Tyres, (2006) 148 STC 256 (Mad); Shoetek Agencies Vrs. State of Tamil Nadu, (2014) 68 VST 19 (Mad).
7.13. This Court in the case of Omkarmal Agarwalla Vrs.
Additional Commissioner of Sales Tax, 1988 (I) OLR 15, held as follows:
<8. *** A similar view was taken by a Bench of this Court in Bisra Limestone Co. Vrs. Sales Tax Officer, Rourkela Circle, AIR 1971 Orissa 122 where it was observed that there may be cases the dealer may purchase articles bona fide, in good faith, that they are covered by a certificate of registration even though there may be an ultimate finding that the goods are not covered by the certificate. But in spite of that, no offence under Section 10(b) would be made out if there was no false representation. This was also a case of imposition of the penalty of fine.STREV No.95 of 2014 Page 19 of 28
9. It is no doubt true that if a dealer does not make a truthful representation which is an equation of false representation, then this is a fact which is to be determined and decided on facts of each case. The representation, therefore, must be intentional that the goods are covered by the certificate on a proof of which ingredient alone, an offence under clause (b) of Section 10 can be said to have been committed.= 7.14. In the instant case, since cement finds place in the certificate of registration, it cannot be said that the petitioner has falsely represented by purchasing goods at concessional rate of tax on the strength of declaration in Form C. It was for the department to prove that the representation was false to the knowledge of the petitioner-dealer.
8. Sri Sumit Lal, learned Advocate for the petitioner refuting the argument of Sri Sunil Mishra, learned Standing Counsel that if the petitioner had no opportunity to meet the allegation under Section 10(d) of the CST Act, this Court can relegate the matter to the Sales Tax Officer for examination by affording opportunity to the petitioner, forcefully argued that before the Tribunal, by way of cross-objection, the petitioner-dealer had raised jurisdictional issue to the following effect:
<Cross-objection has been filed on behalf of the respondent-dealer contended that the learned First Appellate Authority is wholly justified to hold that the learned Sales Tax Officer has no jurisdiction to pass the STREV No.95 of 2014 Page 20 of 28 Order of penalty under Section 10(d) when the show cause notice was issued under Section 10(b) of the CST Act and as such, the lower forum has committed an error of law while passing the impugned Order under Section 10(d) of the CST Act.=
8.1. The learned Tribunal made observation as follows:
<*** The respondent-firm was served with show cause notice under Section 10(b) of the CST Act, but the learned Sales Tax Officer in his order of penalty stated to have held the dealer guilty of committing of offence under Section 10(d) of the CST Act. The learned DCST (Appeal) contended that due to typographical error the fact cannot ignored. ***= 8.2. Such stance of the DCST (Appeal) before the Tribunal is not tenable in view of the observation recorded by the first appellate authority that before issuing subsequent notice dated 06.02.2006, the Sales Tax Officer has made himself clear that the earlier notice dated 31.12.2005 could not have been issued for alleged commission of offence under Section 10(d). The observation of the first appellate authority as extracted heretofore has never been proved to be wrong by placing cogent record by the Revenue.
8.3. The rationality behind issuing a notice is making something known of what a man was or might be ignorant before. It provides diverse effects, for, by it, the party who gives the same shall have some benefit, which otherwise he should not have had or the party to whom the notice is given is made subject to some action or STREV No.95 of 2014 Page 21 of 28 charge, that otherwise he had been liable to. The cardinal principle behind issuing a notice is based on the rule 8audi alteram partem9 which means no one should be condemned unheard. Notice being the first limb of this rule, must be precise and definite. It must apprise the party determinatively of the case he has to meet. Adequate time for his representation must be given. See Arvind Kumar Giri Vrs. Sales Tax Officer, (2010) 27 VST 46 (WBTT).
