Mena Transport vs Assistant Commissioner of Commercial Tax and Others

P.K. Jaiswal, J.—Since the common question of law is involved in both the petitions and, therefore, they are being disposed of by this order. In W.P. No. 1192 of 2005, the petitioner is challenging the order dated February 26, 2005 and in W.P. No. 1194 of 2005, the petitioner is challenging the order dated February 26, 2005, annexure P/9, passed in Revision Nos. 16/04 and 17/04 by which the order passed by the Assistant Commissioner, Commercial Tax, in Penalty Case Nos. 48/03-04 with respect to vehicle No. M.P. 09-KB-0817 and Penalty Case No. 49/03-04 with respect to vehicle No. M.P. 09-KB-2195 has been confirmed and both the revision petitions filed by the petitioner were dismissed.

The brief facts of the case are that the petitioner is a transporter engaged in the business of transportation of goods. That certain consignment contending various consumer goods were loaded at Bombay in two trucks bearing Registration Nos. M.P. 09-KB-0817 and M.P. 09-KB-2195. The goods loaded in the truck were consigned by various parties for delivery to M/s. Hindustan Lever Ltd. at different places. Part of the goods were to be delivered at Indore and Jabalpur in the State of Madhya Pradesh and part of the goods to be delivered at places outside the State of Madhya Pradesh, viz., Varanasi and Shuklaganj in Uttar Pradesh. The goods consigned to the places outside Madhya Pradesh were only to pass through the State of Madhya Pradesh and were not meant for the sale in Madhya Pradesh. The truck No. 817 reached Sendhwa check-post on May 27, 2003 and truck No. 2195 reached on May 28, 2003. They were stopped and detained at check-post barrier. It is the case of the petitioner that the requisite declaration in form No. 75 were not available with the trucks. Though the case of the petitioner is that the trucks were having invoice, builty, challan, etc., contained all the necessary details except the requisite declarations, in respect of some of the cases and in some cases declaration was found to be incorrect. Both the trucks were detained at the check-post because of requisite declarations in form No. 75 in respect of consignment of Jabalpur and some wrong declarations were sent instead of form No. 75 in form No. 85.

The petitioner received two notices in form No. 76 u/s 45A(10) of the M.P. Commercial Tax Act, 1994 (in short, "the Act of 1994"), directing the petitioner to show cause on June 11, 2003 that for not filing proper declarations why a penalty of Rs. 7,80,270 and Rs. 26,90,860 be not imposed. The authorities without providing opportunity of hearing and without waiting till the date of hearing up to June 11, 2003 passed an order imposing penalty on June 6, 2003 and thereafter on June 13, 2003. The authority rejected the reply of the petitioner, which was filed on June 11, 2003. The petitioner challenged the said action by filing Writ Petition No. 1108 of 2003 before the High Court. The learned writ court by order dated July 28, 2003 set aside the order of penalty with the observation that the petitioner should be provided an opportunity of hearing before passing any order of penalty.

In furtherance of the direction issued in W.P. No. 1108 of 2003, respondent No. 1 issued a fresh notice in form No. 76 prescribed u/s 45A(10) of the Act of 1994. The check-post authority issued separate notice for both the trucks vide its notices dated August 2, 2003.

In response to the show-cause notice, the petitioner appeared on March 28, 2003 and submitted (1) one declaration No. 75 form before the check-post officer and 3 (three) declaration forms with regard to form No. 85. It is further submitted by the petitioner that builty No. 301795 dated May 26, 2003 for Rs. 2,52,883 in form No. 75 had already submitted which is available on record and prayed that no penalty can be imposed. It is also submitted in the reply that non-furnishing and furnishing incorrect declaration was merely an inadvertent error without any ulterior motive and there was no intention of facilitating the evasion of tax. The defect/default was merely a technical/venial breach without any intention of evasion of tax because except the declaration in question all other information and documents were available with the consignments in the shape of other documents like invoices, bilties, challan, etc. Moreover, the accompanying documents contained all the information that was required to be filled in the requisite prescribed forms. The petitioner furnished all the necessary declarations and requested the check-post authority to drop the penalty proceedings after taking the said declaration on record.

