SB Civil (ST) Rev. Pet. No.33/2009 M/s. Khusiram Agencies P.Ltd Vs. Asst. Commercial Taxes Officer, Jodhpur. -1- IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR ::: ORDER SB Civil (ST) Rev. Pet. No.33/2009 M/s. Khusiram Agencies P.Ltd Vs. Asst. Commercial Taxes Officer, Jodhpur . DATE OF ORDER :: 28.1.2009 PRESENT HON'BLE MR. PRAKASH TATIA, J. REPORTABLE Mr. Anjay Kothari, for the petitioner. Mr. Rishab Sancheti for Mr. VK Mathur, for the respondent. <><><> Heard learned counsel for the petitioners. The case has chequered history inasmuch as in proceedings under Section 78(5) of the Rajasthan Sales Tax Act, the assessing authority vide order dated 19th Dec., 1995 held that in planned way, the assessee purchased 560 tin of the “Shakti” brand Deshi Ghee with weight of 8400 kg @ Rs.1400/- per tone with total value of the good SB Civil (ST) Rev. Pet. No.33/2009 M/s. Khusiram Agencies P.Ltd Vs. Asst. Commercial Taxes Officer, Jodhpur. -2- Rs.7,84,000/- through inter-State sale. The concerned authority found that all the documents are fake one and, therefore, the act of the assessee is in violation of Section 78(2). The assessing authority thereafter, imposed the penalty @ 30% to the value of the goods amounting to Rs.2,35,200/-. The said order dated 19th Dec., 1995 was challenged by preferring appeal before the Dy. Commissioner (Appeals), Commercial Taxes, Udaipur, who dismissed the appeal of the petitioner vide order date 24th Oct., 1997. The assessee preferred further appeal before the Rajasthan Tax Board, Ajmer, which was registered as Appeal No.161/95/Udaipur. The said appeal was also dismissed by the Tax Board vide order dated 8th July, 2002. Then the assessee preferred revision petition before this Court being SB Civil Sales Tax Revision Petition No.1238/2002. The said revision petition was disposed of by this Court vide order dated 25.8.2004 by following the judgment of this Court delivered in the case of ACTO, Jodhpur Vs. M/s.Shiv Shambhu Agencies (S.B. Sales Tax Revision No.778/2002) decided on 14.10.2003. The matter SB Civil (ST) Rev. Pet. No.33/2009 M/s. Khusiram Agencies P.Ltd Vs. Asst. Commercial Taxes Officer, Jodhpur. -3- was remanded to the Tax Board for fresh decision in terms of law laid down by this Court in the aforesaid judgment of Shiv Shambhu Agencies (supra). Thereafter, the Tax Board vide impugned order dated 28.2.2005 (Annex.1) again dismissed the appeal of the assessee, hence, this revision petition has been preferred. There were difference of opinion in the judgments of Tax Board as well as in the judgment of this Court on the question whether the plea of mensrea is relevant in the matter falling under Section 78(5) of the Rajasthan Sales Tax Act. The said controversy has been settled by the Hon'ble Apex Court in the judgment delivered in M/s. Guljag Industries Vs. Commercial Taxes Officer reported in (2007) 7 SCC 269 and it has been held that the question of mensrea is irrelevant. The Tax Board in impugned order held that in this case, even mensrea in committing the offence of evasion of tax is fully proved from the facts. As stated above, the penalty could have been imposed even without prof of mensrea of the assessee on finding the cases covered under Section 78(2) and 78(5) of the Act. SB Civil (ST) Rev. Pet. No.33/2009 M/s. Khusiram Agencies P.Ltd Vs. Asst. Commercial Taxes Officer, Jodhpur. -4- Be it as it may be, by additional affidavit, the assessee has raised question of law as under : - “Whether, penalty u/s 78(5) could be levied without ascertaining the tax liability on the transaction in question when the provision at the relevant time provided for a penalty equal to the amount of five times of the tax leviable on such goods or 30% of the value of such goods, whichever is less and whether, the impugned penalty order dt.19.12.1995 straightaway imposing penalty of 30% of the value of goods could be upheld by the Ld. Rajasthan Tax Board by its impugned order dated 28.1.2005?” Learned counsel for the petitioner submitted that it is pure question of law and it arises in the present revision petition inasmuch as that authority who passed the order dated 19th Dec., 1995 imposed the penalty upon the petitioner of 30% of the value of the goods whereas at the relevant