Assistant Commercial Taxes Officer vs Tata Iron and Steel Company Ltd.

Jainendra Kumar Ranka, J.—This revision petition has been filed by the petitioner-Department, u/s 84 of the Rajasthan Value Added Tax Act, 2003 (in short, "the Act") against the order dated November 22, 2010 passed by the Rajasthan Tax Board, Ajmer (in short, "the Board") in Appeal No. 1378 of 2009, which upheld the order dated April 30, 2009 passed by the learned Deputy Commissioner (Appeals)-II (in short, "the DC (A)"), who had deleted the levy of penalty of Rs. 1,09,009 imposed by the learned Assistant Commercial Taxes Officer (in short, "the ACTO"), u/s 78(5) of the said Act. The brief facts of the case as emerging on record are that the respondent had sent certain goods through a transport vehicle bearing No. HR-46-9929 from Delhi to Jaipur, containing therein iron rods, etc. On checking by ACTO, builty No. 2729 dated September 11, 2000, Invoice No. 5315 dated September 11, 2000 and text note of Tata Steels dated September 11, 2000 were found with the driver of the transport vehicle. However, with the aforesaid documents/papers form No. ST-18A was not found, which was mandatory as per the Act. Accordingly, the ACTO held that the respondent had contravened the provisions of section 78(2) of the Act and imposed penalty against the respondent to the extent of Rs. 1,09,009 being 30 per cent of the value of the goods which was claimed to be at Rs. 3,63,363.

It was submitted by the respondent before the ACTO that although, all the relevant papers were available with the transport vehicle but form ST-18A though sent from Delhi Office with clear instruction to transport company to inform the driver of the transport vehicle to carry the same. By inadvertence the clerk did not hand it over to the driver of the said vehicle, however immediately on demand the said form ST-18A was produced before the ACTO, and submitted that it was on account of bona fide mistake, the form could not be made available on the spot. It was further submitted by the learned counsel for the respondent before the DC (A) that there was no mala fide intention of the respondent in not producing the form No. ST-18A as the clerk of the transport vehicle company forgot to hand it over the same to the driver of the vehicle who was carrying goods. The ACTO, being dissatisfied with the respondent, imposed the penalty on the respondent-company as stated above.

Aggrieved by the said penalty order, the respondent preferred an appeal before the learned DC (A) and reiterated the facts and submitted that the assessee was prevented from carrying the form No. ST-18A on account of inadvertence for the reasons stated earlier and that all the other documents were made available to the satisfaction of ACTO and immediately on demand, form No. ST-18A was called for from Delhi office and submitted before the ACTO and argued that keeping in view, all the facts and circumstances of the case and also keeping in view, the bona fide mistake committed by the clerk for not handing over the form No. ST-18A to the driver of the vehicle the penalty should not be imposed. The respondent before DC (A) relied upon the judgment of the apex court rendered in the case of State of Rajasthan and Another Vs. M/s D.P. Metals, , accepted the bona fides of the respondent and not only relied upon the said judgment but also referred to certain other judgments and ultimately, vide order dated April 30, 2009 deleted the penalty imposed upon the respondent.

Being aggrieved the petitioner-Department preferred appeal before "the Board".

The Board vide order dated November 22, 2010, after detailed discussions, found that form No. ST-18A could not be made available by the driver of the vehicle at the time of checking but all other relevant documents were made available, form ST-18A was immediately produced on demand. Therefore, the Board came to the conclusion that merely on the ground of non-production of form No. ST-18A, no penalty under the law could be imposed and upheld the order of DC (A).

Being aggrieved by the said order of the Tax Board, the petitioner-Department has now preferred the instant revision petition assailing the impugned order.

Ms. Tanvi Sahay, appearing on behalf of Mr. R.B. Mathur, learned counsel for the petitioner-Department, has submitted that requirement of form ST-18A is mandatory under the law for carrying the goods through a transport vehicle and it is very significant document. She further submitted that though other relevant papers/documents were available with the driver but the most important document, i.e., form ST-18A was not made available, therefore, the learned ACTO was justified in imposing the penalty upon the respondent. She further submitted that requirement of the document under the Act, being primary, it needed to be carried and since, the respondent had failed to make compliance of the requirement of carrying of the form No. ST-18A under the Act, therefore, the penalty had rightly been imposed against the respondent and the respondent has wrongly been exonerated from the penalty so imposed by the DC (A) and the Tax Board.

I have considered the arguments advanced by the learned counsel appearing on behalf of the petitioner-Department and perused the material on record. I am in agreement with the order passed by the learned DC (A) and the learned Tax Board, for the reasons given in the order hereunder. Though the Act, provides that form No. ST-18A is very essential to be produced at the time of checking or otherwise at the time of carrying of the goods in a vehicle but in the present case all other relevant papers/documents like bills, vouchers and authorization letter were available with the driver of the vehicle at the time of checking but at the last moment, the clerk did not give the same to the driver though it was already available in the Delhi office to be given to the driver through clerk. The respondent was prevented by good, sufficient and reasonable causes in not making available the form ST-18A and there was no mala fide intention on the part of the respondent for evading the tax or otherwise, or to defraud the revenue as the form ST-18A was submitted immediately on demand when other papers were complete.

