V.GOPALA GOWDA, CJ & INDRAJIT MAHANTY,J. W.P.(C) NO.2037 OF 2009. (02.07.2010). M/S. JAI JAGANNATH MARBLE ………… Petitioner. .Vrs. THE COMMISSIONER OF ……….... Opp.Parties. COMMERCIAL TAXES CUTTACK & ORS. (A) ORISSA VAT ACT, 2004 (ACT NO.4 OF 2004) – SEC.74 (5), 101. (B) ORISSA VAT ACT, 2004 (ACT NO. 4 OF 2004) – SEC.74(5). For Petitioner - M/s. Subash Chandra Lal, Sumit Lal & Sujit Lal. For Opp.Parties – Mr. R.P.Kar, Addl. Standing Counsel (C.T.) I.MAHANTY, J. This writ application has been filed by the petitioner-M/s. Jai Jagannath Marble seeking to challenge an order dated 6.2.2009, passed by the learned Additional Commissioner of Commercial Taxes, Northern Zone, Orissa, Sambalpur (Opposite Party No.2), confirming the order passed by the Sales Tax Officer (Vigilance), Sambalpur (Opposite Party No.3) in which, while coming to a finding that, the dealer had been found to be carrying excess stock of marble and the same was detected at the Konoktora Check Gate on 22.2.2009 and levied tax and penalty both under the OVAT Act as well as the Entry Tax Act. 2. Learned Senior Counsel appearing for the petitioner, inter alia, assails the aforesaid impugned orders on the ground that, since the petitioner was found to have made “under valued” the transaction of marbles purchased by it, no proceeding under Section 74(5) of the OVAT Act could have been initiated against him and that, the appropriate provision in the present circumstances ought to have Section 101 of the OVAT Act and had a proceeding been initiated against the petitioner under Section 101 of the OVAT Act, no penalty could have been levied in the present case. 3. On perusal of the impugned order and the facts that emanate in the present case, it is clear therefrom that, the petitioner had purchased certain amount of marble in the State of Rajasthan and engaged the service of a transporter to transport such marble to the State of Orissa. At the point of entry into Orissa, the invoice, way bill and other documents evidencing payment of freight charges were produced and the Sales Tax Officer (Vigilance), Sambalpur (Opposite Party No.3) issued notice to the petitioner under Section 74(5) of the OVAT Act, 2004, inter alia, on the ground that while the documents pertaining to the goods indicated transportation of 396.40 square meters of marbles, apart from other marbles, handicrafts, the total quantum of marble being transported was determined to be 1173.14 square meters, (i.e. nearly three times the declared quantum). The petitioner responded to such show cause notice and in consideration of the same, the Asst. Commissioner of Commercial Taxes (Vigilance), Sambalpur by order dated 27.1.2009 under Annexure-4 came to conclude that, the total quantity of marble measured 12623 square feet, whereas the quantity of marble disclosed in the bill measuring 4265 square feet. Therefore, he determined that the vehicle in question was carrying excess quantity of 8358 square feet of marble and determined the value of such excess goods at the rate of Rs.40/- per square feet and determined the value of such excess amount at Rs.3,34,320.00. Consequently, the Orissa Entry Tax determined as @ 2% amounting to Rs.6,686.00 and penalty thereon (twice the tax due) Rs.13,372.00 was imposed under the Orissa Entry Tax Act. Insofar as the OVAT Act is concerned, tax @ 12.5% was imposed on the excess quantity sought to be transported and determined at Rs.41,790.00 and penalty under Section 74(5) of the OVAT Act was levied i.e. five times of the tax due i.e. Rs.2,08,950.00. Therefore, it raised total demand and penalty in both the Entry Tax Act and OVAT Act as Rs.2,70,798.00. Challenge had been made to this order by the assessee-petitioner, by way of a Revision Case No.296/2008-09 before the Additional Commissioner of Commercial Taxes, Northen Zone, Orissa, Sambalpur which came to be disposed of vide order dated 6.2.2009 rejecting the revision filed by the petitioner confirming the order passed by the Asst. Commissioner of Commercial Taxes (Vigilance), Sambalpur. Insofar as the contention raised by the learned counsel for the petitioner is concerned, vis-à-vis the applicability of Section 101 of the OVAT Act, and inapplicability of Section 74(5) of the OVAT Act, it became necessary to quote the said provisions hereunder: “101. Special provision relating to under invoicing – (1) Where the Commissioner has, for the purpose of any proceeding under this Act, reasons to believe that any goods kept in stock or being carried by a dealer or any person on behalf of a dealer are undervalued or underpriced in any document relating to such goods produced before him, he may, after causing such inquiry as he considers necessary in the circumstances, intimate such dealer or person, by a notice in the prescribed form, the prevailing market price of such goods and direct such dealer or person to pay tax under this Act on the basis of the prevailing market price. (2) Where the goods referred to in Sub-section (1) are being carried, the officer-in-charge of the check-gate or barrier or an officer authorized under Sub-Sec.