1997 (10) TMI 372 - AT - VAT and Sales Tax

Issues Involved:
1. Whether the goods being carried were exigible to tax.
2. Whether mens rea is a condition precedent for imposing penalty under section 22A(7) of the Rajasthan Sales Tax Act, 1954.
3. Whether the admission by the person in charge of the vehicle about carrying goods from the dealer's premises without requisite documents suffices to establish an intention to evade tax.
4. The scope of liability for penalty of a person in charge of the vehicle carrying goods without requisite documents.
5. Whether the appellate authority was justified in setting aside the order of the assessing authority instead of remanding the case for proper enquiry.
6. Whether the Tribunal was justified in confirming the order passed by the lower appellate authority.

Detailed Analysis:

1. Exigibility of Goods to Tax:
The Tribunal noted that there was a concurrent finding by the two appellate authorities below that the goods in question belonged to agriculturists. This finding of fact cannot be disturbed by an application for revision, which must necessarily be confined to questions of law. The sale of agricultural produce by agriculturists is not exigible to tax as per section 2(t) of the Rajasthan Sales Tax Act, 1954. Therefore, the question of taxability does not arise.

2. Mens Rea as a Condition Precedent:
The Tribunal emphasized that penalty is never automatic and mens rea is invariably a relevant consideration. The second question posed in the revision application was answered in the affirmative, indicating that the intention to evade tax (mens rea) is a necessary condition for imposing a penalty under section 22A(7).

3. Admission of Carrying Goods from Dealer's Premises:
The Tribunal held that if the goods indeed belonged to the agriculturists, there could be no question of their entries in the dealer's books. The dealer was neither given notice nor provided an opportunity to cross-examine the driver. Since the goods were established to belong to agriculturists, the question of intending to evade tax does not arise.

4. Scope of Liability for Penalty:
The fourth question was deemed irrelevant to the facts and circumstances of the case. There is no liability for penalty of a person in charge of the vehicle if the goods are not exigible to tax.

5. Justification of Setting Aside the Order:
The Tribunal found that the first appellate authority was within its rights to set aside the order imposing penalty, having concluded based on evidence that the goods belonged to agriculturists. Therefore, there was no need to remand the matter for further enquiry.

6. Confirmation of Lower Appellate Authority's Order:
The Tribunal justified the Board's order, confirming the findings of the first appellate authority. The questions raised in the application for revision were answered as above, and the application for revision was dismissed with no order as to costs.

Separate Judgments:

Judicial Member's Separate Judgment:
The Judicial Member provided a detailed analysis of the procedural aspects under section 22A and emphasized that the enquiry must be held by an officer not below the rank of ACTO. The enquiry must give a reasonable opportunity of hearing to the person proceeded against. The Judicial Member concluded that the penalty was justified based on the driver's admission and the circumstances indicating an intention to evade tax. The Judicial Member set aside the orders of the Deputy Commissioner (Appeals) and the Tax Board, upholding the assessing authority's order.

Chairman's Separate Judgment:
The Chairman disagreed with the Judicial Member, emphasizing that the concurrent finding of fact that the goods belonged to agriculturists could not be challenged in revision. The Chairman highlighted the principles of natural justice, stating that the owner of the goods must be given an opportunity to be heard. The Chairman found that the necessary enquiries were not conducted, and the penalty was imposed without proper notice and enquiry. The Chairman concluded that the application for revision deserved to be dismissed with costs.

Conclusion:
The Tribunal dismissed the application for revision, with the Chairman concurring with the findings of the lower appellate authorities, and the Judicial Member dissenting, emphasizing the procedural requirements and the driver's admission.

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