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TMI Blog1997 (10) TMI 372X X X X Extracts X X X X X X X X Extracts X X X X ..... Chairman and the honourable Judicial Member. These two learned Members were unable to agree and recorded their separate dissenting judgments dated November 28, 1996 authenticated copies of which are appended to this judgment. As a consequence of this disagreement the matter has been referred to this three-Member Bench in terms of the provisions of section 9 of the Rajasthan Taxation Tribunal Act, 1995. 3.. The facts of the case are that vehicle No. RJ/22/G-0066 was intercepted and checked by the Inspector, Commercial Taxes at village Jawal en route to Sumerpur from Madia. One Vajaram was driving the vehicle. The vehicle contained 60 bags of raida and 24 bags of gowar. The driver produced two handwritten slips indicating that 24 bags of gowar were being sent by one Lakhma Ram Jetaji and the 60 bags of raida by one Bhawaram Doogaji for sale to M/s. Magan Lal Mahendra Kumar of Sumerpur. On further enquiry it is said that Vajaram informed that the goods had been loaded from the shops and godown of M/s. Magaji Vajingji of Mandia and that the goods had not been loaded from the premises of any agriculturists and that both the slips had been prepared and furnished by one Shri Kantilal Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in question belonged to the agriculturists. This finding of fact cannot be disturbed by an application for revision which must necessarily be confined to questions of law. The finding of fact cannot be said to be perverse. Suffice it to say that by virtue of the first proviso of sub-section (t) of section 2 of the old Act proceeds of sale made within the State of agricultural produce by an agriculturist is not to be included in the turnover. That is to say the sale of agricultural produce by agriculturists is not exigible to tax. There is nothing on record to show, in the absence of any enquiry from the agriculturists, that the goods in question did not attract the provisions of this proviso. 6.. The application for revision frames the following questions of law said to arise out of the impugned order of the Tribunal: (i) If a person in-charge of the vehicle was admittedly carrying the goods without requisite documents belonging to a dealer, whether this fact in itself will not attract the provisions of penalty contained in section 22A of the Act of 1954? (ii) Whether the mens rea to evade the tax liability is condition precedent to attract the provisions of penalty conta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised in the application for revision are answered as above. The application for revision is, therefore, dismissed with no order as to costs. MILAP CHANDRA JAIN, J. (Chairman).-I concur. J.P. BANSAL (Judicial Member).-This revision petition is filed under section 7 of the Rajasthan Taxation Tribunal Act, 1995, read with section 86 of the Rajasthan Sales Tax Act, 1994, and is directed against the order dated May 15, 1995 passed in Appeal No. 625 of 1993 of the Rajasthan Sales Tax Tribunal, Ajmer, hereinafter referred to as the Tax Board . 2.. The facts are these: On October 6, 1991 when a motor vehicle RJ/22-G-0066 was going along the road from Mandia to Sumerpur it was intercepted and checked by the Commercial Taxes Inspector at village Jawal. The respondent Shri Vajaram was at the steering wheel. On enquiry being made, he informed the Inspector that he was carrying 60 bags of raida (rape seed) and 24 bags of gowar which were loaded in the vehicle at Mandia from the godown of M/s. Magaji Vajingji, Mandia. He was not possessed of any documents except two handwritten slips which as per his version were given to him by Shri Kantilal, son of the owner of the foregoing firm. As pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quiry was held. It is against this impugned order of the Tax Board dated May 15, 1995 that this revision petition has been filed before the Tribunal. 3.. We have heard the arguments and examined the material on the record in the light of the relevant provisions of law bearing upon it. 4.. The pleadings of the parties and the rival contentions advanced before us on their behalf necessitated a careful consideration of the following points: (i) Who is to hold the enquiry in cases of this type? (ii) Against whom such enquiry is to be held? (iii) What is the nature and the scope of the enquiry? (iv) Whether the requirements with regard to the holding of the enquiry after giving a reasonable opportunity of hearing to the person proceeded against as laid down under section 22A(7) of the Act have been complied with in the case in hand? 5.. Before we proceed to deal with these points we think that it is apposite to reproduce section 22A(1), (3), (5), (6), (7) and (9) as hereunder: 22A. Establishment of check-post or barrier and inspection of goods while in transit.