time, the maximum penalty could have been 30% of the value of the goods or 5 times of the tax liability SB Civil (ST) Rev. Pet. No.33/2009 M/s. Khusiram Agencies P.Ltd Vs. Asst. Commercial Taxes Officer, Jodhpur. -5- whichever is less. All three authorities, the taxing authority, the appellate authority and the Tax Board did not consider this aspect of the matter and that amounts to applying wrong law in the case of the petitioner for imposing the penalty under Section 78(5) of the Act. Learned counsel for the respondent referred several facts to show that the entire transaction as disclosed by the assessee was false to avoid the tax and there was clear mensrea of the assessee to avoid the tax and further the documents produced by the assessee were also concocted documents. Learned counsel for the revenue vehemently submitted that the transaction as projected could not have been happened because of the reason that in such a short period of two days there could not have been four transactions of sale and re-sale of the huge commodity of Ghee. It is also submitted that the assessment order dated 28.2.1998 on the basis of which, the petitioner is submitting that he had no tax liability is absolutely irrelevant because of the reason that penalty can be imposed under Section 78 (5) of the Act for non-compliance of requirement of Section SB Civil (ST) Rev. Pet. No.33/2009 M/s. Khusiram Agencies P.Ltd Vs. Asst. Commercial Taxes Officer, Jodhpur. -6- 78(5) and it is not dependent upon the nature of transaction. Even if a person carries goods with full payment of tax and transaction is bonafide and correct, but the relevant documents if were not sent with the goods, the penalty could have been imposed by the revenue. In this view of the matter, if the assessee has cured the defects so far as the tax liability is concerned, that does not effect the penalty order passed by the revenue in the year 1996, three years before the regular assessment order was made. I considered the submissions of learned counsel for the parties and perused the facts of the case. Though much has been said about the conduct of the petitioner and his act of creating documents etc., but core question is whether there can be penalty beyond the maximum limit of penalty prescribed by law. The answer is “NO” and that is without hesitation. The penalty is sort of punishment and cannot be increased because of the gravity in the dishonest act of the assessee or because of conduct of the defaulting person beyond the maximum limit of penalty prescribed by law. Here in this case, it is apparent from the order dated 19th SB Civil (ST) Rev. Pet. No.33/2009 M/s. Khusiram Agencies P.Ltd Vs. Asst. Commercial Taxes Officer, Jodhpur. -7- Dec., 1995 that subsequent orders passed by the appellate authority i.e., order of the appellate authority dated 24th oct., 1997, ultimate order of the Tax Board dated 28.2.2005 that this aspect has not been considered and the order of the taxing authority dated 19th Dec.,1995 straightaway levying penalty of 30% of the value of the goods has been upheld and without even examining what was the tax liability of the assessee over which penalty of 5 times of the tax liability could have been imposed provided it would have been lesser amount than the value of the goods. It appears that Section 78(5) was amended w.e.f. 14th May, 1999 by the Act No.12 of 1999 and amended provisions provides only one penalty and i.e, penalty of equal to 30% of the value of the goods involved. The amended provision does not provide the second penalty i.e., the penalty of equal to the amount of 5 times of the tax leviable on the goods involved. In view of the above reasons, the revision petition is allowed. The matter is remanded back to the original authority who passed the order dated 19th Dec., 1995, who SB Civil (ST) Rev. Pet. No.33/2009 M/s. Khusiram Agencies P.Ltd Vs. Asst. Commercial Taxes Officer, Jodhpur. -8- may look into the relevant provision of law and may pass the appropriate order. The authority concerned may look into them contention of both the parties advance on the basis of the assessment order dated 28.2.1998. Both the parties are directed to appear before the concerned authority on 16.3.2009. (PRAKASH TATIA), J. c.p.goyal/-