Unik Traders vs Commercial Tax Officer

R. Gururajan, J.—Petitioner is a registered dealer in dry fruits and kirana items under the provisions of the Karnataka Sales Tax Act, 1957 ("the Act", for short). He has been filing monthly and annual returns and paying taxes regularly. He got the stock transferred on September 19, 2002. The goods were dispatched in a motor transport vehicle and it was accompanied with all necessary documents. Delivery note in form 39-C was got printed by the petitioner on his own in terms of Rule 23-B(l-B)(b) of the Karnataka Sales Tax Rules, 1957 ("the Rules", for short). Petitioner got printed the said delivery note on a blue azure sheet. These goods were called at the check-post on September 20, 2002. On examination of documents, respondent issued a notice u/s 28A(4) of the Act proposing to levy penalty of Rs.1,65,600. A reply was filed in terms of annexure C. Petitioner with these facts questioned the notice dated September 20, 2002 at annexure B.

Respondent entered appearance.

Heard the learned counsel for the parties and perused the material on record.

Parties say that during the pendency of the proceedings final orders have been passed. Sri Kamath, learned counsel for the petitioner, invited my attention to the relevant rules to contend that levy of penalty is uncalled for on the facts of the case. He states that this Court has to come to the aid of the petitioner. Per contra, the Government Advocate supports the action of the respondent.

After hearing the learned counsel I have perused annexure B issued to the petitioner. In annexure B, respondent has referred to the facts of the case. According to him, there are two discrepancies in form 39-C which are as follows :

"(1) Form 39-C issued by the consignor is purchased from one M/s. Industrial and Commercial Prints, Gandhinagar, Bangalore, as can be seen from the bottom of the said form 39-C which is not allowed.

(2) The colour of form 39-C is found to be light green in colour rather than white."

These two discrepancies, according to the respondent, are in violation of Rule 23-B(l-B)(b) of the Rules.

Form No. 39-C is prescribed under the Rules. Rule 23-B is amended. The Karnataka Sales Tax (First Amendment) Rules, 2002 in so far as it is relevant to the amendment to Rule, 23B is concerned, reads as under :

"4. Amendment of Rule 23-B.--In Rule 23-B of the said Rules,--

(1) in Sub-rule (1-A), in Clause (i-a), for the words ''three months'' in the two places where they occur, the words ''six months'' shall be substituted,

(2) after Sub-rule (1-A), the following shall be inserted, namely:--

"(l-B)(a) The delivery note referred to in the proviso to Sub-section (2) of Section 28-A, shall be in Form 39-C and every dealer eligible to issue such delivery note shall notify in advance the commencement of issue of such delivery notes to the assessing authority concerned and thereafter the said dealer shall be deemed to be permitted to issue form 39-C.

(b) every delivery note in form 39-C issued under Clause (a), shall be printed in triplicate in black ink on white paper measuring 210 by 297mm. and serially machine numbered, and the dealer shall maintain an account in respect of such delivery notes issued in a register in form 39-D."

Form 39-C is a prescribed delivery note in terms of the Sales Tax Rules. In the case on hand, form 39-C is submitted by the dealer. But, according to the respondent, discrepancies are seen in the submission of form 39-C. First discrepancy is that the form is purchased from M/s. Industrial and Commercial Prints, Gandhinagar, Bangalore, and the second discrepancy is that it is not on white paper measuring 210 by 297mm.

Let me see as to whether these two discrepancies warrant a penalty of Rs. 1,65,000. It is also to be noted at this stage that the final order has now been passed and an appeal remedy is also available.

The amended Rule 23-B would stipulate that every delivery note is to be in triplicate. A reasonable reading of this requirement of rule would show that the same is not required to be printed by the dealer himself, and also that could not be the intention of the authorities. On the other hand, such printing would involve unnecessary money, time and energy. There is no prohibition as such in terms of the rules. Similarly, delivery note is required to be printed in triplicate in black ink on white paper. In the case on hand, during the course of hearing, the delivery note was made available to me. It is seen that the delivery note is slightly greenish in colour. The rule can be read down to give a reasonably accepted meaning in the given set of facts. In the circumstances, the first discrepancy of purchase cannot be said to be a violation warranting any penalty in terms of Section 28A of the Act. Section 28-A(4) provides for levy of penalty in the absence of dealer''s failure to furnish sufficient cause. In the case on hand, dealer''s reply cannot be said to be insufficient. Section 28-A(4) provide for levy of penalty which shall not be less than one-fourth of the amount of. Tax leviable and not exceeding one half of the amount of tax leviable in respect of the goods under transport. Sub-section (b) of Section 28-A(4) provides for levy of penalty of double the amount of tax leviable and not exceeding three times the amount of tax leviable in respect of the goods under trans-port. Levy of penalty is always a deterrent measure. Deterrence is required only when there is a blatant violation or wilful disobedience of a legal provision. In the case in hand, the material fact satisfies me that it is nothing but, if at all, a bona fide mistake, or an error committed by the petitioner. In these circumstances, I deem it proper to read down the amended rule and thereby to set aside the penalty on the peculiar facts of the case but in the light of the objections and also in the light of the materials made available to me. In the circumstances, I deem it proper to set aside the notice proposing to levy penalty of Rs. 1,65,000. Since I find that the notice requires to be set aside, subsequent order also requires to be set aside notwithstanding the appeal remedy. Availing of appeal remedy in the given set of facts would be a mere waste of time. The order impugned is also liable to be set aside.

Before concluding, I also deem it proper to direct the petitioner not to continue in future the greenish forms and provide form 39-C in terms of the amended rule.

In the result, this petition is allowed. Impugned notice and the subsequent order of confirmation are set aside with the above directions. Parties are to bear their own respective costs.