'? ...-••Cd^1 5' ^- \}\t:'.^'..'t\>ss'^ ^••"'' ^v;"V01^i<('"'A'' ...i?-A^^.^^ ^'""w^.^"' .^^ \A-" Wf's IN ¥HEHIGH COURT OF CHHATTISGARH AT BILASPUR WRITAPPEALNo .^.?... OF 2009. [Arising out of judgemeat aad order dt.2 of February 2009 passed by learned Single.Judge, Hon'blejustice Shri Satish K. Agnihotri ia WP (T) No. 1829 of 2008] APPF.T.T.ANT: PETITIONER ^Sfiket Udyog Limited,. A company registered under the Companies Act, haviag registered Qffice at Boregaon Gro-wth Cenbce, Sausar, District Chhindwara (Previously Shailendra Nagat, Raipur (C.G) Versus RESPONDENTS: 1. State o£ Chhatdsgarh, through tfae Prindpal Secretary, Commercial Tax Department, Mantralaya, Raipur. , 2. The Commissioner, Commercial Tax, Raipur. 3. The Assistaot Commissiorier, Commerdal Tax, Raipur.__ WRIT APPEAL UNDER SECTION 2 OF THE CHHATISGARH HtGH COURT ( APPEAL TO DFyiSION BENCH) ACT 2006 V»8 a ;<^.;^ 'tw^^! as ^" Hi •^as+^O^KSjSlSa^i-BCffltgteRH^ATsB^^ ^^\\ .^<.,-<^^:E^E£® ES;eN6^::,1^-^^.?;^ S; .'^-.i^l'^^lS^Sliii^l^iti'CTf^uiSt^KS'S :;JB bl'fe;:S*tr't?i»N»sWB^iiauNK ^ K6EL»f<0- (Pii'f-ffiotter)' Mi'itjJiWeSa^^^SSfSG/Set^ . ,: '.\ Nikef UdBytyg 1..imi1-8i:l RESI*eM<ffiE rs Sffftetff C.6. & 2 othffrs PFesent:.:':^;'\<;.-'.-> • ,:: ^^..' .•".^^ ,./;.:.' ,;./'.^ ; . -^'...:'. :.•::-..••',:, ^ ;'•.. Mr.;H^S.^ ShnVasTayd^ ;Sr;^tfvocaf&^:^rtKe?app^ C ;- •witfci;;^.^^lTiJeef^rtl'jyasTava:;&v^^ ';"r',. ..•.,',. ^••^.^•; ^ !: :;. .^ ::li^ Mril^e^w<¥^.%t6^,:^(lvp<:atse?.·':.'^:''/.::•'';''. ':"" \, ^.- ,;';".::.'1^'' ';"'<;', ^ ttiSs^e^ttfi^Petndiey^Pflinel t^wyai' .^s; F . <":'.?^l\l''?..' '.'r •.-.,.,.A/':',:..^." :.,'./., "V' ^""-.^' i'^"""^: ^/:-,^. ':'' ^;^ ^ ••'..•''• ' .^..^:':..; ,.. •,J^U!A,:[6-jfci&..N::T.':./.. ,/,..-• :• ..;'; .•; .,.:^, . (Passed $n ^KMdy, 2010) ^. .<MtSSSU!SL. t ; ; '. :..':". ... .' . ; .'••.-•..:-'.,.:..::.':':';:"- . 'l,;ThjS wri1;^pp^l;has'tee^ direcfe^agairis^ tK&^^ . , 2;2.2009 pctSSedpfciy tKg/letiriTed^Sinale Judge iff Wr.P.. (T) , N6;t&?9/20Q8 di$liii^sing^tHe^wi'ityetiti6h; :,^ :, ; 2. Brref factS; of ^h^\ easeAare; that yThe^wr'Jt^Apltetlgftt ^ rtwnufactUre- '(tf^ Ji<^id^,!bxygeri ahd^ fi register''etf dealer tmcler'^ tKe C:j6. •Cffinmercial. Tdx 'Act, 1$94. (for brtfyity. 'ttie Act,; 1994'). ;Rul& 20 ;df the;;Ru|6^\Aacle .:urKrer:fheAet,t994-t:.e;v<;;$SaleSTrtX:Rule1?;;1957(for^^ : 'tHe ^u^^ ;proviye^?tKat.;tftei;aealershall^1?y r-eturfls, thareforia,^lwrit;!'appelli[tn^ (^as _^ ,.; ^per(6di<»lyetiirn;f6F^aperifttf of: ^ monthS clate.o^: : ^valijdityof'iTSTegtStrQ'fioti'cer'i-ificdfe.: ^ ; . " : .a.^he writappieHdnf^SubmiftedVetur'h^ifdr'thep : ;to30.6.1S^; 1.7:19^5 ¥o30.^:1^9S,140.ISi$5lw31.12:199^^ (pevi^) and ra;?9frtd 31;349S^.i ^n ; f the;wMt;ttp^)1<(Bt/waS fl(jtici^^iw^6i'iFri-4^;yfld^fful^ : ;of the •RuliM^ffiR; fl1^e^si^hT:'f^ t ^'•tod'lAl^&';^ 1 i m Page2ofll 31.3.1993: In r'eply to the saicl notice, the writ appelldn-t^ subinitted the calculatioft sKeeT.b^lance shget, pro accdurit and other dbcul'heiits whrch revealed t6 the Assessing Authority tHdt 1%.345,84,526/- w returns towarcls the gross sdle for •t'he said period buf in the books of