Nagendra Rai, J.
1. The petitioner, a Government Company within the meaning of Section 617 of the Companies Act, has filed the present writ application for quashing four orders dated 6th September, 2002 (Annexures 17 series) imposing penalty under Section 7(4) of the Bihar Tax on Entry of Goods into Local Areas for Consumption, use or Sale Therein Act, 1993 (hereinafter referred to as 'the Act') read with Section 16(9) of the Bihar Finance Act (hereinafter referred to as the 'Finance Act') for not paying the admitted tax under the Act within time for the assessment years 1993-94, 1994-95, 1995-96 and 1998-99 and the demand notices dated 7th September,2002, (Annexures 16 series) issued in terms of the aforesaid orders dated 6th September, 2002.
2. The petitioner, a Government of India Undertaking under the Ministry of Petroleum and Natural Gases, Government of India, is carrying on business of refining crude oil into various petroleum products and marketing them through the Marketing Division and also doing research and development work. It has six Refineries, where crude oil is refined into various petroleum products, one of which is situated in the State of Bihar at Barauni and the matter in this case relates to the imposition of penalty with regard to non-filing of return within time regarding the import of crude oil in its Refinary at Barauni. Crude oil is imported by the petitioner from inside and outside the country.
3. The petitioner is a registered dealer under the Finance Act, under the Central Sales Tax Act (hereinafter referred to as the 'C.S.T. Act') and also under the Act. The petitioner imported crude oil for the aforesaid assessment years 1993-94, 1994-95 and 1995-96 through Oil India Limited, O.N.G.C, and during financial year 1998-99 imported crude oil partly from Assam Oil Field and partly from indigenous and partly imported.
4. The Government of Bihar promulgated Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Ordinance, 1993 being Ordinance No. 11/ 1993 on 20th of February, 1993, which was effective from 25th of February, 1993. According to the charging Section 3 of the Act, entry tax was levied on the entry of commodities mentioned in the schedule in the local area. Crude oil is one of the commodities mentioned in the schedule. The Ordinance was succeeded by the successive Ordinances and, thereafter, the Ordinance was replaced by Bihar Act 16/1993. On 22nd March, 1993, the Assistant Commissioner of Commercial Taxes, Begusarai Circle, Begusarai, required the petitioner to pay the entry tax under the provisions of the Act with regard to entry of crude oil. Steps were also taken to impose penalty for not paying the tax under the Act. In the meantime on 5th of May, 1993, the Bihar Chambers of Commerce filed a writ application being C.W.J.C. No. 3224 of 1993 challenging the constitutional validity of the Ordinance. The writ application was admitted on 4-5-1993 and an interim order was passed that no dealer shall be required to get itself registered under Section 5 of the Act, however, a regular account shall be maintained so that if the writ application fails, the liability could be enforced. In the meantime, it appears that Rules were framed under Section 9 of the Act. Again steps were taken by the respondent-authorities to get the petitioner registered under the provisions of the Act and show-cause notices were also issued as to why an appropriate step/action be not taken under the provisions of the Act. The petitioner informed the authorities that the stay order has already been passed' by the High Court in the case of Bihar Chamber of Commerce, but the authorities did not accept the said stand saying that the stay order was passed in the case filed by other party. Thereafter, the petitioner filed a writ application being C.W.J.C. No. 8010 of 1993 on 11-8-1993. On 18-8-1993 in the case filed by the Bihar Chambers of Commerce, the matter of stay was again heard and this Court passed an order that all the dealers shall maintain a regular account of entry of goods into the local area for consumption, use or sale in terms of the Ordinance. The local assessing authority shall have liberty to inspect the records to find out whether the accounts are properly maintained or not. In case, the writ application fails, the liability shall be enforced against the concerned persons. When the writ application filed by the petitioner was taken up, the same was admitted and the interim order passed in the case filed by the Bihar Chambers of Commerce was ordered to govern the case of the petitioner also. On 2-3-1995, both the writ applications, one filed by the writ petitioner and the other filed by the Bihar Chambers of Commerce, were finally disposed of, which is reported in 1995 (2) BUR, Page 1389 and this Court held that the provision of the Act does not satisfy the requirement of Article 301, read with Article 304(b) of the Constitution and, Section 3 of the Act is ultra vires Articles 301 and 304(b) of the Constitution of India. This Court further held that the proviso to Section 3 and provision of Section 6 of the Act were ultra vires Article 14 of the Constitution and restrained the State from enforcing the provisions of the said Act.
