JUDGMENT R.K. Gulati, J.
1. This sales tax revision is directed against the order of the Sales Tax Tribunal, Muzaffarnagar dated May 10, 1989, passed in Second Appeal No. 601 of 1987. The revision arises from the penalty proceedings taken against the assessee under Section 15A(1)(h) of the U.P. Sales Tax Act, 1948, as it was then known, and now known as the U.P. Trade Tax Act (for short, "the Act").
2. The facts are not in dispute. M/s. Singh Traders at whose instance this revision has been filed, is a proprietary concern of one Jaswant Singh Chawala who was also the Manager of National Jute Corporation, a Government undertaking. The above two business establishments were independent of each other and separately registered under the Act. They were also issued Form 31 separately. It is the case of the assessee that Form 31 of both the firms were handed over to a common transporter at Delhi for their use for the imports of goods from outside the State by the respective firms. It is said, M/s. National Jute Corporation imported goods valuing Rs. 1,06,896/- from Delhi. However, by an inadvertent mistake the Delhi transporter filled in the blank Form 31 belonging to M/s. Singh Traders for the transportation of goods of M/s. National Jute Corporation instead of utilising the correct Form 31 given by M/s. National Jute Corporation for that purpose. It is not in dispute that when the mistake was detected, the assessee immediately informed the Sales Tax Department about the same. At this stage penalty notices were issued, both to the assessee as well as to the National Jute Corporation. The latter was penalised under Clause (m) while the former (assessee) under Clause (h) of Sub-section (1) of Section 15A of the Act.
3. Both the firms appealed to the Assistant Commissioner (Judicial), Sales Tax, the first appellate authority against their respective penalty orders. Penalty in the case of National Jute Corporation was let off on the ground that Form 31 of another firm came to be utilised due to human error. However in the case of assessee, though the quantum of penalty was reduced from Rs. 5,000/- to Rs. 3,000/- but the action for the imposition of penalty was affirmed on the finding that the assessee had misused Form 31 and, the declaration on Form 31 which was signed by the assessee was incorrect. Further appeal filed by the assessee against the order of the appellate authority was dismissed by the Sales Tax Tribunal. Feeling still aggrieved the assessee has preferred this revision.
4. I have heard learned Counsel for the assessee and the learned Standing Counsel who appeared on behalf of the respondent - Commissioner of Sales Tax.
5. The learned Counsel for the assessee contended that Clause (h) of Sub-section (1) of Section 15A under which the assessee was subjected to penalty, in terms, did not apply to the facts and circumstances of the case. In the alternative it was urged that there existed no case for penalty, for, except for accidental or clerical error, no motive could be attributed to the assessee for the wrong utilisation of Form 31 by National Jute Corporation in making the import of its goods nor the assessee had taken any benefit or advantage of the wrong use and, indeed no such benefit could have accrued to the assessee in any circumstances whatsoever.
6. It may be observed that Sub-section (1) of Section 15A of the Act by its Clauses (a) to (r) contemplates different types of default. If the assessing authority is satisfied that any dealer or any other person has committed any of those defaults, he becomes liable to penalty under the said provisions. Clauses (a) to (r) are bridged by the expression "may" and empowers the assessing authority after such inquiry, if any, as it may deem necessary to direct the defaulting dealer or person, shall pay, by way of penalty the amount specified by him/in addition to the tax, if any, payable by him. The quantum of penalty in respect of different defaults referred to in Clauses (a) to (r) aforesaid is provided under Clauses (i) to (ix) of that Sub-section. Sub-section (1) of Section 15A insofar as it is material for this case, and leaving out the irrelevant, would read as under:-
"Section 15A:
(1) If the assessing authority is satisfied that any dealer or other person-
...
(h) makes a false verification or declaration on an application for registration or in connection with any other proceedings under this Act; or ...
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, -
...