accounts it wcts shown as^^^R^ arid ds suchthere wasdiffereneeof Rs,43,36,401=45 paise. Oh scrutiny of the documents, it was found that the writ appellant Soltl ilnported (taXable) goods worl-h ftS.43,26,401=66paise qnd dlsb sold old sccapi to the tune of Rs.21,625/-, whieh were not fbund in the details. Consequ&ntly, the Assessihfl Authdrity alldwing cieductioh on Form-33, applicable for concessipnable tax, •for the sale of ,1' . • - : ! : :. ' ' : i i • ,• • . ; : the goods imported for RS.41,47,604=68 paise ©4% tdx and sale of old.scFap for Rs.21,625/- @ 4% tax ancl assessed dccordingly. 4. Further, as the writ appellBht had sold taxable^^^ purchase/ which were nol' Showri iri;the ^ .thereon, the Asse^mg' Authority in hisorder.of<a dated 29.4.t999 atso observed to ihitiate separafe proceedings for iinposing penalty under Seetion 69(2) of th . Act, 1994. However, at that time the Assessing Authority hffld made additioridl demarid towards arr'ears 6f tax to the tune of Rs/1,60,955/-. Consequently, the proceedings under Section 69 (2) of the Act, 1994 were initidted, the w appelldnt was served ahd repressnted by an advoca^^^^^^^^^ sought ddjournments, however, on two successive da^es learned counsel appear'ing on behalf of the writ appellant remained absent and there^ope,the proceedings w^ ex-parte imposing five tijTies penalty 6f tha tax payable to the tune of Rs.7,97,6t5/-. ' S. Agajnst the above order- of ifflpositio dppellant preferred,a revision petition before the AddW ^ •Kl- ^wfSgS'SM::'ll.:^^ . '•.,.• ' : .:-.,.' I Cbmmisswner; Cominercial Tax providing proper opporturiity of ^ passed ex-parte. T 24.5.2Q03 allowed the rewsion and' remitted^^^t fresh adjudKation/ThereaftSr,freiSh6rder- imposing five ttmes peHatt^ against which again^^^^Q^ fhe Comm.issiprter', Cotnnner^idl Tax, Ral pur, w/ho vide order dated 17.12.2007 heldthattherewasw Cdlculdfion of the iax pa^aWe as ^ and as sucH five ti come to RS.5,20,045/- and hdt Rs.7,67,615/- and as such Rs.2,77,570/-has been reduced. l-fowever, there was n6 ^' •'.1. : ' .:;- ';1" .•^' • :'. '"•:.' ' ^y:. •. ' 1": :. •: 1 '>1 change regdrding rdte of peiialty i.e. fiye times. 6. Mr. ShrivQStaya, learned Senior- Gounsel for the writ appellant subimitted ttiat the writ appellant, infact, ha fcnt^red into a (contrtict ivif^ fforshort^SP'^f6r^supp\^o^^w^^ the conditidn of tssue of deelar'ation Rorm-3^3^^^^u 1994 which jt jritendecl to Supply from its^^^f^ during the accouhting year 19C^-96 (w.e.^ to 31.3.1996), butinthemeantime,^^^ became d sick unit grid it suffered a setback in tnanufacturing business and therefpre, it hdd to ptirchase gas from Raurkeld Steel Plant, QrisM (for short 'RSP') to ^fu ill the conditjonS of contr^ct wtth B5P. The supply of^^^ RSP to BSP wds dn ihfer-state Sale dnd Would hot be liable to tax being sale by trdnsfer of docutnents uhder Section 6 (2) of the Act, 1994. Since the^ lori^ receipt^ w ' the name of the writ apiwllaM' qnd t j3i,.' •..:.:'..;'. \ ^'..^ :..^:; .... ..•-:,::'. ..; • '•.;,'.,;-:". ;.._:.. .',.•' '. :••• •' sales were not shown in the returns fjled yn 1994. ^s ^-l' and;"C' forms w f':!: !; •i.n +il tin j B ijj<[1!' • •' Li•^^^^—•'•"i^s?'