5. The State Government filed S.L. P. No. 14636-14644/95 before the Apex Court, which was admitted on 28-7-1995 and an interim order was passed to the effect that pending further orders, the assessment shall be made but the recovery shall be stayed. The said matter was finally disposed of by the Supreme Court on 6-2-1996, the judgment of this Court was set aside and the Apex Court held that the Act and its provisions are intra vires and valid, which is reported in 1996 (1) P.L.J.R, 105 (S.C.) (State of Bihar v. Bihar Chambers of Commerce) and 103 S.T.C. Page 1.
6. After the aforesaid judgment, on 27/2/1996, respondent No.4 drew attention of the petitioner to the judgment of the Supreme Court and requested to make payment with effect from May, 1993 and appear before him by 12-3-1996, along with full statementand payment challans. Again reminder was sent by respondent No. 4 for payment of the tax, Time was prayed on behalf of the petitioner. However, the petitioner paid Rs. 1 crore by cheque on 26-3-1996 on 27-3-1996, the petitioner paid Rs. 85 lacs by cheque and on 17-5-1996 the petitioner applied for registration under Section 5 of the Act mentioning therein that the liability will arise from the 6th of February, 1996, which is the date of the judgment of the Supreme Court. The matter of registration remained pending inspite of the prayer made on behalf of the petitioner to expedite the registration and issue registration certificate as the Head Officer or the petitioner required the registration certificate. On 19-2-1997 respondent No.4 informed that the prayer made for registration with effect from 6-2-1996 was wrong as per the Rules and the petitioner was directed to appear along with particulars of the crude oil imported by it with proof of full and final payment and a threat was also given to impose penalty in default of the compliance. Thereafter, the respondent-authority fixed a date of hearing on the matter of registration. On that day, a prayer was made for adjournment on the ground of the Counsel being out of station, which was rejected on 25-2-1997. On 27-2-1997, respondent No. 5 issued registration certificate and fixed the liability on the petitioner to pay tax under the Act with effect from 25-2-1993.
7. While the matter was pending before the authority, the petitioner being in financial difficulty, approached the State Government through the Director of Industries, Government of Bihar, to exempt the unit from payment of entry tax. The petitioner also approached the Commissioner of Commercial Taxes informing that as it was running through serious financial difficulties, payment of entry tax be not enforced until its request for waiver of entry tax was disposed of by the Government of Bihar. On 10-6-1997, the petitioner filed returns for the financial years 1992-93, 1993-94, 1994-95, and 1995-96 after payment of entry tax in respect of all the said financial years amounting to Rs. 40,39,49,054/-. The petitioner also filed return for the financial year 1996-97 and paid entry tax payable in trims of the said return. Thereafter, it received notices all dated 21-6-1997 for the financial years 1992-93, 1993-94, 1994-95, 1995-96 and 1996-97. The said notices were issued under Sections 16(8) and 16(9) of the Finance Act, copies of which have been annexed as Annexures 12 series to the writ application. On 14-7-1997, the assessment orders for the aforesaid five years were passed by respondent No.5. The question of payment of penalty was also considered by authority and it was held that no penal provision is attracted in view of the prolonged judicial litigation and status of the petitioner. In other words, no penalty was imposed taking into consideration the past litigation and the payment of tax while filing return by the petitioner on 10-6-1997 Copies of the said assessment orders have been annexed as Annexures 13 series.