(3) of Section 74, as the case may be, may detain the vehicle carrying such goods until the tax demanded under Sub-Sec.(1) is paid. (3) Where the goods referred to in Sub-Sec.(1) are found in stock and the dealer or the person on behalf of the dealer, on whom the notice under that sub-section was served, fails to pay the tax in terms of such notice, or where the tax demanded is not paid under Sub-Sec.(2), the Commissioner may offer to purchase such goods at a price at ten per centum above the purchase value or the value disclosed by the principal or agent in the case of goods received in consignment basis plus actual transportation charges and entrust such goods to the Orissa State Civil Supplies Corporation Ltd. or any Co-operative Society as may be notified for sale or sell it through public auction in the prescribed manner. (4) The dealer or the person on being directed under Sub-Sec.(3) shall be found to sell the goods to the Commissioner and if he refuses, fails or does not deliver the goods within the time mentioned in the notice offering to purchase goods he shall be liable to penalty, which shall be equal to twenty per centum of the value of the goods at the prevailing market price. (5) No penalty under Sub-Sec.(4) shall be imposed without allowing such dealer or person, as the case may be, an opportunity of being heard. (6) If, in pursuant to the notice issued under Sub-sec.(4), the dealer or the person delivers the goods to the Commissioner he shall be paid the price of such goods as determined under Sub-Sec.(3) alongwith the cost of transportation within fifteen days of the delivery of the goods. (7) Any person aggrieved by the order or notice, as the case may be, under Sub-sec.(3) or under Sub- sec.(4) may file an application for revision before the prescribed authority within thirty days from the date of receipt by him of the decision, in such form and in such manner as may be prescribed. Provided that the said prescribed authority may admit an application made after the expiry of the period of thirty days, if he is satisfied that the applicant had sufficient cause for not making the application within the said period.” “74. Establishment of check-posts and inspection of goods while in transit –(5) The officer-in- charge of the check-post or barrier or the officer authorized under Sub-section (3), after giving the driver or person in charge of the goods a reasonable opportunity of being heard and holding such enquiry as he may deem fit, may impose, for possession or movement of goods (in transit), whether seized or not, in violation of the provisions of Clause (a) of Sub-section (2) or for submission of false or forged documents or way bill either covering the entire goods or a part of the goods carried, a penalty equal to five times of the tax leviable on such goods, or twenty per centum of the value of goods, whichever is higher, in such manner as may be prescribed.” 4. On perusal of the facts in the present case as would be evident from the documents appended thereto, we are of the considered view that Section 101 of the OVAT Act has no application to the facts of the present case as it is clear from the documents appended to the writ application that, the petitioner had suppressed and/or failed to disclose the actual quantity of marbles that he was seeking to bring into the State of Orissa. Although some issues regarding the actual quantum of marble was raised, the same no longer remains indispute, since by way of an interim order dated 11.2.2009, the vehicle of the petitioner had been permitted to be released in his favour and in compliance of certain terms and conditions as noted in the order dated 11.2.2009 passed in Misc. Case No.1624 of 2009 and more importantly, directions were also issued to the concerned Sales Tax Officer to ensure re- measurement of the stock of marble in the presence of representative of the petitioner at the earliest. It is the admitted case of the parties that the petitioner, in fact, complied with the interim orders by making the necessary deposit and re-measurement by the Sales Tax Officer had, in fact, taken place in the presence of the representative of the petitioner. The result of re-measurement was that the measurement made earlier by the Sales Tax Officer (Vigilance) at the check gate was correct and stood confirmed. 