BALIA, J. - (1.) HEARD the learned counsel for both the parties.
(2.) THIS revision petition was filed against the order passed by the Rajasthan Tax Board on 14. 9. 98 in the matter of C. T. O. Jalore vs. M/s. Nakoda Granite Industries, Jalore. On 23. 06. 1994 inspection was conducted at the premises of M/s. Choudhary Transport Company, Jalore at which 105 packets containing the granite tiles were found without bill, bilty and other documents. On enquiry it was revealed by the Manager, Transport Company that though goods have been brought from the godown of the respondent firm those goods were not put in transit because necessary documents have not been received by him. A notice was served on the consignor-respondent as well as on the Transport Company. The respondent produced the bill dated 21. 6. 94 in favour of the consignee at Bombay. It was explained by Bhawani Singh of M/s. Nakoda Granite Industries that soon after he made the bill he had to leave for Jodhpur and the bill remained in the pocket of his Coat and by mistake could not be delivered to the Transporters simultaneously. He also explained that after delivery of the goods to the transporters he had instructed the transporter to urgently carry the goods. Since requisite documents could not be delivered to him and in the absence of the requisite papers he did not transport the goods. On his return from Jodhpur he found that order has been cancelled and goods were not now required to be carried to the consignee. Meanwhile goods were also taken in custody by the Assessing Officer. He requested for the release of goods to him. THIS explanation was not accepted by the Commercial Taxes Officer, Jalore Circle. He levied penalty of Rs. 17,011/-u/s. 22a (7) of the Rajasthan Sales Tax Act. On appeal the Deputy Commissioner found by considering the evidence before him that had the transaction was for avoiding and evading the goods would have been placed in transit immediately but would not have retained by the transporter for the purpose of awaiting the delivery of the requisite documents. He also found that the Assessing Officer has not properly made enquiry about the genuniness and correctness of the bill produced by the consignee. In absence of requisite mens rea about evasion or avoidance of tax and proper enquiry into the genuniness of documents which was produced after goods were seized, the penalty levied cannot be sustained merely on the basis that at the godown of the transporters when the goods were seized they were not accompanied with requisite documents. On further appeal the Rajasthan Tax Board affirmed the order of Deputy Commissioner (Appeal ). After referring to the material on record no intention for avoiding and evading in the part of assessee was inferred and it concurred with conclusion of the Deputy Commissioner that the Assessing Officer has not conducted proper enquiry into the relevant question. It opined that the penalty ought not to be levied unless a case of intention of the tax avoidance or evasion is made out. It further held that as the goods were found at transporter were not put actually in transit, no case should have been made out u/s. 22a (3) in respect of goods which were not carried by transporter, unless they were accompanied with requisite document. Learned counsel for the revenue urges that Tribunal was not right in finding that no order u/s. 22a (7) could be made when the goods were found at the godown of transporter where delivery was given to the transporter and the goods have been carried from the godown of the consigner to the transporter's godown they ought to be treated in transit. However, in the facts and circumstances of the present case, I am of the opinion that this question is academic. Assuming that goods were in transit when inspected. There is concurrent finding of the appellate revenue authorities that lapses on the part of consignor in delivering the goods to transporters without the requisite document and failure of the transporter to produce requisite documents required to accompany the goods in transit at the time of inspection was not in furtherance of any intention to evade or avoid the payment of tax. In this connection contention of the learned counsel for the revenue is that the offence has been completed where the transporter was in possession of the goods to be transported but he was not in possession of requisite documents. In such event it was lawful for the assessing authority to levy penalty, no further enquiry was necessary for the purpose of leavy of penalty. This contention of the learned revenue cannot be accepted. Undoubtedly breach of the statutory provision is complete when goods are in transit, and the requisite document at the time of checking are not produced. But at the same time for this breach of statute levy is not automatic. Before levying penalty, the person affected has to be given opportunity of hearing, which means an effective hearing which may result in favour of the person who has been after hearing, if he is able to satisfy the authorities that it is not a case for levy of penalty. In this connection reference may be made to the decision of the case Mahaveer Conductors vs. Assistant Commercial Taxes Officer, (1) which was referred to in the order of Dr. Commissioner (Appeals ). In the aforesaid case about the contours of provision the levy for penalty u/sec. 22a (7) it was said:- ``when the law requires giving of an opportunity to a person against the proposed levy of penalty, it is not mere empty formality to make an order, as as a matter of course, as foregone conclusion but it implies that person against whom the action is proposed has a fair opportunity to show that no penalty can be levied in the facts and circumstances of the case. "
(3.) IT was further held after refering to the provision of the Act that: " these provisions are indicative of the fact that penalty is to be levied where the breach committed or the default for which penalty is levied, is related and has a rationalnexus with the purpose for which the provisions of Section 22a of the Act have been enacted, namely, that the breach must be related to envasion or avoidance of tax. In my opinion mens rea or deliberate defiance of the provision with intention to evade or avoid liability of tax that may arise as a result of the transaction must be a necessary ingredient before penalty could be levied. " As both the appellate authorities have found that no such intention exists in the facts of the case the ratio descandi of the above case apply in the present case. Moreover definition of `goods in transit' has to be read in the context of enquiry. Where a transporter to whom possession of goods is handed over for transportation to a destination, without delivering the requisite papers, and the transporter makes it clear that he shall not put the goods in transit unless he receives the requisite documents, he cannot be said to have even accepted the delivery of goods for transport without documents much less to have put the goods in transit at all in breach of Sec. 23a (7), merely because goods have been found at his premises. By his conduct the transporter has made it clear that he is not acting as transporter in breach of statutory provision. ;