Bhanja Bhandar vs State of Orissa

G.K. Misra, C.J.—The question referred to this Court runs thus:

Whether in the facts and circumstances of the case imposition of penalty u/s 12(5) of the Orissa Sales Tax Act in regard to the quarters ending June and September, 1992 is called for?

Material facts may be stated in short. The Petitioner is a partnership firm carrying on business at Raikia in the district of Phulbdni. It was assessed to sales tax u/s 12(5) of the Orissa Sales Tax Act, 1947 (hereinafter to be referred to as the Act) for quarters ending on 31-3-1962 to 30-9-1962 and penalties under that section were imposed on it for quarters ending on 30-6-62 and 30-9-1962 on the footing that the Petitioner was an unregistered dealer. It had applied for registration as a dealer under the Act en 14/16-2-1962 but the registration certificate was granted to it on 16-12-1962. All the taxing authorities including the Tribunal assessed the Petitioner as an unregistered dealer for three quarters ending on 31-3-1962 to 30-9-1962 and imposed penalty for two quarters ending on 30-6-1962 and 30-9-1962. The Tribunal refused to refer a case to the High Court on the conclusion that no question of law arose out of its order. On an application for reference being filed in the High Court, a statement of facts relating to the aforesaid question was called for.

Section 12(5) of the Act runs thus:

If upon information which has come into his possession, the Commissioner is satisfied that any dealer has been liable to pay tax under this Act in respect of any period and has nevertheless without sufficient cause failed to apply for registration, the Commissioner shall, after giving the dealer a reasonable opportunity of being heard, assess, to the best of his judgment, the amount of tax, if any, due from the dealer in respect of such period and all subsequent periods and the Commissioner may direct that the dealer shall pay, by way of penalty, in addition to the amount so assessed, a sum not exceeding one and a half times that amount;

Provided that no penalty shall be levied for the quarter during which the dealer first or again becomes liable to pay tax under this Act.

This sub-section directly came up for consideration of the Supreme Court in Commissioner of Sales Tax, Cuttack, Orissa v. Brijraj Rameswar 17 S.T.C. 295 Their Lordships held that the expression "nevertheless wilfully failed to apply for registration" connotes a deliberate failure to apply for registration in order to avoid taxation. In this case, registration certificate was granted on 16-12-1962 though the application had been filed on 14/16-2-1962. As in respect of the impugned quarters the dealer applied for registration long before, the question of the dealer''s wilfully failing to apply for registration does not arise.

In Subhash Chandra Ghosh Vs. State of Orissa, , a Bench of this Court held under the corresponding provisions of the Central Sales Tax Act that the registration certificate when granted is operative from the date of the application. This decision as followed by a Division Bench of the Punjab and Haryana High Court in Chandra Industries Vs. The Punjab State and Others, , and by a Division Bench of the Calcutta High Court in Chandra Industries Vs. The Punjab State and Others, . The principle laid down in Subhash Chandra Ghosh Vs. State of Orissa, , fully applies to the facts of this case.

The Petitioner is to be treated as a registered dealer with effect from 14/16.2-1962 and it cannot be assessed as an unregistered dealer for the impugned three quarters nor can penalty be imposed upon it for the two quarters ending on 30-6-1962 and 30-9-1962.

On the aforesaid analysis, the question referred is answered in the negative that no penalty is called for in respect of the two quarters ending June and September, 1962.

The reference is accepted with costs. Hearing fee of Rs 100/-. Reference fee deposited be refunded to the Petitioner.

B.K. Ray, J.

I agree.