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CASE NO.: Appeal (civil)  896 of 2007

PETITIONER: Assistant Commissioner Anti Evasion Commercial Taxes, Bharatpur

RESPONDENT: M/s Amtek India Limited

DATE OF JUDGMENT: 22/02/2007

BENCH: Dr. ARIJIT PASAYAT & S.H. KAPADIA

JUDGMENT: J U D G M E N T (Arising out of SLP(C) No. 12528 of 2006)  

Dr. ARIJIT PASAYAT, J.

       Leave granted.

Challenge in this appeal is to the order passed by a  learned Single Judge of the Rajasthan High Court at Jaipur.   By the impugned order the High Court dismissed the revision  petition, filed by the appellant, and imposed cost of Rs.5,000/-  to be paid personally by the Commercial Tax Officer, Anti  Evasion, Bharatpur who passed the assessment order dated  14.9.2001.

Background facts in a nutshell are as follows:

       Penalty under Section 78(5) of the Rajasthan Sales Tax  Act, 1994 (hereinafter referred to as the ’Act’) was imposed on  the respondent (hereinafter referred to as the ’assessee’) on the  ground that at the time of checking of vehicle on 7.9.2001, the  documents produced showed that bill No.155 dated 29.9.2000  of M/s. Georg Fischer Disa Limited, Satyamangala Industrial  Area, Tumkur, Karnataka raised on the respondent-assessee  M/s. Amtek India Ltd., Biwadi along with delivery challan No.  5259 dated 3.9.2001 form No. ST-18A in which invoice No.155  was also mentioned and form No.ST -39 prescribed under  Karnataka Sales Tax Act and bilty of North Eastern Carrying  Corporation accompanying the said goods were produced for  verification. However, date of the said invoice No.155 dated  16.2.2000, was held to be of an earlier point of time than the  date mentioned in the delivery challan of 3.9.2001. Therefore,  the Assessing Authority held that said document was doubtful  and there was non-compliance with Section 78(2)(a) of the Act,  and imposed the penalty of Rs.1,36,200/- @ 30% of value of  goods on the respondent-assessee, the consignee or  purchaser.

According to the assessee, plant and machinery and  equipments purchased by respondent-assessee from the  consignor though purchased under invoice No.155 dated  16.2.2000 in which due excise duty and Central Sales Tax @  4% against C-Form was charged by the seller, but the goods  were consigned and received after the lapse of about one year.

But that cannot mean that invoice raised by seller-

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company was not genuine and, therefore, the penalty was not  justified. Both the Appellate Authorities i.e. D.C. (Appeals) as well  as Tax Board found the said explanation of the assessee  satisfactory and correct and, therefore, set aside the penalty  under Sec. 78(5) of the Act.  The revenue filed a revision  petition before the High Court under Section 86 of the Act on  the supposed question of law arising in the matter.  The High  Court found that as a matter of fact none arises.

In the Revision Petition filed, the correctness of views  expressed by the Appellate Authority i.e. the DC (Appeals) and  the Tax Board were questioned.  The High Court found that all  relevant documents were produced, the declarations issued by  the Sales Tax Authorities of both the States clearly established  that transit and transactions were perfectly genuine and there  was no reason for the Assessing Authority to hold the  document to be non-genuine so as to attract levy of penalty at  the rate of 30% of the value of goods under Section 38(5) of the  Act.  The High Court felt that the action of the authorities  cannot be countenanced and they cannot take the plea of good  faith.  The alleged good faith was not established and on the  contrary the action clearly indicated that the assessing officer  was bent upon levying the demand overlooking the genuine  documents.  Accordingly, the revision petition was dismissed  and costs were imposed.

Learned counsel for the appellant submitted that an  error of judgment should not be treated as a mala fide action  so as to warrant the severe criticism as done by the High  Court and also to warrant imposition of cost.

There is no appearance on behalf of the respondent in  spite of notice.

Whether an act has been done in good faith would  depend upon the factual scenario. In order to establish "good  faith", it has to be established that what has been imputed  concerning the person claiming it to be so, is true.

"Good Faith" according to the definition in Section 3(22)  of the General Clauses Act, 1897 means a thing, which is in  fact done honestly whether it is done negligently or not.

Anything done with due care and attention, which is not  mala fide is presumed to have been done in ’good faith’.

"Good Faith" is defined under Section 2(h) of the  Limitation Act, as ’good faith’- nothing shall be deemed to be  done in good faith which is not done with due care and  attention"

Dealing with a case under the Indian Limitation Act,  1963, this Court held that the expression ’good faith’ as used  in Section 14 means "exercise of due care and attention".  In  the context of Section 14, the expression ’good faith’ qualifies  prosecuting the proceeding in the court, which ultimately is  found to have no jurisdiction.  The finding as to good faith or  the absence of it is a finding of fact. [See Deena v. Bharat  Singh, (2002) 6 SC 336]

Section 52 of the Indian Penal Code, 1860 (in short ’IPC’)  emphasizes due care and attention in relation to "good faith".

In this case though the action of the concerned assessing

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officer, in overlooking the documents produced coming to the  conclusion about manipulation appears to be totally uncalled  for and without any reasonable basis. This is a case where the  officer should have been more careful and should not have  acted in a manner as if he was a bloodhound and not a  watchdog of revenue. It is unfortunate that in large number of  cases, orders totally bereft of rationality are being passed.   They do not in any manner serve public interest, much less  the interest of revenue.    

Therefore, while holding that the action of the Assessing  Authority was clearly unjustified, we direct deletion of the  direction for imposition of cost.  We, however, make it clear  that in future if any such action comes to the notice of the  Courts/Authorities, appropriate action shall be taken in  accordance with law and the observations made in this case  about lack of bona fide shall also be a factor to be taken note  of.   

The appeal is accordingly disposed of.