8. It is the further assertion of the petitioner that after the judgment of the apex Court dated 6-2-1996, the petitioner has been regularly filing returns after paying the entry tax under the Act. For the year 1997-98 and onwards, the petitioner also paid advance tax in terms of the provisions of the Act. Notices were issued for the assessment year 1998-99 by Respondent No.3 and he after being satisfied passed the assessment order for the said year on 19-5-2000 and found that the petitioner has paid the admitted amount of entry tax within the statutory period and allowed rebate under the Act and no penalty was imposed under Section 16(9) of the Finance Act, a copy of the said assessment order is annexed as Annexure 14.
9. On 8-6-2000, show cause notices were issued by respondent No.4 for the five assessment years i.e. 1992-93 to 1995-96 and 1998-99 under Section 7(4) of the Act, read with Section 16(9) of the Finance Act for imposition of penalty in view of the objection raised by the Audit Party of the A.G., Bihar. The copies of the notices are annexed as Annexures 15 series. Thereafter, the petitioner appeared and stated that the question of payment of penalty has already been considered by the Assessing Officer and no penalty has been imposed and the entry tax was duly paid within statutory period for the assessment year 1998-99, and the rebate has been granted. It was further stated that in view of Section 47 of the Finance Act, read with Rule 32 of the Bihar Sales Tax Rules (hereinafter referred to as 'the C.S.T. Rules'), respondent No. 4 could not review the order after expiry of 12 months from the date of passing of the orders. It was further stated that no previous sanction of the Commissioner was taken before reviewing the order as per Rule 32 of the Rules. Thereafter, the impugned orders were passed imposing penalty and in pursuance of that demand notices were issued which have been challenged by the petitioner.
10. In the counter-affidavit, the respondents have admitted that fact that the vires of the Act was challenged before this Court and this Court declared the Act to be ultra vires and the Apex Court, thereafter, set aside the order and held the same to be intra vires and valid. It is also admitted that the assessment orders were passed earlier and no penalty was imposed. Their case is that the Audit Party of A.G., Bihar, pointed out that the petitioner-dealer had not deposited the admitted tax on or before the due date prescribed under the Act, so penalty under Section 16(9) of the Finance Act, read with Section 7(4) of the Act had to be imposed for belated payment and only thereafter, the authorities under the Act issued the aforesaid notices. The petitioner appeared and after hearing it, the orders of penalty have been passed for the aforesaid years and a direction has been issued for payment of the money. It is admitted that all taxes with regard to the period 1992-93 to 1995-96 were paid on 10-6-1997 but the same were paid after more than 14 months from the expiry of due date. So far as the assessment year 1998-99 is concerned, the tax was paid, but for the months of April, 1998 to October, 1998, the same was delayed by 10 days, 9 days, 12 days, 10 days, 7 days, 13 days and 9 days, respectively, due to delaying attitude of the petitioner. The assertion made on behalf of the petitioner that the State Government was moved to waive the payment of tax is not denied but it is stated that that was made with a view to delay the payment of entry tax by the petitioner. It was further said that while passing the earlier assessment orders for the years 1992-93 to 1996-97, the Assessing Officer has not exercised his discretion properly while dealing with the penalty matter. It was also stated that at the time of assessment for 1992-93 to 1996-97, notices were issued to the petitioner under Sections 14(5) and 17(2) of the Finance Act and not under Sections 16(8) and 16(9) of the Finance Act, copies of which have been annexed as Annexures 'B' series to the counter-affidavit. Similarly, for the assessment year 1998-99, no doubt rebate was granted, but the question of payment of penalty was not considered. The review order has been passed after taking sanction from the Joint Commissioner, Commercial Taxes, vide order dated 17-6-2002 under Rule 32(3) of the Rules, 1983, a copy of which has been annexed as Annexure 'C' to the counter-affidavit. In regard to the review, there is no period of limitation and as such the assertion of the petitioner that the review application was barred by limitation is misconceived. Once the Supreme Court has declared the Act to be intra vires and valid, the liability of the petitioner started with effect from 25-2-1993 and the petitioner is obliged to pay tax from that date. The petitioner had full knowledge of the order of the Apex Court and the provision of the charging section of the Act, but it deliberately failed to make payment of entry tax within time. It made payment of entry tax for the aforesaid four assessment years on 10-6-1997 after about 15 months, Similarly he made delay in payment of tax for the assessment year 1998-99 and as such penalty has been rightly imposed under the provisions of the Act.