-(1) If the State Government or the Commissioner considers it necessary that with a view to prevent or check eva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat behalf shall record his reasons for doing so and shall give a receipt for the goods to the person from whose possession or control they are seized. ...................... (7)(a) The officer in-charge of the check-post or barrier or any other officer not below the rank of an Assistant Commercial Taxes Officer, empowered in this behalf may, after giving the owner or person in-charge of the goods a reasonable opportunity of being heard and after holding such further enquiry as he may deem fit, impose on him for possession of goods not covered by goods vehicle record, and other documents prescribed under sub-section (3) or for submission of false declaration or documents, a penalty (equal to five times of the rate of tax notified under section 5 of the Act, for such goods or (30 per cent) of the value of such goods, may be determined by such officer (whichever is less). (b) Such officer may release any of the goods seized under sub-section (5) or sub-section (6) on payment of the penalty under clause (a) or on furnishing such security in such form as may be prescribed for the payment thereof, as he may consider necessary. (c) Such officer may, for sufficient reasons release ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peaks of the possession and production of such other document as may be prescribed in respect of the goods concerned. Now the term prescribed means prescribed by or under the Rules. 9.. Now we proceed to deal with the points we have listed hereinabove for our discussion. (i) Who is to hold the enquiry in case of this type: Under this point we have to consider the question concerning the officer who is to hold the enquiry. Sub-section (7)(a) provides that such enquiry is to be held either by the officer in-charge of the check-post or barrier or by any other officer not below the rank of ACTO who has been empowered to conduct an enquiry by the Government. It may be mentioned here that the officer in-charge of the check-post or barrier can hold the enquiry only if he happens to be an officer not below the rank of ACTO. Such an enquiry can also be held in appeal in an appropriate case by the Deputy Commissioner (Appeals) as is clear from the provisions contained in section 13(3) of the Act. Sub-section (3) is as hereunder: Section 13(3).-The appellate authority may, before disposing of any appeal, make such further inquiry as it thinks fit, or may direct the assessing auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cope of the enquiry which is to be held under sub-section (7)(a). It provides that an ACTO concerned may after giving the owner or person in-charge of the goods a reasonable opportunity of being heard hold such further enquiry as he thinks fit and impose on such owner or person in-charge of the goods a penalty for the possession of goods which are un-accompanied by requisite documents. The use of the words may and further in sub-section (7)(a) makes it clear that it is not obligatory on the part of the ACTO concerned to hold the enquiry in all the cases and in all the circumstances. There may arise a case where no enquiry will be held. We may come across such a case where the owner or person in-charge of the goods fails not only to produce the requisite documents but also to explain away the lapse on his part and finally makes the admission in no uncertain terms about his having committed the offences and further requests the ACTO to make an order which he thinks appropriate in the matter. In a case of this type the ACTO is not required to hold the enquiry because the admission of guilt is accompanied by the request on the part of the owner or person in-charge of the goods fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtunity of hearing to the person proceeded against as laid down under section 22A(7) of the Act have been complied with in the case in hand: We have to consider whether the requirements of law as laid down in section 22A(7) of the Act have been fulfilled or not. The decision on this point necessitates the consideration of the factual as well as legal aspects of the matter. As regards factual aspects, the position as it emerges from the material on the record is that the respondent, Vajaram, was in-charge of the vehicle together with the goods loaded therein at the time when it was intercepted and checked while proceeding from village Mandia to Sumerpur. It was found that there were 24 bags of gowar and 60 bags of raida (rape-seed). These goods were not accompanied by requisite documents. On being asked to explain the position, Vajaram told the Inspector that he had in his possession only two handwritten slips which were given to him by Shri Kantilal Jain, the son of the owner of the firm M/s. Magaji Vajingji, Mandia. His statement was recorded by the Inspector in the presence of the porters Serva Shri Pratap Ram and Lala Ram, who appended their signatures to it. The same day noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent Shri Vajaram by Kantilal, the son of the owner of the firm. The goods were loaded from godown which is in the vicinity of the shop of the firm. The statements are also signed by the porters Serva Shri Pratap Ram and Lala Ram in the capacity of witnesses. The reference to these slips has been made in both these statements. We have looked up these slips. Both these slips have been written by one and the same man (Shri Kantilal). None of these slips has been written or signed by any one of the agriculturists. Now we proceed to consider the application which Shri Vajaram filed before the ACTO on October 6, 1991. It has been mentioned in the body of this application that since the owner of the goods is not coming forward to secure their release and since he has to reach Sumerpur he wants his case to be settled on the spot. He also mentioned therein the price of the goods at the rate of which the total value of the entire goods was determined. He expressed his readiness to pay the penalty, if any, that may be imposed upon him. It was on the basis of these two foregoing statements together with the application that the ACTO proceeded to make the order on October 6, 1991. 