Transit document penalty cannot stand when declaration is later produced before the assessing authority on notice.

Under section 78(5) of the Rajasthan Sales Tax Act, the expression "person in charge of the goods" was treated as wide enough to include the owner of the goods, and the 2002 amendment was regarded as clarificatory rather than creating a fresh liability. Penalty was also held unsustainable where declaration form ST-18C was produced before the assessing authority in to the show-cause notice, because subsequent production on opportunity given cannot be rejected merely for not being available at interception. The appellate order in favour of the assessee was therefore maintained.

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Issues: (i) Whether the expression "person in charge of the goods" in section 78(5) of the Rajasthan Sales Tax Act, 1994 includes the owner of the goods and whether the 2002 amendment to that provision is clarificatory; (ii) Whether penalty under section 78(5) was sustainable when declaration form ST-18C was produced before the assessing authority along with the reply to the show-cause notice.

Issue (i): Whether the expression "person in charge of the goods" in section 78(5) of the Rajasthan Sales Tax Act, 1994 includes the owner of the goods and whether the 2002 amendment to that provision is clarificatory.

Analysis: The provision was read in the light of the Supreme Court ruling that the expression "person in charge of the goods" is wide enough to include the owner of the goods. The amendment introduced with effect from 22 March 2002 was treated as clarificatory and not as creating a new liability. The Tax Board's view that penalty could not be imposed on the owner merely because the checking took place before the amendment was therefore inconsistent with the governing interpretation.

Conclusion: The expression covered the owner of the goods, and the amendment was clarificatory.

Issue (ii): Whether penalty under section 78(5) was sustainable when declaration form ST-18C was produced before the assessing authority along with the reply to the show-cause notice.

Analysis: The record showed that the declaration form was in fact produced before the assessing authority in response to the notice. In such circumstances, the governing principle is that where required documents are subsequently produced on being given an opportunity, penalty should not be sustained merely because they were not found with the goods at the time of interception. The assessing authority's view that the form had to accompany the goods at the exact time of checking was too rigid in the light of the Supreme Court's guidance on opportunity and natural justice.

Conclusion: Penalty was not sustainable and the assessment order was rightly set aside.

Final Conclusion: The revision failed because, although the Tax Board adopted an incorrect reason, the penalty itself was unsustainable on the facts and in law, and the appellate order in favour of the assessee was maintained.

Ratio Decidendi: A penalty for non-production of transit documents cannot be upheld where the requisite declaration is produced before the assessing authority in response to the show-cause notice, and the interpretation of section 78(5) extends to the owner of the goods.

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