Judgment:
ORDER
H.L. Dattu, C.J.
1. The levy of penalty under Section 29A(4) of the 1 Kerala General Sales Tax Act, 1963 ('the Act', for short) by the Enquiry Officer and confirmed by the first appellate authority and the Appellate Tribunal is called in question by the assessee in this revision petition filed under Section 41 of the Act.
2. The assessee is a firm engaged in the processing and export of cashew 2 kernels. In the course of its business, it has imported 3,500 bags of raw cashewnuts from a foreign country. To demonstrate this aspect of the matter, the petitioner has not only produced the bill of entry dated October 18, 2001 but also the certificate issued by the clearing agent both before this Court as well as before the authorities under the Act. Out of the goods imported, the petitioner was transporting 280 bags of cashew kernels to the assessee's own factory situate at Kuzhithura in Tamil Nadu for the purpose of processing. The goods vehicle was detained by the check-post authority at Amaravila on October 20, 2001. After verification of the documents produced by the person in charge of the goods vehicle/driver of the vehicle, the check-post authority had issued notice, pointing out the defects noticed by him at the time of verification of the documents produced. The only defect, that was pointed out was, that, instead of producing the original delivery note, the person in charge of the goods vehicle had produced photostat copy of the original delivery note. The defect that was pointed out by the check-post authority in the notice dated October 20, 2001 is as under:
The goods is transported by M/s. India Food Exports, Kollam, from Cochin Port to their self depot at Kuzhithura, Tamil Nadu. Duplicate copy of the delivery note in form 26 (transporting copy) in original is not accompanied with the consignment. Hence bona fide of transport of the goods and thereby an attempt for evasion of tax is suspected.
3. In the notice itself it was indicated that the person in charge of the goods vehicle is given 24 hours time to explain the defect noted in the notice dated October 20, 2001.
4. Within the time granted, the person in charge of the goods vehicle had not only produced the original of the delivery note, but also had explained the reason for not carrying the original of the delivery note. The explanation offered by him is in Malayalam language and therefore, the same is not extracted.
5. The Check-post Officer still was not impressed by the explanation offered by the person in charge of the goods vehicle. Therefore, had directed the person in charge of the goods vehicle to offer security deposit in a sum of Rs. 1,13,596 for release of the goods vehicle and also the goods transported in the vehicle. Immediately thereafter, the petitioner by its letter dated October 22, 2001, once again had brought to the notice of the check-post authority, that the lapse on the part of the person in-charge of the goods vehicle was wholly unintentional and while getting the photostat copy of the original delivery note, the same had been left in the shop where the originals were xeroxed. The explanation offered by the petitioner is produced along with the revision petition papers. The same is as under:
As per the above notice, 280 bags of imported raw cashew nuts despatched from Cochin Port to our Kuzhithurai depot in Lorry No. KL 7V 4320 have been detained at Amaravila Check-post because duplicate copy of form 26 (transporting copy) in original had not accompanied with the consignment. While despatching the goods from Cochin, we had given all the relating documents to the driver and cleaner. Because of their negligence, they left the original at the shop where they went for taking the xerox copy of the same. We were given 24 hours time vide notice OR No. 2787/01-02 dated October 20, 2001 issued by the Sales Tax Inspector, Sales Tax Check-post, Amaravila to prove the bona fides of the transaction and accordingly our driver had collected form No. 26 (transporting copy) from the photocopy centre where he had misplaced the document and produced the same before the check-post authority within the said time. (On October 20, 2001 before 9 p.m. approximately). However the check-post authorities refused to release the goods.
We hereby enclose the duplicate copy of form No. 26 (transporting copy) in original and a written statement given by our driver explaining the matter for your kind reference. You will kindly notice the incident occurred due to the negligence on the part of the driver and no attempt was made to evade tax. We would therefore request you to kindly condone the lapse and arrange to release the goods.
6. In spite of the aforesaid explanation, since the check-post authority was not prepared to release the goods, the petitioner had no other alternative but to offer security deposit as demanded by the check-post authority in his notice dated October 20, 2001.
7. As required under the Act, the check-post authority had despatched the relevant papers along with the notice and the explanation offered by the petitioner for appropriate enquiry by the Enquiry Officer.
8. After receipt of the aforesaid records, the Enquiry Officer had issued notice to the petitioner for the purpose of passing an order under Section 29A(4) of the Act. After receipt of the notice, the petitioner had once again reiterated the explanation that was offered by them and also by the person in charge of the goods vehicle, before the Enquiry Officer. The Enquiry Officer without even adverting to the explanation offered by the petitioner, by his cryptic and non-speaking order, has rejected the explanation offered by the petitioner and thereafter has proceeded to impose penalty and has adjusted the security deposit collected by the Sales Tax Inspector towards the penalty imposed.
9. In our opinion, it is worthwhile to extract the reasons assigned by the Enquiry Officer while imposing the penalty under Section 29A(4) of the Act.