Respondent No. 1 again imposed the penalty u/s 45A(12) of the Act of 1994, mainly on the ground that declaration in question were not available with the goods and the filing of the declarations subsequently cannot absolve the petitioner from the liability of penalty. The check-post authority imposed the penalty at Rs. 3,91,000 in respect of truck No. M.P. 09-KB-0817 vide his order dated September 1, 2003 passed in Case No. 48/2003-04 (remand) and in respect of truck No. M.P. 09-KB-2195, the check-post authority has imposed the penalty at Rs. 6,17,000 in Case No. 49/2003-04 (remand).

The petitioner being aggrieved by the said order filed a revision petition u/s 62 of the Act of 1994, before the Additional Commissioner of Commercial Tax, Indore. The contention of the petitioner before the revisional authority was that, in absence of any finding regarding any attempt of facilitating the evasion of tax, the imposition of penalty in question amounted to punishing the petitioner for a mere technical or venial breach.

The revisional authority by order dated February 26, 2005 affirmed the order passed by the check-post authority and dismissed the Revision Petition No. 16/04 and 17/04.

The petitioner submits that the requirement regarding the furnishing of declaration with the object of preventing evasion of tax and hence imposition of penalty even where there is no evasion of tax amounts to imposing a penalty for technical default, which is not warranted u/s 45A of the Act, 1994. Mens rea behind non-furnishing of the declaration is essential for attracting the penal provisions contained in section 45A. It is also contended that the revisional authority levied a penalty without satisfying the requirement of section 45 of the Act of 1994 is without jurisdiction and prayed that the impugned order be quashed.

The respondents filed their return and submitted that the petitioner ought to have submitted eight forms but even after remand, the petitioner has submitted total five forms in number including form No. 75 (1+1) 2 in number and form No. 85, 3 in number. So even after remand the petitioner was failed to produce 3 declaration forms less before the check-post officer or even at the stage of revisional authority. It is also submitted that the check-post officer has already reduced the penalty to the extent the forms submitted by the petitioner after remand, which was confirmed by the revisional authority. It is also submitted that the check-post officer while passing the order dated September 1, 2003 recorded a finding of fact that the conduct of the petitioner does suggest that the petitioner was trying to facilitate the evasion of tax. It is also submitted that the mens rea can be presumed by the conduct of the petitioner at the first stage as he has failed to produce the requisite number of form numbers 75 or 85 before the check-post officer. It is also submitted that some of the forms were incorrectly submitted by the petitioner which means instead of form No. 75, the petitioner submitted form No. 85. In respect of a submissions of wrong forms, according to the respondents, the purpose and object of form Nos. 75 and 85 are altogether different, because form No. 75 is described for importing goods within the State, whereas, form No. 85 describes about out to out transaction. In case of form No. 85, there is no need to provide the information about the registration number to consignee whereas in form No. 75, the registration number of consignee is necessary, so the exigibility of tax can be ascertained from the consignee of Madhya Pradesh. It is further submitted that form No. 75 is issued by the Department, whereas form No. 85 is easily available in the market. For proper accounting of the transaction the Department issues form No. 75. While in case of form No. 85, since it is for the out to out, the State of M.P. has no concern with the ascertainment of tax liability. It is further submitted that the petitioner has submitted some form No. 85 in case of goods of which the consignee is of Jabalpur, which is admittedly within the State of M.P. The said conduct of the petitioner does suggest that in the garb of form No. 85, the petitioner is facilitating evasion of tax. With the aforesaid, the learned Deputy Government advocate prayed for dismissal of the writ petitions.

The petitioner filed their rejoinder to the return filed by the respondents and submitted that in the course of proceedings, the petitioner has filed all the necessary declarations, which were not available at the earlier stage and could not be filed for want of proper and reasonable opportunity of hearing. It was also contended that the non-available of declaration was only an inadvertent error committed through oversight because the uneducated drivers of the two trucks proceeded to their destination without collecting the declarations. Without there being any mala fide intention of facilitating the evasion of tax, more so because all other relevant documents containing all the necessary particulars of the consignor, consignee and about the goods were already available through the other documents, which were admittedly available and were filed before the check-post authority. The default being a technical default, with the filing of the declaration in the course of proceedings in consequence of the direction of this court stood cured. It is also submitted that the impugned order would show that respondent No. 1 has extracted his earlier order containing allegations regarding non-filing of the declarations by way of a chart, which contains details regarding concerned builty number and date of the seller and purchaser, details of goods and the value of goods. In respect of filing of declarations, it is submitted that the petitioner has filed in all 12 declarations as per chart which is annexed along with the rejoinder is annexure P/11:

Statement of declaration in form No. 75/85 submitted before the Check-post Officer--Gawadi--Sendhwa on August 28, 2003 : Relating to Truck No. MP 09 KB 0817

Note:

The transporter was carrying and had furnished form No. 75 for MTR No. 13781 at S. No. 1 above at the check-post at the time of entry of the truck and has been so mentioned in the order u/s 45A by the check-post officer dated June 6, 2003.

