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Judgment
Vimla Jain, J.—The petitioner, being aggrieved by order dated 9.9.2003 (Annexure P-7) passed in revision by respondent No. 2 Divisional Deputy Commissioner, M.P. Commercial Tax, Jabalpur, confirming the penalty of Rs. 65,500/-, arising out of the order dated 16.1.2003 (Annexure P-4) u/s 13 of the M.P Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 (52 of 1976) (hereinafter referred to as the Act) read with Section 69(1) of the M.P. Vanijyik Kar Adhiniyam, 1994 (5 of 1995) passed by respondent No. 1 Assistant Commercial Tax Officer, Katni, has come to this Court by filing a writ petition under Articles 226 and 227 of the Constitution of India. Briefly stated the facts of the case are that the petitioner-M/s. Ankit Lime & Minerals a manufacturer of limestone was assessed for tax by respondent No. 1 for the period 1.4.1999 to 31.3.2000 by assessment order dated 28.11.2002. The tax of Rs. 16,125/- with interest of Rs. 11,610/- was assessed u/s 26(4)(a) of the Act and total demand of Rs. 27,735/-was raised. The penalty proceedings were also initiated. During the course of penalty proceedings, the entire purchases of Rs. 17,02,880/- disclosed by the petitioner; books of accounts, bills of sales and purchases were accepted by respondent No. 1. But the Assessing Officer treated these purchases as taxable purchases, levied penalty of Rs. 65500 and refuted the submission of the petitioner that the penalty could not be imposed because there was no fraud or concealment of any transaction in the return. The revision was preferred by the petitioner against the penalty order but it was dismissed by respondent No. 2. The petitioner being dissatisfied with the revision order has filed the present writ petition.
The short question involved in this petition is, whether a case for imposition of penalty for the assessment year 1.4.1999 to 31.3.2000 is made out against the petitioner or not.
It was submitted that the petitioner had declared entire purchases and claimed exemption u/s 3 of the Act. The Assessing Officer had accepted its books of accounts and sale vouchers but issued a notice to impose the penalty. The petitioner had replied to the notice that it has correctly disclosed all the facts and put its legal claim regarding tax exemption.
The explanation of the petitioner was not accepted by both the authorities and penalty of Rs. 65,000/- was imposed on the petitioner on the ground that it had submitted the false return and concealed the amount of purchases for the period 1.4.1999 to 31.3.2000, and thus it had not deposited the required tax in time.
We have heard learned counsel for the parties.
It is not the case of respondents that the petitioner had submitted the false particulars in its return. On the other hand, it is clear from the impugned order that the petitioner had submitted required details and claimed exemption by raising a legal plea. The authorities imposed the penalty on the ground that it claimed exemption which amounts to deliberate non-payment of the tax and filing false return. We have perused the record and penalty order dated 9.9.2003 passed in revision by the respondent No. 2 confirming the penalty.
To appreciate rival contentions of the parties, it will be necessary to look into the relevant provisions, Section 13 of the Act and Section 69 of the M.P. Vanijyik Kar Adhiniyam, 1994 read thus:-
SECTION 13 CERTAIN PROVISIONS OF "VANIJYIK KAR ADHINIYAM" TO APPLY:- Subject to provisions of this Act and the rules made there under, sections 3,11,26,27,28,29,30,31,32,33, 36,38,39,40, 41, 42, 43, 45, 46, 47, 49, 52, 54, 55, 56, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77 and 80 of the "Vanijyik Kar Adhiniyam" and notifications issued thereunder shall mutatis mutandis apply to a dealer or person in respect of the entry tax levied and payable under this Act as if these sections were mutatis mutandis incorporated in this Act and the rules, orders and notifications issued under those sections were mutatis mutandis or issued under the relevant sections as so incorporated in this Act.
Power of Commissioner or appellate or revisional authority to impose penalty in certain circumstances-
(1) If the Commissioner or the appellate or revisional authority, in the course of any proceedings under this Act is satisfied that a dealer has concealed his turnover or the aggregate amount of purchase prices in respect of any goods or has furnished false particulars of his sales or purchases, as the case may be, in his return or returns for any year or part thereof or has furnished a false return or returns for such period, the Commissioner or the appellate or the revisional authority as the case may be, may initiate proceeding separately for imposition of penalty under this Section.
(2) The proceeding under sub-section (1) shall be initiated by the Commissioner or the appellate or revisional authority as the case may be, by issue of a notice in the prescribed form for giving the dealer an opportunity of being heard. On hearing the dealer, the Commissioner or the appellate or the revisional authority as the case may be, shall pass an order not later than one calendar year from the date of initiation of such proceeding or within such further time as allowed by the State Government, directing the dealer that, he shall in addition to the tax payable by him pay by way of penalty a sum which shall be five times of the amount of tax evaded.
(3) If the total Tax shown as payable according to the return or returns and paid by a dealer for any period or part thereof is less than eighty per cent of the total tax assessed u/s 27 such dealer shall be deemed to have concealed his turnover or aggregate of his purchase prices or to have furnished false particulars of his sales or purchases in his return or returns or to have furnished a false return or returns for the purpose of sub-section (1) unless he proves to the satisfaction of the Commissioner or the appellate or the revisional authority, as the case may be, that the concealment of the said turnover or the aggregate of purchase prices or furnishing of particulars of sales or purchases or furnishing of the false return or returns was not due to any fraud or gross negligence on his part.
In order to attract imposition of penalty u/s 69, the revisional authority is required to record the grounds of its satisfaction that the petitioner has concealed the aggregate amount of purchase price or furnished false particulars thereof in the return. On going through the impugned order, we do not find any concealment of purchases or furnishing of false particulars by the petitioner. The petitioner had not attempted to do so. On the other hand, it had raised a legal plea seeking exemption of tax on the goods. Taking a legal plea that the goods are not taxable would not make the return a false return. It appears that the petitioner had not submitted the return with guilty mind because it had the bonafide belief that the entire goods were not taxable. Therefore, the penalty cannot be imposed by condemning the return as a false return. In the case of Hindustan Steel Ltd. Vs. State of Orissa, he Supreme Court has held that 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.
A Division Bench of this Court in Govindram Chatramal, Gwalior Vs Commissioner of Sales Tax (1983) 16 VKN 44 held that failure to disclose purchases in quarterly returns will not amount to impose penalty. To fall within the ambit of section of penalty, it must be accompanied with mens rea. When there is a bonafide doubt about the fact that the purchases are taxable or not, it cannot be said that there was any mens rea of the Assessee in deliberately non-payment of the tax. The Division Bench held that in such circumstances, the Assessee was not liable for penalty. In the present case, the Assessee disclosed all the transactions and complete return was filed but the Assessee contended before the authority that the aforesaid transactions were not taxable. It appears that it was a bonafide plea of the Assessee, which was not upheld by the authorities but on this ground, the petitioner was not liable for penalty.
In view of the aforesaid discussion, we do not find that the petitioner with guilty mind had concealed purchases or had submitted false returns to invite the penalty. Accordingly, the petition deserves to be and is hereby allowed. The impugned order dated 9.9.2003 (Annexure P-7) passed by the Divisional Deputy Commissioner, Jabalpur is hereby quashed. No order as to costs.