^^';:—" —'r':; s—-=^^-=-=l"^Z'T^*^^^ \ y' \ ^\ Jr! .1^- tft^. ss' «y" Pdge4(>fll | (selling dealer) and the BSP (pu^ wer'e takeri ds lacal sales. 7. Sjnce thg penalty iftposed thtit too fj^ befdr'e tlie learhed Single Tudge, wliich is Subject matter of this writ appejal, we are not to consider the valjclity of adsessment order arid additiona^^^^^ we have to > confine Ourselves r'egarcling the penalty imposed under Section 69 (2) of -t-he Acf, 1994 to tlze tuhe bf five timeg. 8. Learned Sihgl& Judge has placed reliance^ tHe judgment in the matter of ©uljag tnclusl'r'ies Vs. Contmercial Tdxes Olfficer reported in (2007) SiSC 269, which is reldted To Rajasthan Sttles Tax Act, 1994, in which The Hon'bl.e Apex Cour't hds fnter dlia held that "ate/ay// of faiiure to colnply with Sectioti 7S (2) is ttie failure/defauit of stdtutory ciyil obligdtion dne/^/^ceed^/?^ w»<yer 5«c/'/Q/7 7^ neither cnmindl ttor guQSi-cnrninal in hStu^ ^ytf^ff^<?/7^o'^fl?s. TTfsre^^^ i^sre /^ Ao^^^y of ihtehtion or of tttetts rea as-l'he saine is excluded from the category of essential eletnent for iwffosfng pendtty. Penql'i'y under ffection 78 (5) is attracfed QS Soon^^a^^ cohtravention of si'atutor'y obligations. Interitian of parties commil'ting such Violation is wholly irrelevdnt": 9. In view of above, while imposing penalty the Jnitention of the pqrty, who has committed default, whether.delibei-ate or hot, is not to be seen and once it is held thoit dn ad^ liability hds been determined with ^the. finding of e^ tdx on the grpund of furnishisg false concealing his tul-nover or ag^r'egate of his purchase price or furnishing a false retur'n unless it is proyecl that it was in frdudor gross'negtige.nce. ^ y,\ ;11:?1: PageSof 11 10. Before |ip6ce^djng furthei", if' iS^^n^ pr^isiohs of Section fr^ fsproduced \^s\oWi- !' •'. ''::' 1;" ' ::' ; ,:' : : ;':.''::' .'' 69(2) The proceedirtg uhder sub-section (1) shall be initiate<i by +h& CowiiTiiSsidney or the a or revisional auttiority ^as the case^^ m^ issue of^a hotice in the prescribed form^ giving The dealer dn cipportunity bf Beirtg hedrd. O h Heiaring the deuler, the Co m m issio rier or tlle appellafe or the r&visional duthori^ tKe case iriay l3e, sftall paSs an prde one cdlendar year from The dat^ c of such proceeding 6r within such furThei" time as dl tewed by t he Stgte ©oVernment,d i rect i ng , the'clealet' thdt, he shall in additidn to the tax payable &y him pay by way of^^^^^^^^p^^ v .(*hi^K sHall'bfe rfiwe tiffle^ bf the^^^ eya.d6d." ' !':.';,. •': .' .' ;.", •, . ' ' . \ ' An amendment was rnads in syb-siection <2) of Se bytheM.P.Act N0.33 of 1997 w.e.f. 1.9.1997 co^^^ diScretion to the duthoT'ities to iffipose penalty which shcill hot be less tlian three tirives but shallnQt &xceed five times of the ampunt of tdx evaded. The gmended sub-section (2 of Section &9 of the Act, 1.994 is quoted ds undsF'1- (2) The Ipi-oceeding under Sute-sectTon (1) Sl'tdll be initiated by the Commissioher or the dppella^^ revisional duthor'ity as the case may be, by issue^ of a rtotice ;in