11. The Act has been enacted for levy and collections of tax on entry of goods into local areas for consumption, use or sale therein and Section 3 of the Act is the charging section, which provides for levy and collection of tax on entry of scheduled goods into a local area for consumption, use or sale therein at such rate not exceeding 5 percentum of the import, value of such goods as may be specified by the State Government. Section 5 of the Act requires registration in such manner and within such period as may be prescribed by the Rules. Section 7(4) of the Act provides that subject to the other provisions of the Act, all the provisions relating to offences and penalties of the Bihar Finance Act relating to assessment, reassessment, collection and enforcement of payment of tax required to be collected shall apply mutatis mutandis in relation to the process connected with such assessment, re-assessment, collection or enforcement of payment of tax under this Act as if the Tax under the Act is payable under the said Act. Section 8 of the Act provides that the provisions of the Finance Act and the Rules framed thereunder shall apply subject to the provision of the Act with regard to assessment, re-assessment, collection, enforcement of payment of tax and penalty payable by a dealer. Section 9 empowers the State Government to make Rules and in exercise of the said power on 17-5-1993, Rules have been framed, which contain a detailed provision and Rule 3 deals with the registration and Rule 4 contains a provision with regard to filing of Returns and payment of tax.
12. According to Section 16(9) of the Finance Act, which is applicable as stated above by virtue of Section 7(4) of the Act, if the tax has not been paid with'in due date then the prescribed authority after allowing such a dealer an opportunity of being heard in the manner prescribed, shall impose penalty which may extend to five percentum but not less than two and half percentum of the amount of tax for each of the first three months or part thereof following the due date or the extended date and. to ten percentum but not less than five percentum for each subsequent month or part thereof. The order in this case has been passed in exercise of the power of review under Section 47 of the Finance Act, which provides that subject to such rules as may be made by the State Government, any authority appointed under Section 9 or the Tribunal may review any order passed by it if such review is in the opinion of the said authority or Tribunal, as the case may be, necessary on account of a mistake, which is apparent from the record. However, it provides for giving an opportunity of hearing to the affected persons, Sub-rule (1) of Rule 32 of the C.S.T. Rules provides that the authority exercising power of review under Section 47 of the Act is required to record reasons for doing so. Sub-rule (2) thereof provides that no authority appointed under Section 9 without the previous sanction of the Commissioner or any authority specifically authroised by him in this behalf shall review any such order except before expiry of 12 months from the date of passing of the order, which is sought to be reviewed. Sub-rule (3) thereof provides that without the previous sanction of the Commissioner or an authority specifically authroised by him in this behalf, no authority appointed under Section 9 other than the Commissioner, shall review any order which has been passed by any of its predecessors in office.
13. Learned Counsel appearing for the petitioner raised the following points:--
(i) that the impugned order has been passed in exercise of the power of review under Section 47 of the Finance Act, which empowers, inter alia, the assessing authority and other authorities as mentioned therein to do so, if the same is necessitated on the ground of mistake apparent from the record. The power of review can be exercised only when there is a glaring and patent mistake and it cannot be exercised only on the ground of earlier erroneous decision on question of fact or law. Only because the matter has been considered by the authorities and after taking into consideration the factual and legal position other view is possible, the review is not permissible.
(ii) that the order imposing penalty is in the nature of quasi judicial proceeding and even if a minimum penalty is provided for a default, the authority is not bound to impose penalty in exercise of discretion.
(iii) that no sanction has been taken at the time of issuance of the notice under Rule 32 of the C.S.T. Rules and as such initiation of the proceeding for review is impermissible in law.
(iv) that a period of 12 months is provided for review of the order under Rule 32 (2) of the C.S.T. Rules. In this case as the review matter has been recked up after four years, the same is barred by limitation.