It is submitted that the petitioner has filed all declarations and wherever there are more consignment for one consignee only a single declaration has been filed, which meets the requirement of section 45A(5), it is also stated that if all the declarations, which were filed before the check-post authority in respect of both the truck numbers are verified from the documents which the driver of both the trucks were having at the time of checking, it would be clear that all the necessary declarations have been filed.

It is submitted by the learned counsel for the petitioner that if the particulars of the both the charts are compared with the particular of deficiency as pointed out in the original order, annexure P/6, it would be clear that all the necessary declarations for all consignments have been filed. These facts have not been disputed by the respondents.

The learned Deputy Government Advocate has submitted, that some of the forms were incorrectly submitted by the petitioner and, therefore, the authorities have not committed any legal error in imposing the penalty and prayed for dismissal of the writ petition.

We have heard the learned counsel for the parries at length and perused the record of the case.

Admittedly, in this case, the petitioner was not having declaration form No. 75 which is required as per sub-section (5) of section 45A of the Act of 1994. A bare reading of the aforesaid provisions of section 45A would show that under sub-section (1) every person transporting such goods as may be notified by the State Government in this behalf shall carry with him an invoice, bill or challan or any other document, by whatever name called, issued by the consignor of the goods giving such particulars as may be prescribed. Under sub-section (5) every transporter shall, before crossing any check-post or barrier set up or erected under sub-section (1), deliver to the check-post officer a declaration duly signed by the consignor in such manner, in such form and containing such particulars as may be prescribed. A separate declaration shall be filed in respect of the consignment or consignments relating to each consignee where the goods are being imported into Madhya Pradesh and of each consignor where the goods are being sent outside the State. No declaration in relation to goods to be delivered in Madhya Pradesh shall be accepted if the consignee in Madhya Pradesh is shown or described as "self" unless the particulars and address of the person who delivery of the goods at the declaration in Madhya Pradesh and furnished. A bare reading of two provisions would show that the intention of the Legislature is to make them mandatory. Therefore, after, the enforcement of section 45A it is mandatory for every person or transporter who is transporting the goods to deliver to the check-post officer a declaration duly signed by the consignor as has been prescribed.

From the aforesaid, it is also clear that before imposing penalty, the check-post officer shall also consider whether the transporter has deliberately violated the provisions for not delivering the declarations with a view to make an attempt of evasion of tax in respect of such goods. The check-post officer may presume but this presumption is a rebuttable presumption as has been specifically provided under sub-section (7) may presume, until the contrary is proved.

Shri P.M. Choudhary, learned counsel for the petitioner taking us through the provisions of section 45A, sub-sections (7), (10) and (12) and submitted that the purpose of imposing the penalty is to check the evasion of tax and to punish a person who evade the tax. According to him in the present case, there is no intention for avoiding tax. He invited our attention to the delivery chart MTRS and other documents. He pointed out that in all these documents the particulars of the material and other details are clearly mentioned. It was a case where because of inadvertence or oversight, form Nos. 75 and 85 did not accompany the consignment. Form Nos. 75 and 85 were also produced and submitted, but the authorities have imposed the penalty which is unsustainable. Accordingly, the learned counsel submitted that as there is no intention on the part of the petitioner transporter to evade the tax and there is no malice a bona fide mistake technically in nature is not contained and tax and penalty imposed without taking note of the totality of the facts and circumstances of the case. Placing reliance on judgments rendered by the apex court in the case of State of Rajasthan and Another Vs. M/s D.P. Metals, , Hindustan Steel Ltd. Vs. State of Orissa, , State of Madhya Pradesh and others Vs. Bharat Heavy Electricals, , Assistant Commercial Taxes Officer, Flying Squad I Vs. Prakash Punj, , Assam Transport Service and Others Vs. State of Orissa and Others, and the decision of M.P. High Court Bench at Gwalior in the case of M/s Cadbury India Ltd., Malanpur Distt. Bhind and Others Vs. State of M.P. and Another, .