the prescribed ^or^ cledler an oppbr'tunity of bfei;ng heard. On heaping^ fhe dealer, tHe Gommissibner 6r ^H^ apjpellate or the rBvisional authority aS ^he cds^^ ^ pdss iffh order not later tf'lan one caleridar year wf^ ; & Pey®6of11 ^roin the clate 6f liinitdtiOn of sueh p^Oceeding or^^^^^^^^^^^^ within such fuf'ther tjme as^ullowed by the^^^S^^ ©overnment,djreeting the dedler thaf/he shall^^i^ adclitidn to the •t-ax paya&te by him pay by wsy of pendl'l'y asym which shall not be less thah thrfee times but shall not exceed five tinies of the ' amount of tax evadecl." — Ih the present cdse, though we are coriCerned with the re^urnSfortl^periodinbetWeeh 1.4.19^ taking gui4ance fPom the-jyygfflent^^^r SuprSnie Court in the mdtter ofState of M.P. & othe Bhardt Heavy Elec't-r'icals repoi'ted in ^1997) 7 SCC 1, wherpin while tlealing with the provisions of the Ehtry Tax Act of the State of M.P. it has been held that the assessing authorities are not bound to levy a fixed penalty equal to ten tinveS the ot'noynt of entry tax, whenever the provisions bf SeCtioii 7 (5) ware aftractey. It w depending ufion the factS of eaeh case the assessin9 authority had to decidewhat wduld be the redsonable arnount 6f penall'y to be imposed, the maximum being ten times the amount of the entry tax. Therefore, we are of the opjriiort that even^ ynder the un-ai'nended provisions thoygh the pow&r has been conferped to impoSe penalty to the extent of five times of the dmount of tax evaded, the same is The on!y niaximym limit ahd hpw under the amended proyiSions the pow^ between three times to five times of the amount of tax evaded. 1 .•..'.'• . ' • ' 11. The atnended sub-Secfion (2) of Seetion 69 of the Ac1", 1994 provides imp<^ition ^of pendlty of three time^^^ exceeding five times, of the dmouht of^^^^^^t^ section (3) plrovides 4'hat if tKe dealer payg le^^ \®^ !>'t"1 Pdge:7oftl the totat tax asSessed undfir Section 27,sufih dedler shall be deenied^to have concealed h^S'tiirnover or^^^^ purchds^ prices or tb ha*e furnis^^ Sales or purchaseS in hi^ returns 6r to have furnished a false reTurn or r&turhs foi- the purpose of Sub- sectipn (1) ynless h^ provss to th^ SatisfaGtion^^^ o Cpminissioner or fhe dppellate or the Fevisional au+hority/a ^•1'ie cdse tTiayt be, thdt such actionf WaS not due to any fraud or gross nie.gltgen&eon his part. 12. Therefore, under ^he Statute if a dealer syccessfully satisfies the aythority eoncerned that tKe xibove actjon was not due^tp any fraud or grdss negljgehce, the p sub-^ection (2) of Seetion &9 bf the Ac^/1994 wo^ applicable iri that cds6. Therefor'e.the author'ity coneerned has to record •dissatisfdction that the ac^jon was intentional qnd ineprrect tb say that 4her& \ r^gljgence on ttjs p^ penalty under Setttion 69 (2) G&rnBB.^^^^ p penalty under sub-Section (2ythe authority concerriecl has to give reasons as to why themaximum penalty i.e. five timeS, has to be itnposed, whereas sub-section (2) provides for imposing of pennlfy betWeen three times to fjve tltti 13. What dre ttie cases in whjch 4-hree times pendlty isyto be imposecl and what are tKe, caseS in which tnore than fhf'ee tirnes aird up to five times psnalty is to be^^^^l depends ypon fhe grcivity of evasi^ 14. In the instant ease we find ^hflt fiv& tJmes^^ jmposed by 1-he Assistant CornrrtisSioner.