JUDGMENT R.K. Gulati, J.
1. Bharat Ply-wood Products Pvt. Ltd. (hereinafter referred to as "the assessee") being aggrieved against an order of the Sales Tax Tribunal confirming the penalty of Rs. 1,600 under Section 15-A(1)(o) of the U.P. Sales Tax Act, 1948 (for short "the Act") has come up in this revision. The proceedings relate to the assessment year 1984-85.
2. The brief facts are that the assessee imported from outside the State of Uttar Pradesh certain quantity of veneer for manufacturing plywood, by road transport through Tamkohi Raj check-post, District Deoria. The goods were supplied by R.K. Industries, Purnia (Bihar). It appears that the assessee was issued by its assessing officer form XXXI bearing No. 0220467 which it forwarded to its ex-U.P. supplier, namely, R.K. Industries along with its supply order. The goods were despatched by the supplier on 3rd of August, 1984. On 9th August, 1984, when the vehicle reached Tamkohi Raj check-post, located in the State of Uttar Pradesh the same was checked. Form XXXI was not produced by the driver, on the plea that he had left it behind. According to the assessee's case as set out in the order of the Tribunal, the sale invoices and form XXXV contained the particulars of form XXXI referred earlier, but the same were deleted from form XXXV when presented at the check-post, because since after the issuance of form XXXI and its despatch to the ex-U.P. supplier, the State Government declared the series of form XXXI in question valid up to 31st July, 1984 only. Further, when the goods reached their destination, i.e., Najibabad, the assessee's place of business, the assessee obtained a fresh form XXXI of the new series from its assessing officer and submitted the same before the said authority. In the above circumstances, the assessee pleaded that there was no breach on its part, of the provisions contained in Section 28-A of the Act. It may also be observed that the goods in dispute were seized at the check-post, which were subsequently released to the assessee on its furnishing security.
3. In due course, penalty proceedings under Section 15-A(1)(o) of the Act were initiated against the assessee. These provisions empower the assessing authority on its being satisfied to impose penalty on an assessee or other person, who imports or transports, or attempts to import or transport, or abets the import or transport of any goods in contravention of the provisions of Section 28-A. The categorical findings of the assessing officer in the penalty order were that there was no dishonest intention on the part of the assessee, when it utilised form XXXI which had been invalidated, nor the assessee was guilty of contumacious conduct with a view to evade payment of due tax. On the date when the form was issued it was perfectly valid and subsequently the period to which the questionable form XXXI pertained was invalidated with effect from 1st of August, 1984. It was not disputed that within two days of the vehicle being apprehended at the check-post, the assessee obtained fresh form XXXI and produced the same before the assessing officer. The assessing officer was, however, of the view that there was a technical default on the part of the assessee in importing the goods on a form which had become obsolete and accordingly he imposed a penalty in a sum of Rs. 1,600 which was eight per cent of the tax payable on the value of imports plus freight against maximum penalty Which could have been imposed up to 40 per cent of the value of goods.
4. The imposition of penalty was upheld in appeal both by the Appellate Assistant Commissioner (Judicial) in first appeal and by the Sales Tax Appellate Tribunal in second appeal. In upholding the penalty order the Sales Tax Tribunal observed as under :
"It appears that either the driver has not produced invalid form or it was left by him with the seller. In any case, even if it is taken that invalid form was with the appellant, it is clear that the goods were being imported deliberately on an invalid form through check-post and hence the appellant has contravened the provisions of Section 28-A of the U.P. Sales Tax Act. The time-lag of the date of bill and its reaching check-post at Tamkohi Raj is also significant in this case. As such, the appellant appears to have contravened the provisions of Section 28-A and hence as per judgment of the Honourable High Court in the case of Commissioner of Sales Tax, U.P, v. Bulaki Das Vinod Kumar 1987 UPTC 154, the imposition of penalty upon the appellant cannot be said to be unjustified."
5. Having heard the learned counsel for the parties, I am of the opinion that the order passed by the Sales Tax Tribunal cannot be sustained.
