Judgment:
K. Shivashankar Bhat, J.
1. The appellant purchased stainless steel articles from a Bombay seller. They were sent by two consignments through goods vehicles. At the check-post near Bangalore, at the time of checking by the officer, prescribed documents under section 28-A of the Karnataka Sales Tax Act, 1957 (for short 'the Act') were not produced. According to the appellant these documents were not handed over to the driver by mistake and they had been handed over to some other goods vehicle. The appellant immediately sought the documents from the consignor. However, in the meanwhile penalty proceedings were initiated and show cause notices were issued. The appellant appeared along with his counsel and produced the relevant documents which he had obtained in the meanwhile. The appellant also filed elaborate objections to the show cause notices. Without considering any of these explanations and the documents produced, the officer levied the penalty. The appellate authority founds as follows :
'In my considered opinion, the contention of the respondent in the impugned penalty orders that Sri S. K. Nahar, advocate and power of attorney holder, had appeared before him in response to notices No. K. 262/81-82 and No. 264/81-82 before the Assistant Commercial Tax Officer, an May 3, 1981, but had not tendered any objections, is found to be far from truth, as rightly argued by the learned power of attorney holder in the grounds of appeal.
The learned power of attorney holder had contended during the course of hearing of these appeal petitions that when he had approached the respondent, on May 3, 1981, with written reply to the notices issued by the respondent, hearing No. TRCP K. 262/81-82 dated April 23, 1981, the respondent had refused either to receive the same or to give any endorsement to that effect. The perusal of the connected records submitted by the respondent did not disclose the reply of the appellant to the said notices or any endorsement by the Assistant Commercial Tax Officer, perhaps, contributed by the circumstances now brought to my notice, by the learned power of attorney holder. A copy of the reply of the appellant dated May 1, 1981, referred to supra, was enclosed to this office T. No. 1687/82-83 dated August 7, 1982 addressed to the respondent, requiring him to submit his detailed remarks thereon. It is highly disquieting and deplorable to find that the respondent has not cared to acknowledge the receipt of the said reference and to submit his remarks thereon as called for, till date. I personally contacted one Sri Syed, Assistant Commercial Tax Officer, Tumkur Road Tax Check-post, who was on duty, on August 30, 1982, at 11.39 a.m. and he was directed to expedite the reply to this office letter, referred to above. Even this gesture did not bring forth any compliance from the respondent. So, another reference was made to him, on September 2, 1982 bearing No. 1089/82-83, which met with the same result. Such high-handedness on the part of the respondent and the deliberate disobedience on the part of the respondent, are highly deplorable. Alas, all in vain, and nothing has been heard till date on this matter. The obvious logical conclusion that can be drawn from the sphinx like silence on the part of the respondent in this behalf, is that the allegations made by the learned power of attorney holder, on the above line, are completely true. It is ardently and sincerely hoped that in the interest of fair play and quick dispensing of proper justice, suitable instructions will be issued by the competent authority to the check-post authorities to desist from such blatant and deliberate disrespect and disobedience to appellate authorities.
The respondent had completely erred and had not properly utilised his discretion in a judicious manner, in the instant cases. He has not proved either the intention or the design on the part of the appellant, to evade tax in these cases. Therefore, the penalties levied by him under section 28-A(4) of the Act, are not only illegal but unjust, arbitrary and capricious and unwarranted.'
The appellate authority made serious remarks against the Check-post Officer and ultimately allowed the appeals. It was further found by the appellate authority that there was no finding that the appellant had acted deliberately in disregard of the statutory obligation and consequently levy of the penalty was unwarranted. This order was revised by the Commissioner under Section 22-A of the Act on the ground that the order was erroneous and prejudicial to the interest of the Revenue. The notice issued by the Commissioner under section 22-A was solely on the ground that the appellant failed to produce the document on demand at the check-post and subsequent explanation was entirely irrelevant. By an order dated March 2, 1985, the Commissioner restored the order of the Check-post Officer. The Commissioner observed that :
'The motive behind the circumstances under which the transactions were found to have been effected was only to evade tax and any subsequent efforts made were an afterthought.'
At para 4(v) of the order the Commissioner says that it was not clear as to whether the appellant presented him representation to the Check-post Officer in time; if he had really done so there would not have been any occasion for Check-post Officer to refuse the same and on this basis the finding recorded by the appellate authority was reversed regarding the representations and the explanations. A reading of the order Commissioner shows that he has treated the matter quite lightly and assumes that the Check-post Officer would not have acted in the manner alleged by the appellant. The appellate authority had given valid reasons and on this question the appellate authority has narrated the circumstances from which he had to draw adverse inference against the Check-post Officer, which we have already extracted above. The Commissioner has not traversed the various given by the appellate authority. No doubt there is a presumption that a public officer would function without bias and properly and would record the facts before them as they were. However, in the instant case the appellate authority has given certain reasons to doubt the veracity of the statement made by the Check-post Officer. The Commissioner should have held proper enquiry on the question in the interest of the fair administration of the revenue legislation instead of just reversing the finding based on his assumptions alone.
2. We do not find any material to hold that the documents produced by the appellant were the result of an after thought and the goods were transported with a motive to evade tax, without documents. Just because the documents were produced subsequent to the check, one cannot infer that they were got up documents. The original authority does not refer to these documents while the appellate authority does not refer to these documents while the appellate authority accepted these documents and the Commissioner had no material at all to brush aside these documents by imputing motive to the appellant. These is no presumption that every trader indulges in malpractice and his conduct always is motivated to evade the tax. There should be something more apart from the delayed production of the documents to doubt the bona fides of the trader. When section 28-A(4) contemplates issuance of a show cause notice before levying penalty it is implied that the concerned person may explain the circumstances resulting in the failure to have the documents readily available for production at the check-post. Section 28-A(4) empowers the levy of penalty when sufficient cause is not furnished for the non-compliance with sub-section (2) of section 28-A (here we are not concerned with the other provisions). In S.T.A. 6 of 1984 (Prakash Roadlines (P) Ltd. v. Commissioner of Commercial Taxes in Karnataka) (Reported in : 1991(1)KarLJ444 ) we have already held that the levy of penalty is not an automatic imposition for the failure to comply with the requirements of section 28-A and the levy is discretionary and the power created by sub-section (4) will have to be read in the background of the constitutional requirements. In the instant case the Check-post Officer has not given any reason as to why the maximum penalty has to be levied, while the Commissioner has imputed motive to the appellant for which there is no basis. The Commissioner should have held an independent investigation about the allegations made by the appellant that the documents produced by him were not considered by the Check-post Officer especially in the background of the finding given by the appellate authority against the Check-post Officer. In these circumstances, we are constrained to allow the appeal.
The appeal is accordingly allowed.
3. Appeal allowed.