^^^^^G^ Raipur vide order 29.4.t999 pcBiSetlin CaSe No.l72/9<> (Provincjal), however^^the Said or^^r^was^^^s AdditiOhtll Coinmissidiier vide ordep clat6iJ remdnded tWe rnfftter fo ^^: .i.1.;; »>.„!. • a^'!l '^ iir PageSoflI i mposi ng pandlty was pdssed on S.9.12.2005 dfter'theremand was ade Ky TKe Additionol £ earlieror'dSr dated 27;9.2000. 15. A peruSal of the said. order dated 2?;l2.2005 reveals^^^ t the AsSistaftt ComiTiissidwer, Comniercial Tax, Raipyr has given a categor'ical finding that he was not^ s wifh the plea taken by the writ appellant and held ^hflt tKe d not filed fhe proper r^urn intentionally ;dnd tax p^ less thart 80% flf the t6fdl tdx cisseSSed undep Section 27 of the Act, 1;994. Mowevery no reflSdn has bfeen giyen os to why the tnaximuffi peha\^y has }3e&w^^6se^. Qhce [t^^^[^ Jn the statul-e that three times *o f imposed, it is i ncurnlaent Upol'i tKe concer'hed aufhoritytogive reaSOns for imposi^ t^^ Therefore, rh^ our opiniori, ;the iinpositron of pehalty require^^^^ consjdepi^g vaTiflUS^ fWtorS ihcluding: thgt ^ ;'IUnif^(wii^|^ew:|t(^ctiasl|a^:S'ie^fl^f :by.;^ for: 'Tndust r1 a 1 ahd Firiari<:ial Recon^trticl-i^ CBIFft) v 9.5.2000fin thscaSePegiS^et^^as 367/99 ffi^ pas^ngo^ We^ord^ ^We:d^29.^S005^^W ComRani^ (Special PrbviSionS) Aef, 1985. Pa^ ord&i* passed t>y the BTFR are quotedjierein belOw:- " 10.After'hedring the subt'njssjons and on a ear'eful coiiside.r'ttl'ioii of fhe avdi lable i nfor'mdtion, the Beneh ^ ob^r^ed tKat the^company's cl the prbvisions of SIGA wfis rwt^convincing. H view of the fdcf thdV no parti^l^a thecomponY'sttccsuntsfoff 1^97-96 were^^^^S^ ahyone and it fulfilled all tK^^ c fbr si&kness specifiechuffder^t^eAeT-asAlsoth^ delay would , jeopardize 'whatever ^ehffirieSs bf rehcAiliifdl'ioh were there/ condone fhe Idelay in filingi the^^^^^^r !,:i:4.!.n-~- — \e> l:i't :;^ts. Page9ofll interest of t'evivdl of the Company. Accordingly, the company was declared to be^a sick ihdustritil company u/s 3 (1) (o) of the Act. 11. Oh being asked about the company's l''evival plans, its repreSerttative submitl'ed that they wdnted to work out a settiement with IDBI dnd IDBI also on the lihes of ICIGI. In view df this, the Bench noted that a package u/s 17 (2) of the Act (vas rulecl out and proyisions of Section 18 6f fhe Act woUld hdve to be resor'-l-ed to in, public inter'est in relation to the cbmpiany. Accofdingly, the Bench appointed IbBT as the Oper'ating Agency (OA) u/s 17 (3) of the Act fdr ^exdtnihation of the techno-economic viability of the cofnpany and prepdration of ai-ehabilital'ioin scheme for it. The Bench mentioned that IDBI as BIFR's OA was r'equired to keep ifs role as a lending instittltion separate and functioh in dn impartial and objective inanner. The OA should Reep jn vi&w of.the tneasures Specified u/s 18 of the Act and the enelosec' '&uidelines' while working out the rei/ival SGheme. The Bench also