(v) That the review proceeding has been initiated not on the basis of satisfaction of the assessing authorities that the mistake apparent from the record has been committed, on the other hand, the same has been initiated on the basis of the objection raised by the Audit Party of the Accountant General, Bihar (Annexure 15), which is not permissible in law and on this ground also, the order passed on the review application imposing penalty is vitiated in law.
14. Learned Counsel appearing for the respondents combatted all the submissions and submitted that Section 47 of the Finance Act vests the power of review when the mistake is apparent from the rec6rd. Under Section 16(9) of the Finance Act, if the tax is not paid within the due date, as mentioned therein, the penalty has to be imposed within minimum and maximum limits fixed. In that view of the matter, the authorities have no option but to impose at least minimum penalty on non-payment of tax within due date. The assessing authorities while passing the assessment orders for the aforesaid five financial years did not impose penalty and as such that was a mistake apparent from the record and as such review has been rightly made in this case. He further submitted that once a minimum penalty is prescribed, the assessing authority has no discretion but to impose the aforesaid penalty. He also submitted that the review application has been entertained under Rule 32 (3) of the C.S.T. Rules, which empowers the successor to review the order and for that no period of limitation is prescribed and in that view of the matter, the review application is not barred by limitation. He further submitted that the sanction was obtained on 17-6-2002 (Annexure 'C' to the counter-affidavit) before passing the order of review and as such the learned Counsel for the petitioner is not right in submitting that the order has been passed without sanction.
Point No. (i)
15. The assessment order attains finality unless it is interfered with in appeal, revision, review, reassessment, reopening etc. The review cannot be equated with the initial hearing of the matter. It does not vest power in the authority to the same extent as is vested in the authority while disposing of the matter at the initial stage. Under Section 47 of the Finance Act, the only ground, on which the review is permissible, is the mistake apparent from the record. If the question has been decided by the authority after considering all the factual and legal aspects then the review cannot be allowed on the ground that erroneous decision has been taken by the authority on the question of fact and law. This question was considered by the Apex Court in the case of T.S. Balaram, I.T.O. v. Volkart Brothers, reported in 82 I.T.R. 50, while dealing with the provisions under Section 154 of the Income Tax Act, 1961, which permitted rectification on the ground of mistake apparent from the record and it was held as follows:--
'A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions'.
16. The question for consideration in the present case is whether the assessing authority while passing earlier assessment orders committed a glaring and patent mistake or not. It appears that assessment orders for four years i.e. 1993-94, 1994-95, 1995-1996 and 1996-97 were separately passed on 14-7-1997, which have been annexed as Annexures 13 series. From perusal of the assessment orders, it is clear that the assessing authority has taken not of the controversy about the application of law with regard to the crude oil imported by the petitioner, the judgment rendered by the High Court, After the judgment, the petitioner claimed that it is liable to pay tax from the date of judgment of the Apex Court and, accordingly, applied for registration certificate as well as for fixing the liability from that date. The registration was granted and the authorities fixed the liability from the date of operation of the Ordinance. After the registration was done, the petitioner applied for time to file return and to deposit the amount of admitted tax thereafter paid the admitted tax. The Assessing Authority also noticed that the petitioner has paid the admitted tax on ad hoc basis even prior to the judgment of the Supreme Court dated 6-2-1996 and it filed the return on 11-6-1997 and paid entire admitted tax. Taking into consideration these facts, the Assessing Authority held that 'taking into consideration the prolonged litigation and status of the dealer, no penal provision is attracted.' In other words, he did not consider it a fit case for imposition of penalty.
