Indian Oil Corporation Ltd. vs State of Bihar and Others

Narayan Roy, J.—Heard counsel for the parties.

This writ application is directed against order dated May 18, 2004 passed by the Commercial Taxes Tribunal, Bihar, Patna, in Revision Case No. PT-257/1997, whereby and whereunder imposition of penalty against the petitioner u/s 16(9) of the Bihar Finance Act, 1981 (hereinafter to be referred to as, "the Act") for the period 1994-95 was affirmed.

Dr. Debi Pal, learned Counsel for the petitioner, submitted that the petitioner is engaged in distribution and sale of petroleum products through its sale depots and sale point throughout the country including the State of Bihar. The petitioner had deposited the admitted tax of Rs. 4,84,14,513 for quarter ending on December 31, 1994 on February 28, 1995 though a prayer was made to condone the delay and extend the time for submitting the quarterly return till the end of February, 1995. However, the assessing officer initiated a proceeding u/s 69 of the Act for delay of payment of admitted tax. Pursuant to the notice, show cause was filed showing its inability to compile the statement, which was necessary for ascertaining the admitted tax for the relevant quarter. However, a penalty was imposed u/s 16(9) of the Act and a demand notice was served for Rs. 48,41,451.30.

Dr. Debi Pal, learned Counsel for the petitioner, submitted that pursuant to notice dated March 13, 1995, as contained in annexures 5 and 5/A the petitioner in all bona fide deposited advance tax of Rs. 13,50,00,000. Learned Counsel, therefore, submitted that the assessing officer has committed an error of law against the settled principles of law, wherein it was held that the order imposing penalty is quasi-judicial in nature and it involves exercise of judicial discretion and further held that it is equally well-settled that unless the party under obligation to pay tax has acted dishonestly, intentionally and in defiance of law or in conscious disregard to obligation and is guilty of contumacious conduct, the penalty ordinarily will not be imposed even in case where minimum penalty is prescribed. Learned Counsel, in this view of the matter, submitted that the conduct of the petitioner cannot be said to be intentional or mala fide in view of the judgment of this Court in the case of Indian Oil Corporation Ltd. Vs. The State of Bihar and Others .

The learned Advocate-General, appearing on behalf of the State, on the contrary, submitted that from the materials on record, it appears to be a case of wilful evasion of tax, and, therefore, imposition of penalty is wholly justified.

In view of the submission of learned Counsel for the parties and materials available on record, it appears that imposition of penalty would not be justified, as no ingredient of mens rea was found on the part of the petitioner and the delay in payment of tax cannot be said to be deliberate.

In the facts and circumstances of the case, and in view of the legal proposition, as referred to above, the order imposing penalty appears to be wholly unjustified and not sustainable in law.

In the result, this application is allowed and the order imposing penalty upon the petitioner is hereby set aside No order as to costs.