Verified the records in the light of the contentions put forth by the authorised representative and it is understandable that the transporting copy of the delivery note was produced subsequently. But for the interception the consignee would have transported another consignment using the DL. 110777. Hence I find that mala fide intention is established on the part of the consignor to evade payment of tax and the following orders are passed:
Order No. OR. 2727/01-02 Dated January 22, 2002.
In the circumstances mentioned above a penalty of Rs. 1,13,596 (one lakh thirteen thousand five hundred and ninety six only) is imposed on M/s. India Food Exports, Kollam being double the amount attempted to evade for the offence committed.
The security deposit collected by the Sales Tax Inspector, Sales Tax Check-post, Amaravila as per cash receipt 44321 dated October 22, 2001 is adjusted towards penalty imposed.
10. The order so passed by the Enquiry Officer is confirmed by the first appellate authority as well as by the Tribunal. Questioning the correctness or otherwise of the aforesaid orders, the petitioner is before us in this revision petition.
11. Sri Kurien Thomas, learned Counsel appearing for the assessee, would submit, that the orders passed by the authorities under the Act and the Tribunal are not only perverse but also illegal and irregular. Therefore, the said orders require to be interfered with.
12. Sri Muhammed Rafiq, learned Government Advocate appearing for the Revenue, sought to justify the impugned orders.
13. Under Section 29(2) of the Act, a dealer is not expected to transport the goods within the State or beyond the State without the documents prescribed under the Act. The documents so prescribed are the sale bill or a delivery note or way bill or a certificate of ownership, etc. If for any reason, the person in charge of the goods vehicle does not carry the aforesaid documents, the check-post authority is authorised to detain the vehicle and direct the person in charge of the goods vehicle to offer security for release of the vehicle and the goods transported in the vehicle subject to further enquiry by the Enquiry Officer.
14. In the instant case, it is not in dispute nor can it be disputed by the Department that the person in-charge of the goods vehicle had produced the xerox/photostat copy of the delivery note. The Check-post Officer noticing that the document so produced is not in consonance with the provisions of Sub-section (2) of Section 29 of the Act had issued a notice to the petitioner asking him to offer his explanation, if any. In the notice, as we have already stated, the only defect that was pointed out by the check-post, authority was that the person in-charge of the goods vehicle had not produced the original of the delivery note, but had produced only a photostat copy of the delivery note. The person in-charge of the goods vehicle, within the time granted by the check-post authority, had not only produced the original of the delivery note but also had offered his explanation. On a perusal of the explanation, to our mind it appears, it is not only reasonable but also acceptable. Ignoring this aspect of the matter, the check-post authority on mere ipse dixit has proceeded to direct the person in charge of the goods vehicle to offer security in a sum of Rs. 1,13,596 for release of the goods vehicle and also the goods transported in the goods vehicle. Immediately thereafter, the petitioner had also filed his explanation and in that had reiterated whatever that had been said by the person in-charge of the goods vehicle. In spite of this explanation, the check-post authority had insisted that the petitioner shall offer security as demanded by him in the notice dated October 20, 2001.
15. The Enquiry Officer while holding the enquiry for the purpose of imposing the penalty under Section 29A(4) of the Act had issued a notice to the petitioner and this was also replied by the petitioner and in that he had reiterated whatever that had been said by the person in charge of the goods vehicle immediately after the goods were detained, i.e., on October 20, 2001, and the explanation offered on October 22, 2001.
16. The Enquiry Officer on mere assumptions and presumptions has once again rejected the explanation offered by the petitioner and has converted the security deposit offered towards the penalty imposed by him.
17. While imposing the penalty under Section 29A(4) of the Act, the authority under the Act must have a reasonable suspicion that the person in charge of the goods vehicle or the owner of the goods vehicle is trying to evade payment of tax due to the State. When the vehicle was checked at the check-post, the person in charge of the goods vehicle had produced the photostat copy of the delivery note and the original of which was later produced along with the reply to the show-cause notice within the time specified in the notice itself. In view of this, no mala fide intention or mens rea on the part of the petitioner for avoidance or evasion of payment of tax could be inferred or gathered. In our view, if there is any contravention, that contravention is merely technical and that cannot be the basis for imposition of penalty under the Act.
18. In the appeals filed against the order passed by the Enquiry Officer, neither the first appellate authority nor the Appellate Tribunal has adverted to these aspects of the matter. From a perusal of those orders, to our mind, it appears, that they have glossed over the whole issue and have mechanically rejected the appeals.
19. In view of the aforesaid discussion, in our view, the order passed by the Enquiry Officer under Section 29A(4) of the Act and the other orders passed by the first appellate authority and the Appellate Tribunal require to be set aside and we do so. Accordingly, we allow this revision petition. We further direct the respondent herein to refund the amount collected from the petitioner as expeditiously as possible, at any rate within 30 days from the date of receipt of copy of this court's order. If for any reason, the respondent fails to comply with the orders and directions issued by this Court within the time granted, the amount deposited by the petitioner will carry interest till it is paid by the respondent at nine per cent per annum from the date of imposition of penalty.
Ordered accordingly.