8.4. It has already been extracted herein above from the Order dated 30.05.2006 of the Sales Tax Officer that pursuant to notice dated 06.02.2006 the petitioner- dealer had furnished reply to the effect that <the goods purchased on the strength of C Form are included in the certificate of registration granted by the Sales Tax Officer, Sambalpur=.
8.5. Specific stand of the petitioner before the Tribunal was that when notice was for alleged commission of offence under Section 10(b) and as revealed from the Order of the Sales Tax Officer that the reply/explanation of the petitioner was received in respect of such offence, the final Order imposing penalty under Section 10A could not be based on alleged offence under Section 10(d).
8.6. Under Section 24 of the OST Act, this Court is vested with the power to adjudicate any question of law on the ground that the Tribunal has either failed to decide or STREV No.95 of 2014 Page 22 of 28 decided erroneously any question of law. As the question of law was raised before the Odisha Sales Tax Tribunal, but it failed to decide the same, question of law arises for this Court to deal with. In Commissioner of Income Tax Vrs. Scindia Steam Navigation Co. Ltd., AIR 1961 SC 1633 = (1961) 42 ITR 589 (SC) = (1962) 1 SCR 788, the principles propounded by the Constitution Bench of the Hon9ble Supreme Court of India are as follows:
<39. The result of the above discussion may thus be summed up:
(1) When a question is raised before the Tribunal and is dealt with by it, it is clearly one arising out of its order.
(2) When a question of law is raised before the Tribunal but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is, therefore, one arising out of its order.
(3) When a question is not raised before the Tribunal but the Tribunal deals with it, that will also be a question arising out of its order.
(4) When a question of law is neither raised before the Tribunal nor considered by it, it will not be a question arising out of its order notwithstanding that it may arise on the findings given by it.
40. Stating the position compendiously, it is only a question that has been raised before or decided by the Tribunal that could be held to arise out of its order.= STREV No.95 of 2014 Page 23 of 28 8.7. Therefore, this Court framed the question whether the Tribunal was justified in upholding the imposition of penalty under Section 10(d) of the CST Act while holding that the petitioner was served with show cause notice under Section 10(b) and not under Section 10(d) of the CST Act. Similar question fell for consideration of this Court in South Eastern Coal Fields Limited (supra), which is relied upon by Sri Sumit Lal, learned counsel for the petitioner.
8.8. In the said reported decision, this Court came to hold as under:
<We are unable to accept this contention of the Learned Counsel appearing on behalf of the Revenue. In the entire show cause notice, there is no mention of sub-sections (1), (3) and (4) of Section 8 of the C.S.T. Act. It goes without saying that a show cause notice which is issued seeking a reply from the dealer before imposing penalty on him for breach of any statutory provision must be in unambiguous and clear language. It should not be worded in such a manner that one shall be required to derive a clear idea of the case which he has to answer. If there is anything in the mind of any authority issuing show cause notice the same should be translated in clear words and must find place in the notice so as to enable an affected person/dealer to know the exact allegations raised against him on the basis of which he will give his reply. *** The contents of the show cause notice clearly show that the allegations are only in relation to the infraction covered by clause (b) of Section 10 of the C.S.T. Act. Thus no show cause notice was issued by the S.T.O. affording STREV No.95 of 2014 Page 24 of 28 reasonable opportunity to the Petitioner to show cause why it should not be held guilty of offence under clause
(d) of Section 10 of the C.S.T. Act, before imposing penalty of Rs. 37,00,000/- under Section 10A of the C.S.T. Act holding that the Petitioner was guilty of an offence under clause (d) of Section 10 of the C.S.T. Act. This amounts to violation of basic principles of natural justice as well as statutory requirement provided under Section 10A of the C.S.T. Act. There was no occasion for the Petitioner to meet the allegation of committing offence under clause (d) of Section 10 of the C.S.T. Act. Such a course is not permissible.= 8.9. Pertinent here to refer to the observation of the first appellate authority, which is to the following effect:
<After issue of notice under Section 10(b) of the CST Act, the notice earlier issued for imposing penalty under Section 10A for violation of Section 10(d) is not supported by a valid notice and opportunity of being heard.= 8.10. It transpires from the tenor of both the notice dated 31.12.2005 and the notice dated 06.02.2006, that even before hearing by affording opportunity to the petitioner to furnish its reply, the Sales Tax Officer had made up his mind by holding the petitioner guilty of offence.