Shri P.M. Choudhary, learned counsel for the petitioner, has submitted that in the facts and circumstances of the case, the authorities concerned have acted in an arbitrary and unjustified manner in the matter of imposing penalty. Taking us through the reasons indicated by the revisional authority, and the assessing authority, he submitted that action of the respondents in the present case is not just fair and reasonable, and therefore, he seeks for interference in the matter.

Ms. M. Ravindran, Deputy Government Advocate taking us through section 45A of the Act and other documents available on record emphasized that once a breach, statutory in nature is established, imposition of penalty is the discretion of the competent authority and the discretion having been exercised on the statutory breach proved, this court is not required to interfere in the matter. It is not disputed by her that after passing of the order in writ petition when the petitioner received show-cause notice they filed their reply and filed declaration form Nos. 75 and 85. She also submitted that the petitioner deliberately filed wrong declaration, i.e., declaration No. 85 instead of declaration 75 and, therefore, learned authorities have not committed any error in passing the impugned orders and prayed for dismissal of the writ petitions.

In the present case, the irregularity that was detected when both the vehicles were checked. It is not in dispute in both the writ petitions that the declaration required under form Nos. 75 and 85 were not produced by the transporter when the goods were seized that being so, the check-post was well within his right in taking action. However, while taking action the competent authority of the check-post the revisional authority proceeded on an assumption that the declaration under form Nos. 75 and 85 was not produced and the intention to facilitate evasion of tax was presumed due to non-production of this statutory form in the check-post. The presumption was drawn in the matter of evasion of tax without taking note of the circumstances that were existing in the present case. Neither the assessing authority in the check-post nor the revisional authority have considered this aspect of the matter before holding that there was intention to evade tax. The invoices and other documents produced by the transporter in the check-post do not indicate that any attempt was made to evade tax. It is not the case of the assessing authority or revisional authority that the documents produced at the time of checking showed any difference in the matter. Record indicates that all the material particulars and information which were required were available in the documents produced at the time of checking of the vehicle and no mala fides are proved or established and the nexus to the act of non-production of documents and the intention to evade tax is not proved. Under these circumstances, the question is can penalty be imposed merely because some documents were not produced at the time of checking of the vehicle or because instead of declaration of form No. 75, declaration of form No. 85 was produced by the petitioner. In this regard, the principle laid down by the apex court in the case of Hindustan Steel Ltd. Vs. State of Orissa, may be considered in paragraph 7 of the aforesaid judgment. The Supreme Court has held as under (page 214 in 25 STC):

... 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. 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. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute...

If the facts and circumstances of the present case are evaluated in the backdrop of the aforesaid principles laid down by the Supreme Court in the case of matter of imposition of penalty, it would be seen that in the present case, penalty has been imposed mechanically without any dishonest intention or malice or mens rea having been established or proved. The bona fide reason given by the company explaining the circumstances in the matter of non-availability of from No. 75 is not at all considered by the authorities concerned while imposing the penalty. Imposition of penalty has penal consequence. Penalty is a measure of punishing a wrong doer and the discretion for imposing penalty has to be exercised judiciously after considering all the relevant facts and circumstances in a given case. Merely, because the law empowers an authority to impose penalty that by itself is not a reason for imposing penalty. Deliberate defiance of law, guilty conduct and dishonest intention are the necessary ingredients which should be available for imposing penalty. Merely, because some technical or venial breach of a statutory provision is established that by itself is not a reason for imposing penalty. In the present case the authorities have proceeded to impose penalty without taking note of all these factors. There is nothing on record to indicate that the act of the company or concerned transporter in the matter of non-production of form No. 75 was a deliberate and intentional act for the purpose of evasion of tax. On the contrary, the records indicate that all the necessary information which was required under the law was supplied during the time of verification at the check-post. Under these circumstances, it was incumbent upon the authorities concerned to examine the entire matter and find out if there was any intention to evade payment of tax. Before imposing penalty on the petitioner a finding should have been recorded as to whether there was any intention on the part of the petitioner to evade tax as no such intention is either established or proved. On the contrary, as a matter of course, mechanically penalty is imposed merely on the ground that the statutory provisions are violated and a particular declaration form is not produced. Mere non-production of a document, i.e., form No. 75 in the facts and circumstances of the present case does not establish any intention on the part of the company to evade tax. The lapse found established is a technical lapse unaccompanied by any mala fide or dishonest intention and therefore, can be classified as a bona fide mistake, and accordingly under such circumstances, the imposition of penalty was not warranted.