(vi) in a case referred to in Clause (h) a sum not exceeding rupees five thousand; and"
7. From the above it is apparent that Clause (h) of Section 15A(1) of the Act contemplates two situations to bring a case within its mischief, namely, making a false verification or declaration on (i) an application for registration or (ii) an application in connection with any proceedings under the Act. On either of the two conditions obtaining in a given case and the assessing authority being satisfied that a case for penalty has been made out, he has been empowered to direct the imposition of penalty. Now in order to determine whether a case for the imposition of penalty existed or not, the matter is left to the discretion of the assessing authority. The exercise of that discretion is to be governed by reason and justice and according to law based on judicial considerations. It is to be exercised objectively with reference to the facts and circumstances of each case. In other words, the penalty is not automatic and may not necessarily be imposed in every given case irrespective of other considerations.
8. At this stage, what found favour with the Sales Tax Tribunal in upholding the imposition of penalty may also be noticed. The Tribunal pointed out that the law does not permit that the blank Form 31 may be issued to the transporters. It held that their misuse and abuse cannot be ruled out, rather, is so often resorted to by the unscrupulous transporters for which only the issuing parties are responsible. The Tribunal remarked :-
"The law enjoins that fully filled in forms bearing complete details should be given to the transporter. When the proprietor of the M/s. Singh Traders, Shri J.S. Chawala had signed a declaration that all the above contents were true which were found subsequently false, the provisions of Section 15A(h) was rightly invoked."
9. The Tribunal also recorded another finding, namely, that the information given by the assessee to the Sales Tax Department was belated and appeared to have been given under some concealed and pressing circumstances. Thus the imposition of the penalty was justified. The Tribunal, however, did not attempt to spell out the so-called concealed and pressing circumstances on which it based itself for coming to those conclusions.
10. It may also be clarified here that the declaration signed by J.S. Chawala and referred to by the Tribunal in its order, which subsequently was allegedly found false, has reference to the verification clause of Form 31 which as already stated was wrongly utilised by the Delhi transporter. Except for Form 31 the assessee had not filed any other declaration before the Sales Tax Department or its authorities constituted under the Act. Form 31 is prescribed under Rule 83(4) and Rule 47A of the U.P. Sales Tax Rules, 1948. Rule 83(4), inter alia, provides that the driver or any other person in-charge of the vehicle shall in respect of such goods carried in the vehicle, as are notified under or referred to in Sub-section (1) of Section 28A, and exceed the quantity, measure or value specified therein, carry with him the declaration in Form 31, amongst other documents as stated in the said provision. A perusal of Form 31 would show that it requires the dealer importing goods from outside State to furnish diverse information such as description of goods, quantity, weight, value, etc., and the name of the dealer to whom the Form 31 was issued. At the end, the Form 31 contains a verification clause which reads :-
"I do hereby declare that the above information is correct and complete to the best of my knowledge and belief."
11. Now sub-rule (6) of Rule 85 of the aforesaid Rules contemplates that the registered dealer shall send the original and duplicate portion of the form to the selling dealer or the consignor of the other State after filling in all the required particulars and signing it. He shall retain the counterfoil himself. It seems, the Tribunal had this provision in mind, though not referred to by it, when it held that the law enjoins that fully filled in forms bearing complete details should be given to the transporters. It is in this context the Tribunal held that the declaration given on Form 31 by the assessee was subsequently found to be false. Perhaps as the name of the importing dealer was incorrectly stated in that declaration.
12. There is no dispute between the parties as already stated both, the assessee as well as the National Jute Corporation had handed over their respective Form 31 in blank to a common transporter at Delhi. It is obvious that the disputed Form 31 had not been filled up with details when the signatures of the assessee were appended to the declaration contained in that form. It is one thing to say that the declaration should not have been signed unless the Form 31 had been filled up in all other respects and before it was handed over to the transporter inasmuch as the handing over of blank form was in breach of Sub-rule (6) of Rule 85 of the Rules referred hereinabove. However, it is another thing to say that the declaration when signed was false. Bouvier's Law Dictionary, Volume I, page 1181, explains the term "false" thus : "Applied to the intentional act of a responsible being, it implies a purpose to deceive. In a statute prescribing punishment for false statements in making an entry of imported goods, 'false' means more than incorrect or erroneous. It implies wrong or culpable negligence, and signifies knowingly or negligently untrue."