The honourable apex court in the case of State of Rajasthan and Another Vs. M/s D.P. Metals, , had an occasion to consider identical issue and came to the conclusion that though provision of section 78(5) of the Act, is valid but simultaneously, held that if by mistake or inadvertence the form was not readily available at the time of checking and on demand the same was produced, therefore, in the circumstances of the case, the penalty ought not to be imposed and ultimately held as under (pages 635 and 636 in 124 STC):

Such submission of false or forged documents or declaration at the check-post or even thereafter can safely be presumed to have been motivated by desire to mislead the authorities. Hiding the truth and tendering falsehood would per se show existence of mens rea, even if required. Similarly where, despite opportunity having been granted u/s 78(5) if the requisite documents referred to in sub-clause (2)(a) are not produced, even though the same should exist, would clearly prove the guilty intent. It is not possible to agree with the counsel for the respondents that breach referred to in section 78(5) can be regarded as technical or venial. Once the ingredients of section 78(5) are established, after giving a hearing and complying with the principles of natural justice, there is no discretion not to levy or levy lesser amount of penalty. If by mistake some of the documents are not readily available at the time of checking, principles of natural justice may require some opportunity being given to produce the same. This provision cannot be read as to imply that the penalty of 30 per cent is the maximum and lesser penalty can be levied. The Legislature thought it fit to specify a fixed rate of penalty and not give any discretion in lowering the rate of penalty. The penalty so fixed is meant to be a deterrent and we do not see anything wrong in this. The quantum of penalty under the circumstances enumerated in section 78(5) cannot, in our opinion, be regarded as illegal. The Legislature in its wisdom has though it appropriate to fix it at 30 per cent of the value of goods and it had the competence to so fix. As held by this court in Rai Ramkrishna and Others Vs. The State of Bihar, ''The objects to be taxed so long as they happen to be within the legislative competence of the Legislature can be taxed by the Legislature according to the exigencies of its needs, because there can be no doubt that the State is entitled to raise revenue by taxation. The quantum of tax levied by the taxing statute, the conditions subject to which it is levied, the manner in which it is sought to be recovered, are all matters within the competence of the Legislature, and in dealing with the contention raised by a citizen that the taxing statute contravenes article 19, courts would naturally be circumspect and cautious'' as such there cannot, in the present case, be any valid challenge to the rate of penalty provided for in section 78(5) of the Act.

It is very dear that though the provisions of section 78(5) of the Act, have been held to be just, proper and valid but it is not automatic, the principles of natural justice, demand an opportunity to be given to rebut and if the documents are produced then the benefit of producing the documents ought to have been given to the assessee and no penalty should have been imposed. Therefore, the aforesaid judgment of the honourable apex court is squarely applicable in the facts and circumstances of the present case.

This court in the case of Cera Tech India v. Assistant Commercial Taxes Officer, Bhiwadi [2013] 35 Tax-Up-Date 2, 49, considered this issue and held as under:

The honourable Supreme Court of State of Rajasthan and Another Vs. M/s D.P. Metals, has categorically held that on show-cause notice with regard to alleged contravention/deficiency found in respect of goods in transit, if the deficiency/contravention is removed, with the filing of the requisite document by the assessee imposition of penalty ought to be eschewed. In the instant case it is not in dispute that form VAT 47 was furnished to the ACTO, who checked the vehicle with the reply to show-cause notice on the very same day. That being the position, there is no escape from the inevitable conclusion that the petitioner-assessee could not have been found in contravention of section 76(2)(b) of the RVAT Act. Other documents such as invoice and transport receipt were also by themselves indicative of the bona fides of the transit of goods. Following the judgment in case of State of Rajasthan and Another Vs. M/s D.P. Metals, I am of the considered view that at the first instance on the very same day the petitioner-assessee having furnished form VAT 47 to ACTO, and the petitioner could not have been found to be in contravention of section 76(2)(b) of the RVAT Act or visited with penalty u/s 76(6) of the RVAT Act. The Board has misdirected itself in overlooking the aforesaid admitted facts and instead focusing on the alleged improbability of VAT form 47 being lodged in the dash-board of the vehicle in transit.

Consequently, the revision petition is allowed. The impugned order dated June 29, 2012 passed by the Rajasthan Tax Board, Ajmer is quashed and set aside.

The learned counsel for the petitioner has placed reliance on the judgment rendered in the case of Assistant Commercial Taxes Officer, Ward IV, Circle B, Udaipur v. Raja Glass House [1989] 75 STC 417 (Raj) and submitted that the facts of the present case are identical to the facts of the said case.

On perusal of the aforesaid judgment I notice that the facts are totally-distinguishable to that of the present case and not identical in as much as in the case of Raja Glass House [1989] 75 STC 417 (Raj), even the dealer had admitted before the assessing officer (ACTO) that the goods were not accounted, in the books and tax was not paid therefore, in that case there was admission whereas the facts in the present case is contrary to that case as all the papers were made available except form No. ST-18A at the time of checking and form ST-18A was made available immediately, on demand. I am satisfied that the order passed by the Tax Board, Ajmer, is quite justified and the Board had rightly affirmed the order and there is no perversity in the order of Tax Board, whereby the penalty deleted by the Deputy Commissioner (Appeals), against the respondent was sustained.

Resultantly, the revision petition filed by the petitioner has no force and the same is dismissed. The stay application is also accordingly dismissed.