5. In view of the aforesaid fact, it becomes clear that while in the invoice, as well as the way-bills in question, the documents indicated that the vehicle was carrying nearly 4265 square feet of marble. But, in fact, on physical verification and subsequent re-measurement, it was re-confirmed that the vehicle was carrying 12623 square feet of marble. This fact itself clearly satisfies the requirement of Section 74(5) of the OVAT Act. We are of the considered view that the documents submitted on behalf of the petitioner at the entry gate regarded were false and, therefore, clearly attract the applicability of Section 74 of the OVAT Act, 2004. 6. Learned Senior Counsel for the petitioner next contended that since this Court has been pleased to allow the vehicle in question to enter into the State of Orissa and to unload the cargo and since the petitioner also deposited the additional tax amount both under the OVAT Act and OET Act amounting to Rs.48,476.00 as well as 25% of the penalty amount before the Sales Tax Offier (Vigilance), Sambalpur (O.P. No.3), the Court may favourably consider these facts and quash the direction imposing any further penalty on the petitioner beyond the amount already deposited. 7. In the aforesaid regard, Mr. Kar, learned counsel for the Revenue supported the revisional order impugned before us and stated that it became rampant practice in certain specific trades such as “marble”, that the quantum of goods actually brought into the State of Orissa is under-declared and consequently, leading to a huge loss of State Revenue, due to such activities on the part of certain traders and submits that the penalty imposed is in terms of Section 74(5) of the OVAT Act. Since the Legislature had mandated the levy of penalty at five times of tax amount in order to prevent unscrupulous dealers from avoiding of lawful obligations. In this respect, he submits that the Revenue have no discretion in this matter and if a person is found to have presented false documents pertaining to the goods sought to brought into the State of Orissa, apart from the tax leviable therefrom, he is also liable to pay penalty @ five times the tax imposed and in this respect the Assessing Officer has no discretion in the matter regarding levy of penalty and, therefore, prays dismissal of the writ application. 8. In this respect, reliance was placed by the revenue on the decision of the Hon’ble Supreme Court in the case of Union of India v. Dharamendra Textile Processors, (2008) 231 ELT 3 (SC) wherein the Hon’ble Supreme Court while considering Section 11AC of the Central Excise Act, 1944 (Levy of penalty) determined that the application of the aforesaid section would depend upon the existence or otherwise of all the conditions stated in the Section. Once the Section is found to be applicable in a case, the concerned authority would have, no discretion in quantifying the amount and penalty must be imposed as stipulated under Sub-Section (2) of Section 11A of the Central Excise Act. This view has been re-affirmed by the Hon’ble Supreme Court in the case of Union of India v. Rajasthan Spinning & Weaving Mills, (2010) 1 GSTR 66 (SC). 9. In view of the aforesaid authoritative pronouncement by the Hon’ble Supreme Court, we are of the considered view that the Sales Tax Officer has no discretion vis-à-vis levy of penalty, once he is satisfied that the circumstances as contemplated under Sub-Section (5) of Section 74 of the OVAT Act are satisfied. This penalty as mandated by the State Legislature has to be imposed and the Sales Tax Officer has no discretion in the said regard. Therefore, we are afraid that the second contention of the petitioner also cannot be accepted and the same stands rejected. 10. Further contention was raised by the learned counsel for the petitioner that the imposition of tax and penalty had been made by adopting a sum of Rs.40/- per square feet as the “local sale price” of marble whereas the petitioner had in fact, purchased the marble @ of Rs.38.45 per square feet. In so far as this contention is concerned, we are in agreement that the contention of the petitioner that the Sales Tax Officer (Vigilance) ought not to have taken the “local selling price” as the value of the goods, but the price on which the petitioner had “purchase price”, i.e. Rs.38.45 per square feet. 11. Therefore, in view of the conclusion arrived at, as noted hereinabove, the writ petition succeeds only to the limited extent of remitting the matter back to the Sales Tax Officer (Vigilance), Sambalpur to re-compute the tax and penalty both under the Orissa Sales Tax Act, 1947 and Orissa Entry Tax Act, 1999 by taking the price of the marble at the check gate i.e. @ Rs.38.45 per square feet and re- compute the tax and penalty leviable thereon and by issuing fresh demand on the petitioner after adjusting therefrom the tax and penalty already deposited by the petitioner pursuant to the interim direction passed in the writ application, while directing interim release of the Vehicle/goods. 12. The writ application stands disposed of in terms of the aforesaid direction. Writ petition disposed of.