13. Thus the expression "false" means something designedly untrue and deceitful and implies an intention to perpetrate some treachery or fraud. There is nothing in the provisions under discussion to show that the Legislature intended to punish a dealer or an assessee who honestly though incorrectly signed the declaration in Form 31 in blank without intending to defraud the Revenue. The Tribunal did not maintain this distinction in taking the view that the declaration signed by the proprietor of the assessee was subsequently found to be false and therefore, the provisions of Section 15A(1)(h) were attracted. The Tribunal did not go into the question that the assessee had signed the declaration knowing it to be false. It may be stated that Clause (r) of Sub-section (1) of Section 15A contains a residuary clause. It contemplates the levy of penalty, if any dealer or any other person otherwise acts in contravention of the provisions of the Act or the Rules made therein. It is not necessary to examine whether the assessee could have been proceeded against under Clause (r) for having acted in contravention of Rule 85(6) of the U.P. Sales Tax Rules in handing over Form 31 in blank to the transporter as held by the Sales Tax Tribunal.
14. In Commissioner of Sales Tax v. Mahadeo Prasad and Sons, Varanasi -1983 UPTC 125, the facts were that the assessee of that case was subjected to penalty under Section 15A(1)(h) because the assessee had not shown one of his godowns in the application for registration. The Tribunal deleted the penalty. On revision at the instance of the Commissioner of Sales Tax, this Court upheld the order of the Tribunal. It was held that the assessee in that case had no guilty intention in concealing the existence of the godown and had made a mistake in the application for registration by not mentioning it. This Court observed :-
"In view of the finding of the Tribunal that there was no intention to mislead the department and there was a bona fide mistake on the part of the assessee, the revision cannot succeed. Mere non-mentioning of the godown will not attract a penalty unless there is in existence some other circumstances indicating on the part of the assessee an intention to evade the law."
15. The above decision clearly rules that in order to sustain a penalty under Section 15A(1)(h) there must be guilty mind or an element of mens rea and a mere default simpliciter may not be sufficient to attract the penalty under those provisions. In other words, the mere failure to carry out a statutory obligation need not necessarily visit the consequence of imposition of penalty. Something more must be shown and that is whether there is dishonest conduct on the part of the defaulter. Where an offence is the creation of a statute, normally without anything more, the requirement of the element of mens rea, is imported into the concept of the offence unless there is something express or implied in the language of the provision which goes against such presumption.
16. In Hindustan Steel Ltd. v. State of Orissa - 1978 (2) E.L.T. (J 159) (S.C.), the Supreme Court pointed out that the liability to pay penalty does not arise merely upon proof of default. 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. Further 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.
17. In the instant case the Sales Tax Tribunal has not gone into the questions of bona fide and the circumstances under which the mistake was committed by the transporter in making wrong use of Form 31 belonging to the assessee for transportation of the goods of another concern, National Jute' Corporation. The Tribunal has also not recorded any finding of mens rea. There are also no findings that the assessee had acted in breach of the law with a view to evade the payment of tax due or payable under the Act. There is no suggestion much less any finding that by the wrong utilisation of Form 31 in favour of National Jute Corporation, a Government undertaking, the assessee stood to gain in any manner. It is not the case of the Revenue that the discrepancy was noticed by it. On the contrary the goods which accompanied the disputed Form 31, in fact, were allowed to cross the check-post barrier on the strength of that form. It was the assessee who detected the mistake much later when the department was informed about it. As already stated the provisions under discussion are not intended to penalise an honest assessee for a bona fide mistake. It is not mandatory that penalty must be levied in every case of default. It has been observed above that law enjoins discretion to the assessing authority in these matters. This discretion, like other judicial discretions, will have to be exercised with vigilance and circumspection according to justice, common sense and sound judgment.
18. In view of the above discussion, the order of the Sales Tax Tribunal in upholding the imposition of penalty cannot be sustained. On the facts and circumstances of the case no case for penalty was made out either on facts or in law. The Sales Tax Tribunal committed an error of law in taking the view otherwise.
19. In the result the revision succeeds and is allowed. There shall be no order as to costs.