6. As already noticed, Section 15-A(1)(o) of the Act provides for penalty against those who act in disregard to their obligation talked of in Section 28-A of the Act. It is necessary to refer to the provisions of Section 28-A and the purport of these provisions, to find out the obligations cast on an assessee or other persons under the same provisions. The heading of Section 28-A is itself meaningful and classifies the subject with which it deals, namely, "import of goods into the State against declaration". Under the Rules framed under the Act, different forms of declaration are prescribed for import of goods in connection with business or otherwise than in connection with business. Sub-section (1) of Section 28-A, inter alia, provides that any person who in connection with his business intends to bring, import or otherwise receive, into the State from any place without the State, any goods liable to tax under the Act in excess of such quantity or measure or of such value as stated in Clauses (a) and (b) of Sub-section (1), shall obtain the prescribed form of declaration on payment of the prescribed fee from the assessing authority having jurisdiction over the area where his principal place of business is situated or, in case there is no such place, where he ordinarily resides. Sub-section (2), lays down the procedure when such goods are to be consigned by road. It says, inter alia, that importer shall furnish to the consignor the declaration in the prescribed form in duplicate duly filled in and signed by him. The driver or any other person in-charge of vehicle carrying such goods, shall carry a copy of such declaration duly verified by the consignor in the prescribed manner together with such other documents as may be prescribed and shall deliver one copy of such declaration to the officer-in-charge of the check-post before crossing any check-post or barrier established under Section 28. Clause (c) of Section 28-A(2), inter alia, provides that where for any other reason a copy of the declaration could not be delivered at a check-post or barrier as aforesaid, the consignee shall after obtaining delivery of such goods, submit to the assessing authority one copy of the declaration by the next working day.
7. Sub-sections (3) and (4) are not relevant for our purposes and, therefore, they need not be referred to here. Sub-section (5) of Section 28-A directs, inter alia, that any vehicle carrying such goods shall stop at every check-post or barrier, or any other place when so required by an officer authorised under Sub-section (2) of Section 13 and shall allow the search of vehicle and inspection of goods and all documents referred to in the preceding sub-sections. Sub-section (6) authorises the officer making such search or inspection to detain the goods for the reasons to be recorded in writing after giving the person an opportunity of being heard, if he is satisfied that the transportation of goods was not covered by proper and genuine documents and such goods were being so transported in an attempt to evade an assessment or payment of tax due or likely to be due under the Act.
8. It is not necessary to dilate on the provisions referred above, because the entire Section 28-A had been a subject-matter of consideration by a Division Bench of this Court in Jain Shudh Vanaspati Ltd. v. State of U.P. [1983] 53 STC 54 ; 1983 UPTC 198. On the analysis in great details the court found that the said section is directly aimed at preventing evasion of tax on sales and purchases to be made inside the State. In order to come within the mischief of that provision it is necessary to show that there was an attempt on the part of the importer or any other person to evade tax. The power to detain the goods and levy of penalty in respect of such goods cannot be exercised unless two-fold conditions are made out. There cannot be any proper exercise of the power in that regard merely for the reason that the disputed goods were not accompanied by the requisite documents or that the documents accompanying them were false. These powers can be exercised only if the goods detained are not accompanied by the requisite documents or that the documents accompanying them are false and if there is material before the detaining authority to indicate that the goods are imported in an attempt to evade assessment or payment of tax due or likely to be due under the Act. It was observed :
".........that the obligation to make declaration and submit the declaration forms to the carrier of the goods have been placed only upon the dealers importing the goods liable to tax in excess of the quantity, measure or value notified by the State Government, in connection with their business and the power of the officer making search or inspection at the check-post to detain the goods and forward the same to the assessing authority for adjudication of penalty can be exercised only where such officer is, for the reasons to be recorded in writing, satisfied that such goods were being imported with a view to evade assessment or payment of tax due or likely to be due under the Act................ It also does not authorise the officer at the check-post to seize such goods merely because they are not accompanied by the declaration form or other prescribed documents. The provisions contained in Section 28-A have thus been made with a view to check any attempt on the part of the dealers to evade payment of tax due or likely to be due under the Act."
9. Having noticed the essential ingredients and purports of Section 28-A we may now turn to the penalty provisions contained in Section 15-A of the Act. Leaving out the irrelevant for this case, these provisions would read as under :
"15-A. Penalties in certain cases.--(1) If the assessing authority is satisfied that any dealer or other person--
* * *
(o) imports or transports, or attempts to import or transport or abets the import or transport of any goods in contravention of the provisions of Section 28-A ;
* * * it may, after such inquiry, if any, as it may deem necessary, direct that such dealer or person shall pay, by way of penalty, in addition to the tax, if any, payable by him,--
* * *
(ix) in a case referred to in Clause (o) or Clause (q) a sum not exceeding forty per cent of the value of the goods involved."
