- (1.) R. K. GULATI, J. This revision arises from penalty proceedings under section 15-A (I) (o) of the U. P. Sales Tax Act (now called the U. P. Trade Tax Act, for short, "the Act" ). At the relevant time in the assessment year 1986-87 the respondent-assessee was engaged in the manufacture of ploythene bags. It appears that the assessee imported from Bombay one truck load of raw material - H. D. P. granules. The said goods were seized at the check-post Kairana because form 31 was not found available with other documents accompanying the goods. Later, on furnishing a cash security of Rs. 24,194 the goods were released in favour of the assessee. Thereafter penalty proceedings under section 15-A (1) (o) of the Act were initiated against the assessee and the amount of security was converted into penalty. When the matter came to be heard in due course in second appeal by the Sales Tax Tribunal it sustained the penalty to the extent of Rs. 1,000 only as against the penalty of Rs. 24,194 imposed by the assessing authority. Feeling aggrieved the Revenue has preferred this revision against the order of the Sales Tax Tribunal.
(2.) HEARD learned counsel for the parties. Section 15-A (1) (o) authorises the assessing authority to impose a penalty on any dealer or other person who imports or transports, or attempts to import or transport or abets the import or transport of any goods in contravention of the provisions of section 28-A of the Act. On a default being established the penalty can be imposed in a sum not exceeding 40 per cent, of the value of the goods involved or three times of the tax leviable on such goods under any provisions of the Act, whichever is higher. The contention of learned Standing Counsel on behalf of the Revenue was that the Tribunal was not justified in reducing the amount of penalty from Rs. 24,194 to Rs. 1,000 considering the facts of the case. Having considered the submission carefully, in my opinion, there is no substance in it. It may be observed that the provisions, with which we are concerned in this revision, have been the subject-matter of consideration before this Court on several occasions. In Jain Shudh Vanaspati Ltd. , Ghaziabad v. State of U. P. [1983] 53 STC 54; 1983 (1) UPTC 198 a Division Bench of this Court has held that no penalty under section 15-A (1) (o) can validly be sustained for the only reason that the goods are imported without form 31 in contravention of section 28-A unless it is further established that in making such import the intention was to evade assessment or payment of tax. In the instant case the Tribunal has recorded a finding that because of the eligibility certificate issued to the assessee under section 4-A of the Act it was exempted from payment of tax and was also declared non-taxable for the assessment years 1985-86, 1986-87 and 1987-88. In reducing the quantum of penalty the Tribunal has considered the facts of the case particularly from the angle as to whether in making import of the goods in question the intention of the assessee was to evade assessment or payment of tax. In respect of the raw material imported by the assessee it paid custom duty by two demand drafts much earlier to the date when the goods were checked by the concerned authority at the check-post. The Tribunal also found that the goods in dispute were duly recorded in the account books of the assessee. It was explained before the Tribunal that the assessee instructed its clearing agent at Bombay to send the goods in question by truck for which form 31 had allegedly been issued. However, it is said that by mistake the clearing agent prepared the bill in the name of another dealer - M/s. Mahalaxmi Poly Plast, Muzaffarnagar, which was also engaged in the production of a similar product as manufactured by the assessee and was purchasing the raw material through the same clearing agent. When the mistake was detected at the check-post, the assessee sent a fresh form 31 which was submitted before the check-post authority along with account books, etc. The ultimate finding of the Tribunal was that it was the mistake of the clearing agent that the bill was prepared in the name of a wrong dealer instead in the name of the assessee and the reason appeared to be that both the parties belonged to Muzaffarnagar and the same clearing agent was supplying the raw material to both of them. In the opinion of the Tribunal this was a case of bona fide mistake and there was no mala fide on the part of the assessee. Further there was no bad intention on the part of the assessee in making the import or to evade tax or assessment inasmuch as the assessee was not liable to pay any tax because of the eligibility certificate held by it under section 4-A of the Act. However, the Tribunal sustained the penalty in part because of the fact that form 31 did not accompany the consignment and there was no evidence that form 31 was sent in advance to the clearing agent. Thus there was a technical violation of section 28-A (2) of the Act.
(3.) IT has been observed earlier that import of the goods in violation of section 28-A but without an intention to evade assessment or tax in making such an import is not exigible to penalty. Under section 15-A (1) (o) of the Act as held by the Division Bench of this Court in the case of Jain Shudh Vanaspati Ltd. [1983] 53 STC 54 (All. ). The correctness of the findings of fact recorded by the Tribunal have not been specifically, challenged in this revision. The question framed for consideration of this Court in the memo of this revision is whether on the facts and circumstances of the case the Sales Tax Tribunal was legally justified in reducing the amount of penalty in spite of adverse material available on record. The expression whether on the facts and circumstances of the case is to be construed in the light of the facts found by the Tribunal. The so called adverse material had been considered by the Tribunal when it returned its findings that there was no intention on the part of the assessee to evade assessment or payment of tax in making the import of the goods in question. The Standing Counsel was unable to bring to the notice of this Court any other material which may not have been considered by the Tribunal. In Hindustan Steel Ltd. v. State of Orissa [1970] 25 STC 211 (SC); [1972] 83 ITR 26 (SC) it has been pointed out by the Supreme Court that an order imposing penalty for failure to carry out a statutory obligation is the result of 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. 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.;