Penalty under entry tax law requires omission of the statutory bill statement, not merely defective sealing of duplicate bills.

Penalty under section 7(5) of the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 cannot be sustained merely because the duplicate copy of bills was not sealed or preserved in the prescribed manner. Section 7(1) requires the registered dealer to include the prescribed statutory statement in the bill itself, and penalty arises only when that statement is omitted and evasion of entry tax is thereby facilitated. Rule 7 governs the manner of recording the statement and the preservation of the counterfoil or duplicate bill, but the duplicate-bill requirement is distinct from the obligation to make the statutory statement. The reference was answered in favour of the assessee, and the Tribunal's view attracting penalty was not justified.

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Issues: Whether penalty under section 7(5) of the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 could be sustained for failure to affix the seal on the duplicate copy of bills, in the absence of a finding that the bills issued for sale of local goods did not contain the statement required by section 7(1) read with rule 7.

Analysis: Section 7(1) requires a registered dealer to issue a bill containing the prescribed statement, and section 7(5) creates liability to penalty only when that statement is not made, on the footing that evasion of entry tax has been facilitated. Rule 7 prescribes the manner of recording the statement and also requires preservation of the counterfoil or duplicate bill. The obligation to maintain the duplicate or counterfoil is distinct from the obligation to record the statutory statement in the bill itself. Penalty under section 7(5) cannot be imposed merely because the duplicate was not sealed or preserved in the prescribed manner unless there is a finding that the bill issued in respect of local goods omitted the required statement.

Conclusion: The reference was answered in favour of the assessee. The Tribunal was not justified in holding that there was a violation of section 7(1) attracting penalty under section 7(5).

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