17. So far as the assessment year 1998-99 is concerned, the assessment order has been annexed as Annexure 14 and the assessing authority having found that the payment of admitted tax has been effected within the statutory period, granted rebate and did not impose penalty. Thus, so far as the three assessment years are concerned, it is not a case that the assessing authorities were ignorant of the provision of Section 16(9) of the Finance Act, on the other hand, while exercising quasi judicial function, they found that no case for imposition of penalty was made out and, accordingly, did not impose penalty. So far as the assessment year 1998-99 is concerned, both the parties were given full hearing and after considering the facts, it was held that the admitted tax has been paid before the due date and, accordingly, rebate was allowed. The aforesaid order has attained finality as the same has not been challenged. However, the review proceeding was initiated on 8-6-2002 i.e. after four years in the case of assessment years for three years and about two years in the case of assessment year 1998-99. Earlier orders of assessment have been passed after giving full opportunity to the petitioner as well as the revenue. There is nothing on the record to show that the provision of Section 16(9) of the Finance Act was not within the knowledge of the assessing authority and if after having considered the matter the assessing authority did not impose penalty, the order may be erroneous in law, but it cannot be said that there is a glaring mistake apparent on the face of the record. The review in these cases amounts to reconsideration of the matter only on the ground that on a rehearing of the matter a different view can be taken.
Point No. (ii)
18. Even assuming that the review is permissible under Section 47 of the Finance Act, the question is as to whether this was a case where a penalty should have been imposed or not. The detailed facts have been narrated above, After the Act came into force with effect from 25-2-1993, a controversy arose as to the liability of the petitioner to pay tax under the Act. The matter was challenged before this Court and this Court accepted the stand of the petitioner and held the Act to be ultra vires and, thereafter, the matter was considered by the Apex Court and on 6-2-1996 it held the Act to be intra vires. Thereafter, the petitioner applied for registration immediately on 17-5-1996 and the registration was granted on 27-2-1997. It filed the returns on 10-6-1997 and paid the entire admitted tax. Even when there was a controversy as to the applicability of the law and this Court had rendered judgment in favour of the petitioner, the petitioner paid some ad-hoc amount as tax prior to the judgment of the Supreme Court.
19. Whether the petitioner can be said to have acted deliberately or dishonestly in not paying the admitted tax in terms of the provisions of Section 16(9) of the Finance Act. Section 16(9) of the Finance Act provides for minimum or maximum penalty and question to be considered is as to whether in such cases any discretion is left to the authority not to impose the tax. In other words, whether in view of the nature of the provisions, minimum penalty has to be imposed by the authority and it has no discretion. The law is well-settled that the order imposing penalty is quasi judicial in nature and it involves exercise of judicial discretion. It is not an order which has to be passed by the authority mechanically, It is equally well-settled that unless the party, under obligation to pay tax, has acted dishonestly, intentionally, in defiance of law or in conscious disregard of obligation and is guilty of conduct contumacious, the penalty ordinarily will not be imposed. Even in a case where minimum penalty is prescribed the authority is not debarred from exercising the judicial discretion and on consideration of fact it can come to the conclusion that no case for imposition of penalty is made out. However, such power is to be exercised, when there is a technical or venial breach of the provisions of the Act or where the breach was bona fide and not intentional. This question was considered by the Apex Court in the case of Hindustan Steel Ltd. v. State of Orissa, reported in 25 S.T.C. 211. There the appellant-company was engaged in construction work and was getting the work done departmentally or through contractors. It supplied materials for use in construction, bricks, coal, cement, steel etc. The question for consideration was as to whether the appellant-company was a dealer within the meaning g of Section 2(c) of the Orissa Sales Tax Act. The appellant-Company did not include the transaction regarding supply of materials to the contractors as a sale in the taxable turn over. The Assessing Authority treated the appellant-company as a dealer with regard to supply of those materials and also directed to pay tax and penalty for failure to register itself as a dealer. The appellant, before the Apex Court, challenged the matter before the higher authorities and, thereafter, the matter came to the High Court and it lost there also. Then, the matter went before the Apex Court and the Apex Court held that the supply of building materials to the contractors was a sale and, therefore, the appellant was a dealer and was required to be registered as a dealer under the Act. With regard to default, the Apex Court held that the appellant-Company was under bona fide belief that the Company was not a dealer and as such no case for penalty was made out. The Apex Court also held that even if a minimum penalty is prescribed, the authority is vested with the power to come to the conclusion that no case for penalty is made out in case of bona fide or technical mistake. It is apt to quote the observation made by the Apex Court in this connection, which is as follows:--
'Under the Act penalty may be imposed for failure to register as a dealer: Section 9 (1) read with Section 25(1) (a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a delear. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Those in charge of the affairs of the company in failing to register the company as a dealer acted in the honest and genuine belief that the company was not a dealer. Granting that they erred, no case for imposing penalty was made out'.
