NATIONAL ALUMINIUM CO LTD Vs. STATE OF ORISSA

JUDGEMENT

(1.) THE National Aluminium Company Limited (in short, "nalco"), a Government company within the meaning of section 617 of the Indian Companies Act and engaged in the business of manufacturing aluminium, is the petitioner and has approached for the third time this Court under article 226 of the Constitution against an order levying penalty under section 10-A of the Central Sales Tax Act, 1956, passed by the Sales Tax Officer, Dhenkanal Circle, Angul, to the tune of Rs. 66,95,87,326. 34 annexed as annexure 1, as well as the revisional order passed by the Additional Commissioner of Sales Tax, Central Circle, Orissa, Cuttack, reducing the penalty amount to the tune of Rs. 66,09,07,504. 24, annexed as annexure 2 to the writ application.

(2.) THE transactions in question relate to the period February 24, 1982 to June 30, 1986. The General Manager, Captive Power Plant, NALCO, is a registered dealer having certificate No. DL-C-624-A under the Central Sales Tax Act. The Sales Tax Officer, Dhenkanal Circle, Angul, issued a notice to show cause as to why penalty will not be levied upon the petitioner under section 10-A of the Central Sales Tax Act (hereinafter referred to as "the CST Act") alleging that there has been no inter-State trade between the petitioner and B. H. E. L. , Trichy, and yet the petitioner had issued three "c" declaration forms in favour of M/s. B. H. E. L. , Trichy, purporting the sale to be an inter-State sale. The said notice is dated July 25, 1986, annexed as annexure 5 to the writ application. The said Sales Tax Officer issued another notice dated December 15, 1986, annexed as annexure 6/a calling upon the petitioner to produce the bill statements along with challans, way-bills and supporting documents for the petitioner's transactions with M/s. B. H. E. L. for use of the "c" declaration forms as mentioned in the notice and a list of 10 "c" declaration forms was given including the three forms which were the subject-matter of notice under annexure 5. The Sales Tax Officer levied penalty to the tune of Rs. 8,37,04,819 for the alleged contravention of section 10 (d) of the CST Act and being aggrieved by the said order the petitioner filed a revision before the Commissioner which was disposed of by order dated March 3, 1987. Though the Commissioner set aside the order of the Sales Tax Officer, but made certain observations in the said order in relation to the three transactions which were the subject-matter of the first notice issued by the Sales Tax Officer for which the petitioner approached this Court in O. J. C. No. 1438 of 1987. That application was disposed of by order dated April 28, 1987, clarifying therein that the direction of the Commissioner for reconsideration would mean that the Sales Tax Officer would dispose of the matter afresh in respect of both the transactions covered by the notice dated July 25, 1986, as well as notice dated December 15, 1986, giving due opportunity to the petitioner to be heard in the matter. The Sales Tax Officer finally levied penalty to the tune of Rs. 8,36,66,275 under section 10-A of the CST Act by his order dated January 25, 1988. The said order of the Sales Tax Officer was confirmed in revision by the Additional Commissioner by order dated February 27, 1988. The petitioner, therefore, approached this Court in a writ petition which was registered as O. J. C. No. 805 of 1988. The said writ application was disposed of by this Court on November 26, 1988. This Court came to the conclusion that the liability of the petitioner is such that it requires thorough investigation of facts as well as law and the manner in which the matter has been dealt with both by the Commissioner as well as the Sales Tax Officer is wholly unsatisfactory. The orders of the sales tax authorities, therefore, were set aside and the matter was remitted to the Sales Tax Officer for fresh enquiry. It was observed that the Sales Tax Officer must make up his mind as to the violation actually made by the petitioner with reference to the facts and circumstances and issue appropriate notices to it so that it will have an opportunity of meeting the allegations, whereafter the proceeding shall be disposed of in accordance with law. The Sales Tax Officer was directed to issue fresh notice to the petitioner within one month from the date of receipt of the order and the petitioner was called upon to file its show cause within one month from the date of receipt of notice and the proceeding was to be closed within two months thereafter. Pursuant to the aforesaid observations and directions of this Court, the Sales Tax Officer issued a fresh notice to show cause by letter dated March 5, 1989, annexed as annexure 6, and in the said notice five charges were levelled against the petitioner. The gravamen of those charges are :

(3.) UNDER section 10-A of the CST Act, penalty can be imposed only against the person purchasing goods in the course of inter-State trade or commerce and such penalty can be levied when a registered dealer purchasing any class of goods falsely represents that goods of that class are covered by his certificate of registration; an unregistered dealer when purchasing any goods in the course of inter-State trade or commerce falsely represents that he is a registered dealer; and a registered dealer after purchasing any goods at the concessional rate of tax on giving a declaration that goods are intended for particular purpose without reasonable excuse makes use of the goods for a different non-declared purpose. A penalty proceeding being quasi-criminal in nature, penalty will not ordinarily be imposed unless the dealer acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. Thus whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judiciously and on consideration of all the relevant circumstances. Where, therefore, a breach flows from a bona fide belief that the dealer is not liable to act in the manner prescribed by the statute, the assessing officer would be entitled to refuse to impose any penalty. Similarly, when a dealer is technically guilty of violation but not in conscious disregard of the provisions and acted bona fide and has no motive to escape the liability by using "c" declaration forms, no penalty should be levied. That apart, before a penalty can be imposed, the circumstances established must reasonably point to the conclusion that the assessee concerned has consciously committed the acts or omissions which go to constitute the offence and the burden would be on the department to prove the existence of such circumstances. Thus, in a proceeding for levy of penalty under section 10-A the department must prove the existence of facts and circumstances constituting the offence in question. Bearing in mind the aforesaid position, we would now proceed to examine the contentions of Dr. Pal appearing for the petitioner in respect of the different charges in seriatim.