1991 (1) TMI 394 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the penalty imposed u/s 28-A(4) of the Karnataka Sales Tax Act, 1957.
2. Justification of the Commissioner's revision of the appellate authority's order as prejudicial to the Revenue.
3. Interpretation of section 28-A(2) read with section 28-A(4) of the Act.
4. Competence of the State to legislate affecting inter-State trade and commerce.

Summary:

1. Legality of the penalty imposed u/s 28-A(4):
The Assistant Commercial Tax Officer detained the appellant's goods vehicle at a sales tax check post and initiated penalty proceedings u/s 28-A(4) of the Karnataka Sales Tax Act, 1957, ultimately levying a penalty of Rs. 24,750. The Assistant Commissioner of Commercial Taxes allowed the appeal, finding that the goods were consigned from Delhi to Madras and not Bangalore, and there was no attempt to evade tax. The Commissioner, however, revised this order, affirming the penalty on the ground that the driver failed to produce the required documents at the check post.

2. Justification of the Commissioner's revision:
The Commissioner issued a notice u/s 22-A of the Act, proposing to revise the appellate authority's order, stating it was prejudicial to the Revenue. The Commissioner affirmed the penalty, emphasizing the failure to produce documents at the check post. The appellant was not heard by the Commissioner due to the absence of his authorized representative.

3. Interpretation of section 28-A(2) read with section 28-A(4):
Section 28-A(2) mandates that the person in charge of a goods vehicle must carry and produce specified documents at the check post. Section 28-A(4) allows the officer to levy a penalty for non-compliance, provided a reasonable opportunity of being heard is given. The court noted that the penalty should not be automatic and must consider the bona fides of the carrier and the purpose of carrying the goods.

4. Competence of the State to legislate affecting inter-State trade and commerce:
The court emphasized that the State has no competence to legislate affecting inter-State trade and commerce, which is covered by entry 42 of List I of the Seventh Schedule of the Constitution. The court referred to several Supreme Court decisions, highlighting that the State's power is confined to regulating intrastate transactions and cannot extend to inter-State trade.

Conclusion:
The court found that the penalty was imposed solely due to the failure to produce documents immediately, without considering the bona fides of the carrier. The maximum penalty was imposed arbitrarily, without a judicial approach to the facts. The court set aside the Commissioner's order, allowing the appeal.