20. In the case of E.I.D. Party (I) Ltd. v. Assistant Commissioner of Commercial Taxes, reported in AIR 2000 Supreme Court 551, the question of imposition of penalty was considered under the provisions of the Tamil Nadu General Sales Act. There, the Question for consideration was whether planting and transport subsidy paid by the appellant-sugar manufacturers before the Supreme Court would be treated as a part of the sale price and included in the taxable turnover. The Apex Court decided against the appellants and held that the same was part of the sale price and has to be included in the taxable turnover. But so far as the penalty that was imposed by the authority is concerned, it held that as there was a litigation and correct legal position was settled after a prolonged litigation, the same was not a case for imposition of penalty. It further held that though the appellants before the Apex Court were not right in not including the amount of planting and transport subsidy in the taxable turn over, their action cannot be said to be deliberate. They cannot be said to have acted disohonestly and in conscious disregard of law. In this connection, it is relevant to quote paragraph 22 of the judgment, which runs as follows:--
'(22) But so far as levy of penalty is concerned, we do not think that the Sales Tax Authorities were justified in levying it. Till the judgment of the Madras High Court, on 15-7-1991, in Perambalur Sugar Mills Ltd v. State of Tamil Nadu, (1992) 86 STC 17, the correct position of law within the State of Tamil Nadu was not free from doubt. Even thereafter, the Sales Tax Tribunal had in subsequent orders held that transport subsidy was not includible in the taxable turnover. Such a view was held by the Tribunal till 19-3-1993. It appears that on bond fide belief that planting and transport subsidies were not includible in the taxable turnover, the appellants had not included those amounts in their turnover and for that reason non-inclusion of these two items in the turnover do not seem to be intentional. Though we have now held that the appellants were not right in not including the amounts of planting subsidy and transport subsidy in the taxable turnover, considering the facts and circumstances of the case, it would not be correct to say that they had acted deliberately in defiance of law or that their conduct was dishonest or that had acted in conscious disregard of their obligation under the Sales Tax Act. The Sales Tax Authorities were, therefore, wrong in passing the orders of penalty arid upholding the same. The High Court also, in our opinion, committed an error in upholding the orders of penalty.'
21. The facts have already been stated above. Whether it can be said that the petitioner has acted dishonestly, deliberately and in conscious disregard to the statutory requirement. The glaring facts clearly show that there was a prolonged litigation. The petitioner bona fide believed that it was liable to pay tax from the date of the judgment of the Apex Court when the Act was held to be valid piece of legislation. It made a request to that effect. It also immediately applied for registration and the authorities having considered the matter granted registration and, thereafter, it filed the returns and deposited the admitted tax for three assessment years. Even when there was a controversy about the applicability of the Act, the; petitioner had deposited the ad hoc amount of admitted tax before the judgment of the Apex Court and also paid the admitted tax for subsequent period. In such a situation, I am of the considered view that the petitioner in a good faith acted bona fide and once the registration was given, it filed the returns and deposited the tax for three financial years. So far as the assessment year 1998-99 is concerned, the petitioner paid the admitted tax and rebate was allowed. In such a situation, it was not a case where the penalty should have been imposed upon the petitioner. There is no force in the submission advanced on behalf of the State that when minimum penalty is provided, the assessing authority is obliged to impose at least minimum penalty and it has not discretion in the matter.
Point No. (iii)
22. From the perusal of Annexure 'C' to the counter-affidavit, it appears that the competent authority has granted sanction on 17-6-2002 before passing of the order in review matter, there was previous sanction of the authority in terms of Rule 32(3} of the C.S.T. Rules and as such the said point is also devoid of any substance.