While in the former he has stated <As such you are found to have attracted penal provision under Section 10(d) of the CST Act, 1956 for misutilisation of C Form=, in the latter he mentioned that <As such you are found to have attracted penal provision under Section 10(b) of the CST Act, 1956 for misutilisation of C Form=. The learned Standing Counsel has not denied the fact that STREV No.95 of 2014 Page 25 of 28 the earlier notice dated 31.12.2005 scheduled to 13.01.2006 was served on the petitioner on 14.01.2006. Therefore the first appellate authority is correct in holding that the Sales Tax Officer proceeded with the subsequent notice.
8.11. Under the aforesaid premise with the given clear legal position as set forth by the Court(s), the Order of the Odisha Sales Tax Tribunal cannot be sustained in the eye of law.
DECISION AND CONCLUSION:
9. On consideration of the facts on record, arguments of counsel for respective parties, legal position enunciated by the Courts, this Court holds that the commodity, cement, being specified in the certificate of registration at the time of effecting inter-State purchase during the period 2004-05, there was no false representation by the petitioner and the Revenue has not discharged its burden by clearly establishing that the purchases were not made bona fide on the strength of declaration in Form C. It is also noteworthy to mention that, when the notice alleging offence under Section 10(d) was served after the scheduled date calling upon the petitioner to submit reply and subsequent notice specifying commission of offence under Section 10(b) of the CST Act was responded to by the petitioner, the Sales Tax Officer was not correct in rendering finding as if the STREV No.95 of 2014 Page 26 of 28 petitioner was held guilty of offence under Section 10(d). Therefore, the penalty imposed under Section 10A of the CST Act cannot be sustained. Furthermore, as is apparent from the Order of the first appellate authority, the Sales Tax Officer himself appears to have recorded that the notice dated 31.12.2005 should have been issued for alleged commission of offence under Section 10(b), but not under Section 10(d) of the CST Act.
9.1. Observation of the Sales Tax Tribunal, that there was <no absence of mens rea to constitute an offence under Section 10(b) of the CST Act=, suffers from infirmity, inasmuch as no reason was assigned thereto. Therefore, the Order dated 09.12.2013 of the Sales Tax Tribunal setting aside the order of the first appellate authority and remanding the matter to the Sales Tax Officer for assessment afresh is uncalled for.
9.2. Accordingly, the question of law as framed by this Court is answered in the negative, i.e., in favour of the petitioner-Aryan Ispat & Power (P) Ltd. and against the opposite party-State of Odisha represented by the Commissioner of Sales Tax, Odisha, Cuttack.
9.3. As a sequel to the above answer to question of law, in exercise of power under Section 9(2) of the CST Act read with Section 24(4) of the OST Act, the Order dated 09.12.2013 of the Sales Tax Tribunal is hereby set aside and, thereby the Order dated 28.04.2007 of the STREV No.95 of 2014 Page 27 of 28 Assistant Commissioner of Sales Tax, Sambalpur Range, Sambalpur is restored.
9.4. The sales tax revision petition is disposed off with no order as to costs.
(MURAHARI SRI RAMAN)
JUDGE
DR. B.R. SARANGI, ACJ. I agree.
(DR. B.R. SARANGI)
ACTING CHIEF JUSTICE
Orissa High Court, Cuttack
The 11th October, 2023, Aswini
Signature Not Verified
Digitally Signed
Signed by: ASWINI KUMAR SETHY
Designation: PA(SECRETARY-IN-CHARGE) Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 16-Oct-2023 17:23:32 STREV No.95 of 2014 Page 28 of 28