There is no dispute between the parties that declaration form was not accompanied with the goods when the vehicle was checked, but it was produced along with the reply to show cause notice itself before the check-post officer. The honourable apex court in the case of State of Rajasthan and Another Vs. M/s D.P. Metals, held (pages 635 and 636 in 124 STC):

30.... Firstly, if there is non-compliance with section 78(2)(a), i.e., not carrying the documents mentioned in that sub-clause or, secondly, if false or forged documents or declaration is submitted. This sub-section cannot relate to personal belongings which are not meant for sale but would relate to those types of goods in respect of which documents referred to in section 78(2)(a) exist or can exist.

Such submission of false or forged documents or declaration at the check-post or even thereafter can safely be presumed to have been motivated by desire to mislead the authorities. Hiding the truth and tendering falsehood would per se show existence of mens rea, even if required. Similarly where, despite opportunity having been granted u/s 78(5) if the requisite documents referred to in sub-clause 2(a) are not produced, even though the same should exist, would clearly prove the guilty intent. It is not possible to agree with the counsel for the respondents that breach referred to in section 78(5) can be regarded as technical or venial. Once the ingredients of section 78(5) are established, after giving a hearing and complying with the principles of natural justice, there is no discretion not to levy or levy lesser amount of penalty. If by mistake some of the documents are not readily available at the time of checking, principles of natural justice may require some opportunity being given to produce the same. This provision cannot be read as to imply that the penalty of 30 per cent is the maximum and lesser penalty can be levied. The Legislature thought it fit to specify a fixed rate of penalty and not give any discretion in lowering the rate of penalty. The penalty so fixed is meant to be a deterrent and we do not see anything wrong in this. The quantum of penalty under the circumstances enumerated in section 78(5) cannot, in our opinion, be regarded as illegal. The Legislature in its wisdom has thought it appropriate to fix it at 30 per cent of the value of goods and it had the competence to so fix. As held by this court in Rai Ramkrishna and Others Vs. The State of Bihar, : ''The objects to be taxed so long as they happen to be within the legislative competence of the Legislature can be taxed by the Legislature according to the exigencies of its needs, because there can be no doubt that the State is entitled to raise revenue by taxation. The quantum of tax levied by the taxing statute, the conditions subject to which it is levied, the manner in which it is sought to be recovered, are all matters within the competence of the Legislature, and in dealing with the contention raised by a citizen that the taxing statute contravenes article 19, courts would naturally be circumspect and cautious'' as such there cannot, in the present case, be any valid challenge to the rate of penalty provided for in section 78(5) of the Act.

In the instant case, requisite documents have been produced at the time when opportunity of hearing was given and as noted above, the correctness of document has not been questioned. Therefore, even in State of Rajasthan and Another Vs. M/s D.P. Metals, the honourable Supreme Court has not held where by mistake some documents are not produced but subsequently produced even in such case, imposition of penalty is not automatic, even though the language used in section 78(5) of the Rajasthan Act is "shall impose".

It is well-settled that when discretion has been conferred on the authority in the matter and imposition of penalty that discretion must be reasonably exercised.

Following the aforesaid principles, this court holds that the imposition of penalty in the facts and circumstances of the case is not a proper exercise of the discretion by the authority concerned. The authority who has passed the orders has not acted in accordance with law and exercised its discretion in the manner which cannot be approved.

Considering the totality of the facts and circumstances of the case and keeping in view the principles, which governed the imposition of penalty as indicated hereinabove, both the petitions are liable to be allowed.

The impugned orders passed by the assessing authority dated September 1, 2003 and revisional authority. Additional Commissioner dated February 26, 2005 as contained in (annexure P/9) are quashed. In the result, both the writ petitions are allowed and disposed of, without any orders as to cost.

Copy of this order be kept in other connected matter.

W.P. No. 1194 of 2005

Shri P.M. Choudhary, advocate for the petitioners.

In view of the detailed order passed in W.P. No. 1192 of 2005, this petition also stand allowed and disposed of. A copy of the said order be retained in the record of this case.