11.. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld. In the second place, the ACTO sent the Inspector to Mandia where it was found that the goods were not entered in the account books of the firm. The owner of the firm and Shri Kantilal kept silent and did nothing to show as to what the real position was. The department was expected to hold the enquiry against the person, in this case Shri Vajaram, who was in-charge of the goods. This was something which could be done by the department in view of the clear provisions of section 22A(7)(a) of the Act. The department was not expected to make a roving enquiry to collect facts and figures from all and sundry. The owner of the goods could however come forward to lay his claim to the goods. If he failed to do so the department was not bound to go to him and make enquiries about the ownership of the goods or the requisite documents. The Deputy Commissioner (Appeals) as well as the Tax Board erred in law when they held that notices were to be issued to the agriculturists or to the consignee. No such notices need be issued to them. The Tax Board erred in law when it held that there was no intention on the part of the owner of the goods to evade the payment of tax. In this case before us t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds that all the proceedings ranging from the inspection of the business premises of the petitioner-firm to the passing of the order of the composition were taken on a single day. The department acted with speed but all this was done in hot haste, thereby inducing in the mind of Shri Saraf a reasonable apprehension that justice was not done to him. This contention does not hold water. All the proceedings taken on a single day cannot be adjudged as bad or illegal merely because of the fact that they were taken on a single day. There is nothing on the record to show that any illegality was committed. In Kaki Butchi Raju Son v. State of Andhra Pradesh [1995] 96 STC 634 (AP), all the proceedings were taken and completed on a single day, i.e., December 31, 1991. The suppression of the turnover of Rs. 64,160 was detected in the course of inspection on December 31, 1991. On the request of the dealer the order of composition was held legal. On page 636 of the Report it was observed as hereunder: Reported in [1996] 103 STC 385. Reported in [1997] 104 STC 443. Having offered to compound the offence and when the offer was accepted, it is not open to the petitioner to challenge the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This is necessary because no two cases are similar on facts. With regard to the factual position of the decision in question, the penalty for non-production of the requisite documents under section 22A(7) of the Act with regard to one aluminium coil was imposed upon the consignee who came to know about the interception of the truck on August 18, 1988. The petitioner-consignee was in urgent need of the aluminium coil and as such he requested the release of it by paying the penalty of Rs. 24,300. The requisite documents were produced in appeal which the petitioner-consignee filed before the Deputy Commissioner (Appeals). The appeal was dismissed and the order of the assessing authority affirmed. It was held in paragraph 8 of the report (page 69 of STC; 110 of RTJS) that if the goods are carried unaccompanied by the requisite documents a breach of the condition for carrying goods is complete. With regard to the imposition of penalty, it was held that it could not be imposed until an enquiry was held after giving a reasonable opportunity of being heard to the person proceeded against. The answer to the question as to whether a particular person is or is not the owner of the goods de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. (iii) That the offence under section 22A(7) of the Act is complete on failure to produce the requisite documents. The question of mens rea is immaterial here. (iv) That the officer concerned has to hold the enquiry after giving reasonable opportunity of hearing to the person proceeded against before the penalty can be imposed. Here the question of mens rea becomes important. The quantum of penalty may vary according to the gravity of the offence in the light of the circumstances of each particular case. (v) That rule 63(3) of the Rules comes into operation only after the seizure of the goods has taken place. It speaks of the release of the seized goods on fulfilment of any of the conditions laid down therein. It does not control the provisions of section 22A(7) of the Act nor does the production of the requisite documents within the period of notice of 15 days purge the offence committed on failure of the production of the requisite documents. 