2011 (3) TMI 1540 - HC - VAT and Sales Tax

Summary

Issues:
- Penalty under section 78(5) of the RST Act, 1994 on the respondent-assessee for goods found in transit without proper declaration.
- Interpretation of section 78(5) prior to and post-amendment.
- Applicability of the apex court's decision in Assistant Commercial Taxes Officer v. Bajaj Electricals Ltd.
- Discretion in levying penalty under section 78(5) and compliance with principles of natural justice.

Analysis:
The revision petition challenges the order dismissing the Revenue's appeal against the penalty imposed on the respondent-assessee for goods found in transit without the required declaration. The appellate authorities upheld the penalty, but it was set aside on the grounds that prior to the amendment of section 78(5), such penalty could only be imposed on the person in charge of the goods, not the owner. However, the apex court's decision in Assistant Commercial Taxes Officer v. Bajaj Electricals Ltd. clarified that the expression 'person in charge of the goods' under section 78(5) includes the owner, thus overturning the previous interpretation.

The apex court's decision emphasized that the duty to furnish the declaration in form ST 18-A was on the purchasing dealer, which includes the owner of the goods. The owner is entitled to seek release of goods and a hearing under section 78(5), broadening the scope of 'person in charge of the goods' to include the owner. Therefore, the order passed by the lower authorities was deemed unsustainable in light of this interpretation.

Moreover, referencing the apex court's decision in State of Rajasthan v. D.P. Metals, it was highlighted that once the requirements of section 78(5) are met, there is no discretion to not levy or reduce the penalty. However, principles of natural justice may require providing an opportunity to produce any missing documents during checking. Consequently, the revision petition was allowed, setting aside the previous orders and remanding the case for a fresh decision on the penalty proceedings, considering the apex court's decisions and ensuring compliance with natural justice principles. No costs were awarded in this matter.