AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
1993 (5) TMI 170
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....and show cause against levy of penalty on the value of the coil, estimated to be Rs 81,000, weighing 2,912 kg. at the rate of 30 per cent maximum permissible levy of penalty under section 22A(7) of the Act. The petitioner moved an application that the aluminium coil is urgently required for the purpose of manufacture of conductors which are to be supplied to Punjab Electricity Board and delay in getting the coil might result in severe loss. He, therefore, offered to make payment of tax and whatever penalty that may be leviable on the spot. On such application, the Assistant Commercial Tax Officer (for short, hereinafter, "the A.C.T.O") levied the penalty at the maximum amount of Rs. 24,300 and released the goods on that very day. The petitioner, thereafter, preferred an appeal before the Deputy Commissioner, Commercial Taxes (Appeals), on August 30, 1988. Accompanied with appeal, he produced a covering letter from the seller of the goods, dated August 18, 1988 along with the gate pass, dated August 17, 1988, for removal of excisable goods and the delivery invoice dated August 18, 1988; and the transport receipt dated August 18, 1988, all of them pertaining to the goods in question....
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....ot to be entertained. He also contended that application of the petitioner for taking delivery of goods by offering to make payment of tax and penalty must be deemed to be an admission of guilt by the petitioner and surrendering to penalty by volition. He is, therefore, estopped from challenging the order. There cannot be any doubt that section 22A is on statute book, as a preventive measure to tax evasion and avoidance through fictitious or unaccounted transporting of goods. But it is equally true that provision are of ancillary nature, providing the manner and mode of transporting goods. The fact that on occasion, the goods are transported unaccompanied 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 ....
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....he 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." 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 opportunity against the proposed penalty. Such opportunity must necessarily include opportunity to show that no penalty is leviable. It is to be noticed that the provisions of section 22A are operative only until goods are in transit unaccompanied with requisite documents. It has no operation/application where transit of goods have come to an end by delivery of goods to consignee. Thus, in all cases, the question of levy of penalty will arise before the goods are delivered to consignee and it is found, while the goods are in transit, with the transporter, that they are unaccompanied with documents. On the face of it, in such cases, if that is sufficient to levy penalty, no meaning can be ....
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....ion with intention to evade or avoid liability of tax that may arise as a result of the transaction, which was sought to be shielded by keeping it out of accounts, must be necessary ingredient before penalty could be levied. It may further be noticed that where goods are found in transit unaccompanied with requisite documents, when the vehicle is checked, the breach is complete. In defence, the person concerned can produce the relevant documents only after the event regarding which breach has been committed and not earlier. Therefore, the mere fact that the goods were not accompanied by documents and were produced later on, during the proceedings by itself does not lead to any conclusion that such documents have been prepared later on by ante-dating the same. That finding must depend upon an inquiry 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. Even assuming the alternative, that wherever a breach is found, to have been committed, of the provisions of section 22A, penalty has to be levied and it is lawful ....
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....plied). 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." It will also be relevant to refer to decision in Sodhi Transport Co. v. State of U.P. [1986] 62 STC 381 (SC); AIR 1986 SC 1099, wherein their Lordships while considering the constitutional validity of the provisions of section 28B of the U.P. Sales Tax Act, which are of similar nature as section 22A of the Rajasthan Sales Tax Act, observed that these provisions are introduced to check evasion and to provide a machinery for levying tax from the persons who dispose of goods within the State and avoid tax which they are otherwise liable to pay. That was a case relating to a presumption, which was envisaged under the U.P. Sales Tax Act, in the case of goods unaccompanied by requisite documents, about sale of such goods having been taken place within the State so as to attract the tax liability of the State. The Rajasthan Act does not raise suc....
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....ersons. In the present case, this is what the petitioner who was a consignee of the goods has done. On August 18, 1988, when the goods were seized while in transit, with the carrier one coil of aluminium was found unaccompanied with any relevant document. He could offer any explanation only after getting to know from the vendor or the transporter as to why one part of the consignment was not accompanied by requisite documents. The fact that because of some pressing necessity he immediately offered to make payment of tax and penalty leviable in law, and get the goods released; does not militate against the explanation which he could offer only after receiving the same from the vendor. It is to be noticed that section 22A(7) itself provide for release of any goods seized on payment of penalty under clause (a) or on furnishing such security for such penalty, as may be prescribed, for the payment thereof. This clearly envisages that even by furnishing security, for the proposed sum of penalty, to be levied disclosed in the notice or at best the maximum leviable penalty; a person could get the goods released if he is in necessity of the immediate release of the goods and furnish the e....
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....his favour. He becomes the owner on the basis of terms of the contract. His ownership depends upon point of time and place where the property in goods pass on to him. If the property in goods passes on to the consignee on delivery of the goods at destination; the consignee does not become owner of the goods until delivery of the goods to him. On the other hand, if the property in goods passes to the consignee at the seller's end or the goods are delivered to the transporter, as agent of the consignee, he becomes the owner of the goods and liability may arise under section 22A(7) against him. But without determining this question, in my opinion, penalty cannot be ipso facto levied on the consignee on the plain reading of the provisions of section 22A(7). This enquiry is also relevant for the purpose of deciding the question of mens rea which, as discussed above, is the relevant fact to be determined before levy of penalty in whichever way the provisions of section 22A(7) relating to levy of penalty is construed. The authorities have, in my opinion, erred in levying penalty by ignoring the relevant consideration before levy of penalty in the present case, as I have discussed above;....