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TMI Blog2019 (11) TMI 1605X X X X Extracts X X X X X X X X Extracts X X X X ..... ented Elaichi and Scented Supari from their Delhi office to Indore office through Truck No.HR-38-S-3588 on the basis of stock transfer vide stock transfer note having value of Rs. 33,13,930/- and Rs. 48,000/- respectively. 04-The truck was detained at the check post at Madhya Pradesh border on the ground that Form No.49 was not available in respect of the said goods. The driver of the truck produced bills along with bilty and stock transfer invoice, which were available with the truck driver, however, a show cause notice was issued on 23/07/2013 by the Check Post Officer. 05-The appellant submitted a reply to the show cause notice and demonstrated before the authority that there is no evasion of tax by producing bills of goods transported and bilty in respect of transportation of goods from Delhi to Madhya Pradesh. A reply was also filed by the appellant on 24/07/2013 and 30/07/2013. Undisputedly, the appellant has paid VAT on the subject goods @ 13% on the basis of its uses classified under the Act of 2002 and not at the rate of 5%, which is applicable for Kirana goods. 06-The appellant has further stated that a notification has been issued on 31/03/2006 by the Commercial Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 57(8) w.e.f. 01/04/2011. Hence, levy of penalty under Section 57(8) is itself without jurisdiction and illegal. 09-Learned counsel for the appellant has placed reliance upon a judgment delivered in the case of M/s. Hariom Floor & Oil Mill Vs. State of M.P. and Others reported in (2015) 26 STJ 357 (MP) and his contention is that in the aforesaid case this Court has held that the provisions of Section 57 involve an element of mens rea. A careful reading of Section 57(6) read with Section 57(8) suggests that if goods in movement are not supported by documents, or documents produced appear to be false or forged, the inevitable conclusion is violation of the provisions entailing levy of penalty. The word "False" means intentionally or knowingly or negligently nature. The scope of enquiry to be held under Section 57(8) is to ascertain whether goods in movement were without documents or with false or forged documents. Before taking any action concerned authority is under obligation to record reasons in writing as provided in Section 57(6). Section 57(8) obliges the concerned Officer to afford a reasonable opportunity of hearing to the transporter and hold an enquiry before levy of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act i.e. bills and bilty, unless these documents are found false or forged, levy of penalty under Section 78(5) cannot be justified. Any admission or representation made before Check Post Officer for securing release of goods may be made in peculiar circumstances, but it does not absolve the authority to hold enquiry into the matter and objectively arrive at the conclusion that either prescribed documents are not available or that they are false or forged. Any hasty admission is nothing better than admission of guilt before Police authorities, which are not even admissible in evidence. They may be made under fear or under undue influence of authorities, it may be even by the person not authorized by assessee. The authorities cannot be let free to impose penalty, without holding proper enquiry, because ultimately what is being imposed is penalty and not a tax which is imposed by virtue of charging provisions of taxing statutes. In imposition of penalty, the existence of guilty animus is essential and arriving at the findings of same, holding of enquiry by the concerned authority is sine qua non. 12-A reply has been filed in the matter and it has been admitted that truck in questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th non-production of documents i.e. Form No.75. It was a case of M.P. Vanijyik Kar Adhiniyam, 1994. This Court in the aforesaid case in paragraphs No.7 to 12 has held as under:- "7. While considering the question with regard to territorial jurisdiction of this Bench, a Full Bench in the case of K.P. Govil Vs. JNKVV (1987) JLJ 341 has taken note of the provisions of Article 226 of the Constitution, the import of the word, "cause of action" and it has been held that the cause of action would also arise in a place not only where the order is passed but also at a place where the consequence of the order has effect on the person concerned. In the present case, the material was being transported from Mumbai and it was coming to Malanpur. Orders have been passed by the authorities of the respondents addressing M/s Cadbury India Limited, Malanpur, district Bhind to pay the amount of Rs. 13.00 lacs and the amount of Rs. 13.00 lacs is also deposited by M/s Cadbury India Limited, Malanpur. The consequence of the orders passed has resulted in adverse effect on the establishment of the Company's unit situated at Malanpur and they have been penalized for the same. Keeping in view the pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m No. 75 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. The authorities concerned failed to take notice of a important factor in as much as what was being transported was not a saleable item, as per Annexure P/2, invoice No. 283 which is a invoice pertaining to excise advice-cum-invoice, the goods were LMC, according to Company it was transfer of goods (raw material) from depot., to unit for manufacture of chocolates and not for sale. It was in fact transfer of raw material from one place to another. There is nothing on record to indicate that LMC which was being transported was a saleable product, and therefore, subjected to payment of tax. Neither the assessing authority in the check post nor the appellate authority or the revisional authority have considered this aspect of the matter before holding that there was intention to evade tax, a intention to evade tax would arise if the material was meant for sale, and therefore, liable to be taxed. A pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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." (Bold Emphasis Supplied) 10. If the facts and circumstances of the present case are evaluated in the back drop of the aforesaid principle laid down by the Supreme Court in the 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 nonavailability of Form 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 (sic) all the relevant facts and circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, imposition of penalty was not warranted. 11. Considering the totality of the facts and circumstances of the case, I am of the considered view that in the matter of imposition of penalty on the Company, all the authorities who have passed the orders have not acted in accordance with law and exercise their discretion in a manner which cannot be approved. Accordingly, keeping in view the principles which govern the imposition of penalty as indicated hereinabove, this petition is allowed. 12. The impugned orders passed by the assessing authority, Assistant Commissioner, Annexure P/5 dated 1st September, 2002, 29th July, 2003 (Annexure P/8), and the revisional authority, Additional Commissioner dated 25th August, 2004 as contained in Annexure P/9 are quashed. Authorities concerned are directed to refund the amount of penalty deposited by the Company." In light of the aforesaid judgment, on account of non-production of Form No.49 at the relevant point of time penalty has been imposed upon the appellant. Mere non-production of document i.e. Form No.49 in the peculiar facts and circumstances of the case does not establish any intention of the part of the Company to evade the tax. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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