issued the followjh^ directioris:- a) The Company shall provide detailed inventOT'y of all its fixed assets With their book values ds on31.3.2000 and break up of its liabilities into secured and unsecured dues as well QS the dues towards the banks, institutiQns, workers, statutory authorities, (iressing creditor'S dnd dthei'is dlong with the cdntingent liQbilitieS, if dny, estii'hated aS on 31;.3.2QOQ. Th6unSecured creclitors ^betow Rs.l lakh could be club&eci tpgetheF. This infornidticin should be^suppliecl to OA, secured creditdrs dnd^ M 3t.5;2000 (tnd, if based on uhaudited resylts, ^ 1 J^.silSs./':l i1'',: ~a!'i<Bi~ :R: PagelQofll 1...•.'... .. .; the datd shoul'd be eertified by the cotnpany's Char'tered Accouhtants. b) the OA Shall get a techno-economic^^^ v^^ study (TBVS) of The compQny dohe in-house, as no technicc^ proWen^ had been re.port&d. c) The coinpdny shall submit its comprehensive pr'oposd 1 i nd icat i ng c ledr and verif ja&le meahs df finanee to the QA and others concer^ latest by 10-6.2000. It should hold simultaneoysnegotiations with the parties from^ whoffl reliefs and concessions ure expected so as to create a eohsensus regdrding itsproposat. ^ d) The cut off dgte for cr'ystallization of dues shouldbetakenas 30.9.2000 andthepropoSal whether based on RBI guidelines or one tirne Settlement (OTS) shpuld confor'm to normal par'anieters of BIFRschenieS. e) The OA shall analyse the coropahy's pr'oposdl Jn deftth from all i''elevant aspects, circulate a background note based ther'eon and hdld diseussioris in a joiht meetTng of all cbncer'ned including the MP5EB. Thereafter the OA should Stibmit its^report to BXFR containing detailed comments and observations latest by 25.7.2000. f) The company shgll not dispoSe of brfdlie ai^ Other way any of jtS fixed assets u/s 22A of the Act. 1-1owever, s i nc? the u njt is worRihg, the curreht assetS could be utilized for fflaintaining day-to-day oper'ations sybject to keejiing proper; records tKereof and royting all iSosMvi/- Pagellof^ thie tl-ansaction thi'ough the company's ? finctncing tiariks; ' : ^ ^he swts ^reaSY iife^^^^ 6^ credrtorS could"cohtinue f<)r crystqlliZdtion of liabilities; but no fresh suits sKould be filed antl clecrees^ if any, obtdihed shdll^n exeeyted wjfKQut pf'ior approva] of BIFR." Ib.^h^iefore.Sonsi^eTrng^&fac^ case, this Court is 6f ttie Opinion that the m^^ reconsiderdtjon only witK r^cird 1^ th& of p&nalfy by the,Assessing Authoril'y under Section 69 (2) of the Act, 1994. 17. tn the r&su^li, we set sside^^^^^^i^^ 2.2.2009 passedbytheledrneclSingleJudge in W.P. (T) No. 182972008. We v\so ss-i asicle /t-he iWp u ghed order passed by the Assessing Atttharity^^ d case No.702^R/l^fnaricl/ (fyp<^ne%l) ? aHcf^ ^ i7.1.2.200T ypa^^&My^^ Case No.59/2®0@(Prowin^ral) arKt re.mit the^ te AsseSsing Authority for Taking fresh decision 1n the lighlt af the observations made in this order after' providing opportunityof hedring to the partiesconcerned. 18. The writ appeal stands allowed in part to the Qbove extent. Noorder as t6 costs. Sd/- ' I.M.Quddusi Judge Sd/- PrashantKumarMishra Judge '''.:!.