20.. To conclude, I accept the revision petition, set aside the order of the Deputy Commissioner (Appeals) dated October 14, 1992 and the order of the Tax Board dated May 15, 1995 and uphold the order of the assessing auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case as held by the honourable Supreme Court in the case of Shri Krishan v. Kurukshetra University (1976) 1 SCC 311; AIR 1976 SC 376, it will not be binding. In the present matter, the alleged admission cannot be considered to be an admission at all since even the basic requirement of law has not been complied with. In order to give a finding that the goods are not accounted for by the dealer in his accounts, the registers and other documents maintained in the course of his business or in any other satisfactory manner, a finding has to be given to this effect and this finding could be given only after examination of books of account or other documents or any other satisfactory manner. Since no such finding was given for this basic requirement of the law nor the compliance thereof was made by examining the books of accounts, documents, etc., the Deputy Commissioner (Appeals) was justified in setting aside the penalty. The order of the Tribunal does not require any interference. No such application was moved by M/s. Magaji Vajingji, Mandia. The fact that notice was issued to the said firm shows that the Assistant Commercial Taxes Officer, Ward I, Sirohi himself considered necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court as also of the Sales Tax Tribunal and remit back the matter to the Sales Tax Tribunal at Meerut. 6.. The Deputy Commissioner (Appeals) has also observed in his order dated October 14, 1992 that the survey report dated October 6, 1991 relating to the business premises of M/s. Magaji Vajingji, Mandia (Kantilal Jain) discloses that no enquiry was made from the said firm regarding the said bags of gowar and mustard. It is also stated in it that the said agriculturists were residents of the same village (Mandia) and despite it no enquiry was made from them which was very necessary under the facts and circumstances of the case. Admittedly, the two slips produced by the said driver Vajaram mentioned the names of these two agriculturists and also the dealer (M/s. Maganlal Mahendra Kumar, Sumerpur) where the said bags were being taken for sale. Admittedly, the two slips produced by the vehicle driver Vajaram before the checking party were prepared before his vehicle was checked. They were ante litem motum (before the controversy arose) documents. Their genuineness could not be doubted. The disputed bags of mustard and gowar were not found entered in the accounts books of M/s. Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanied with documents, does not mean that in all such cases, penalty has to be levied, or if it is to be levied, maximum penalty has to be levied. It is to be noticed that provision casts an obligation only to the extent of carrying of requisite documents along with the goods by the carrier. If the required documents are accompanied, no breach is committed except in case documents are found to be fictitious or forged. If the goods are carried unaccompanied with the documents requisite, the breach of the condition for carrying goods is complete. Can it be said that in later case, levy of penalty is not only lawful but in all circumstances, obligatory? If so, can it further be said that the assessing authority has uninhibited discretion to levy the maximum or near maximum penalty. In my opinion, the answer to both is in negative. Law does not provide that once goods in transit are found to be unaccompanied by the requisite documents, the levy of penalty is automatic. If that were so, the provision for issuing a show cause notice to the owner or transporter will be meaningless. Notices are issued to the person likely to be affected by the order, only with a view to give him an o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iry into the facts and not merely on the presumption, solely on the basis that documents were not accompanying the goods when the same was checked. That would be the case, in every case of breach of provisions of section 22A. ...............penalty may be imposed for failure to register as a dealer. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. 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 (emphasis* added). 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 (emphasis* supplied). Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tute has not provided any presumption about the existence of mens rea against the defaulter. Therefore, as a prosecutor, burden of proving is primarily on the Revenue. The Revenue has failed to discharge its burden, inasmuch as, it has merely raised a presumption of such deliberate breach on account of furnishing of documents not at the time when goods were seized but later on; which, as I have discussed above, was wholly unwarranted. Adopting this course, would result in raising presumption in favour of Revenue for the purpose of levy of penalty in all cases where no such presumption is provided to be raised under the statute. 10.. It has been observed in A.C.T.O., AE, Jodhpur v. Deo Karan Sri Chand Jain [1992] 1 RLW 499 at page 501, paras (5) and (6) as follows: (5) Thus, when actual evasion of tax has not been established no penalty under section 22A(7) of the Act can be imposed ipso facto without mens rea merely not having the documents at the time of checking when they were submitted in time subsequently under rule 63(3) of the Rules and were found to be genuine by the authorities below and if still the assessee is held liable then the purpose of rule 63(3) of the Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X
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