Point No. (iv)
23. The review proceeding was initiated under Rule 32(3) of the C.S.T. Rules. The Rule runs as follows:--
'32. Review.--(1) When any authority appointed under Section 9 reviews under Section 47 any order passed under the Act it shall record reasons for doing so.
(2) Save with the previous sanction of the Commissioner or an authority specifically authroised by him in this behalf no authority appointed under Section 9, other than the Commissioner, shall review any such order except before the expiry of twelve months from the date of passing of the order which is sought to be reviewed.
(3) Save with the previous sanction of the Commissioner or an authority specifically authroised by him in this behalf, no authority appointed under Section 9, other than the Commissioner, shall, review any order which has been passed by any of its predecessors in office.'
24. From a perusal of sub-rule (2) of Rule 32 (2) of the C.S.T. Rules, it appears that the said sub-rule is applicable in a case where review is considered by the authority which has passed the assessment order and in that case there is a period of limitation of 12 months for exercising the said power, which has to be exercised with the previous sanction of the Commissioner. Sub-rule (3) of the said Rule is applicable in a case where the order, which is to be reviewed, has been passed by the predecessor in officer of the officer exercising the power. No period of limitation has been prescribed under the said provision. In this case, the order of review has not been passed by the same assessing authority, who had passed earlier assessment orders and as such Rule 32 (3) is applicable and it does not prescribe any period of limitation and there appears to be a good ground for doing so. If the same authority wants to review his order, he has to consider the same within a reasonable time and unlimited time cannot be granted and for that reason, the legislature has provided period of limitation under Rule 32 (2) of the C.S.T. Rules. So far as the review of the order passed by the predecessor is concerned, the same may not come to the knowledge of the successor in office within a period of twelve months and in that situation, no limitation is provided. The said provision cannot be said to be ultra vires or unconstitutional on that ground.
Point No. (v)
25. The last submission, which has been advanced by the learned Counsel for the petitioner is that the review proceeding on the basis of the objection raised by the Audit Party of the Accountant General is not maintainable. Learned Counsel for the State submitted that the said submission is devoid of any substance.
26. Learned Counsel for the petitioner cited the judgment of the Apex Court in the case of the I. & E. Newspapers Secretary v. I.T. Commissioner, New Delhi, reported in AIR 1979 Supreme Court 1960. There the question for consideration was as to whether the view expressed by an internal audit party of the Income Tax Department on a point of law be regarded as 'Information' for the purpose of initiating proceedings under Section 147 (b) of the Income Tax Act, 1961. Section 147 of the Income Tax Act deals with the reopening of the assessment proceeding. The Apex Court held that such information cannot be regarded as an information within the meaning of the aforesaid provision.
27. The said question does not arise in this case. Here the Audit Party of the Accountant General raised objection and, thereafter, the authority empowered under the Act proceeded to review the orders. This apart, in the same judgment at paragraph No. 12 it has been held that no doubt the information submitted by the Audit Party may not be an information for the purpose of the Act but the assessing authority may draw attention of the income tax officer to the defects. In the present case, the audit report has only drawn attention of the assessing authority to the mistake and as such there is no force in the submission advanced on behalf of the petitioner that initiation of the review proceeding is vitiated in law.
28. In the result, except Point Nos. I and II, other points raised by the petitioner are rejected. As I have already held that this was not a fit case for imposing penalty, the writ application filed by the petitioner is allowed and the orders dated 6th September, 2002 imposing penalty under Section 7(4) of the Act, read with Section 16(9) of the Finance Act, as contained in Annexure 17 series, and the demand notices dated 7th of September, 2002, issued in pursuance thereof, as contained in Annexure 16 series, are quashed. In the facts and circumstances, there shall be no order as to costs.
29. Any amount of penalty, paid in pursuance of the interim order passed by this Court dated 27-11-2002, shall be adjusted towards the future liability of the petitioner under the Act.
R.S. Garg, J.
I agree.