10. It is settled by now that the nature of penalty proceedings in a taxing statute is quasi-criminal. Its principal object is to work as a deterrent against recurrence of a default on the part of the assessee or the person concerned. Its consequences are intended to have effective detriment which will put a stop to the practices which the Legislature considered to be against the public interest. Generally speaking and in abstract, as pointed out by the Supreme Court in Khemka & Co. (Agencies) Pvt. Ltd. v. State of Maharashtra [1975] 35 STC 571 ; AIR 1975 SC 1549, the imposition of penalty gives rise to a substantive liability which can be viewed as a fine for infringement of law. It is imposition of pecuniary liability which is comparable to punishment for the commission of an offence. Now when a statute provides for imposition of penalty, it will have to be found out from the scheme of the Act and the particular provisions under which a penalty has been imposed, whether any case for imposition in a given case has been made out or not. The expression in the opening part of Section 15-A "if the assessing authority is satisfied" vests some kind of discretion in the authority imposing penalty, to find out whether the import or transport, or attempt to import or transport, etc., of any goods was in contravention of the provisions of Section 28-A. If in the opinion of the authority, there was no such contravention, no penalty can be imposed. The liability to penalty arises only if the Sales Tax Officer is satisfied about the existence of the conditions which give jurisdiction and the quantum thereof depends upon the circumstances of each case. In terms of the decision of the Division Bench in the case of Join Shudh Vanaspati Ltd. [1983] 53 STC 54 (All.) ; 1983 UPTC 198, two-fold requirements are necessary of which a mention has already been made. The assessing authority had found that there was no evidence of dishonesty or contumaciousness on the part of the assessee in utilising form XXXI which had become obsolete subsequent to the issuance of the disputed form to the assessee because of its validity having been curtailed beyond a certain date. There is nothing on record to suggest that the assessee had any information or inclination about the subsequent events and yet he made use of form XXXI, which was no longer valid when it was so utilised. It is not a case where the assessee before the import of goods had not obtained form XXXI as required by Sub-section (2) of Section 28. On the explanation given by the assessee and on preponderance of probabilities the explanation was found to be plausible by the assessing authority but he imposed the penalty taking the view that there was technical default on the part of the assessee. When the matter came before the Sales Tax Tribunal, as would be evident from the passage extracted earlier from its order, it recorded a finding that the disputed goods were being imported deliberately on invalid form. It is on this finding that the contravention of provisions of Section 28-A was upheld by the Tribunal.
11. It is true that the findings of fact recorded by the Tribunal are ordinarily not interfered with in these proceedings. The finding whether there was a deliberate use of invalid form or otherwise is essentially a finding of fact. It is equally true that if the finding of the Tribunal is based on no material or on consideration of facts which are totally irrelevant to the controversy, such finding is not binding on this Court and the same is liable to be interfered with. In the instant case, the Tribunal has not referred to any evidence for its finding that the assessee was importing goods deliberately on invalid form. The Tribunal has stated its bald conclusion without referring to any evidence available before it. Reference to the time-lag of the date of bill and the goods reaching the check-post is also not understandable, inasmuch as, from the evidence it appears that the goods were despatched on the same date on which bills were prepared and the time-lag was on account of journey by the truck to reach the check-post at Tamkohi Raj. The decision of this case therefore cannot rest on the findings recorded by the Sales Tax Tribunal regarding the contravention of Section 28-A.
12. Learned Standing Counsel argued that mens rea or guilty intent are not necessary ingredients for the imposition of penalty under Section 15-A(1)(o). The element of mens rea was not required to be taken into consideration while imposing the penalty under the said provisions. He relied upon a decision of a learned single Judge of this Court in the case of Bulaki Das 1987 UPTC 154, referred to by the Tribunal in its decision.
13. On the other hand, it was argued for the assessee that the said decision runs counter to the decision of the Division Bench in Jain Shudh Vanaspati case [1983] 53 STC 54 (All.) ; 1983 UPTC 198, inasmuch as, unless it was found as a fact that the use of invalid form was intentional and that too with a view to evade payment of tax, no penalty was imposable under the provisions in which it was imposed.
14. On first impression, the arguments on behalf of the assessee, it appears, have some substance. However, it is not necessary to go into that controversy for the decision of this case because, on the findings recorded by the Sales Tax Tribunal no penalty was leviable on account of technical breach only.
15. In Hindustan Steel Ltd. v. State of Orissa [1970] 25 STC 211 ; [1972] 83 ITR 26, the Supreme Court was concerned with a case of levy of penalty on the delinquent assessee for its failure to register itself as a dealer. The Supreme Court in that case held as under :
"Under the Act penalty may be imposed for failure to register as a dealer : Section 9(1) read with Section 25(1)(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion 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. Those in charge of the affairs of the company in failing to register the company as a dealer acted in the honest and genuine belief that the company was not a dealer. Granting that they erred, no case for imposing penalty was made out."
16. The instant case, on the facts found by the Sales Tax Officer, in my opinion, squarely falls within the principles enunciated by the Supreme Court in the case of Hindustan Steel Ltd. [1970] 25 STC 211; [1972] 83 ITR 26. As there was only a technical default without anything more the assessee was not liable to any penalty. The imposition of penalty on the assessee was bad and unwarranted, and the same is not liable to be sustained.
17. For what has been stated above, this revision succeeds and is allowed. In giving effect to this order Under Section 11(8) of the Act, the Sales Tax Tribunal shall pass the appropriate order.