Rajasthan High Court - Jaipur
Lalji Mulji Transport Company vs State Of Rajasthan And Anr. on 10 April, 2002
Equivalent citations: RLW2003(2)RAJ1237, 2002(5)WLN561
Author: N.N. Mathur
Bench: N.N. Mathur
JUDGMENT Mathur, J.
1. By way of these petitions, petitioners have challenged the constitutional validity of Sub-sections (4), (8), (10) and (11) of Section 78 of the Rajasthan Sales Tax Act 1994, hereinafter referred-to as "the Act" and, as such, they are disposed-of by this common order. Prayer has also been made to quash detention notice/order under Section 78(4) and (8). A further prayer has been made to quash the penalty order, if any, passed during the pendency of the writ.
M/s. LALJI MULJI TRANSPORT COMPANY (324/2002) :
2. A brief resume of facts would help in focusing attention on the dispute involved in these writ petitions. The petitioner Company is a transport Company having its office at Mumbai. It booked goods viz; Supari from M/s. Malabar Trading Company, Maloth for delivery to another registered dealer M/s. Sai Traders of Delhi. It carried invoice No. 431 dated 4.1.2002 of M/s. Malabar Trading Company, Maloth showing trade of Supari to M/s. Sai Traders. It also carried Bilty No, 32348 dt. 4.1.2002 of petitioner M/s. Lalji Mulji Transport Company showing despatch of Supari from M/s. Malabar Trading Company, Maloth to M/s. Sai Traders of Delhi through truck No. HR-55/5769. The said truck proceeded from Maloth, Mangalore (Karnataka) towards Delhi. The Assessing Authority on receiving information that the truck containing Supari was being brought within the State with fake bills and bilties and, therefore, the second respondent viz; the Assistant Commercial Taxes Officer, Ward-11, Nimbahera intercepted and checked the petitioner's truck on 12.1.2002 at the checkpost of Nimbahera. The driver of the vehicle produced documents viz; bill dated 4.1.2002 for Rs. 5,01,600/-and bilty No. 32348 dated 4.1.2002 bearing seals of transit checkpost. The second respondent suspected the genuineness of the Central Sales Tax/L.C. Number given in the bill. The driver of the vehicle Was confronted with the situation. As per the say of the Assessing Authority, the driver Incharge produced a fax copy of the Registration Certificate of M/s. Sai Traders, Delhi. The driver and the Assessing Authority had a talk with the dealer viz; M/s. Sai Traders at Delhi. The dealer pleaded his absolute ignorance about such goods being brought to his place. It is also averred by the Assessing Authority that the driver made the statement to the effect that he was carrying goods in the transit from Ichhlakarni to Delhi. He further stated that he could even unload the goods anywhere in the State of Rajasthan as per the directions of the dealer or the transport Company. The say of the petitioner is that provisions of Section 78 do not apply to its case as the goods were merely intended to pass through the State of Rajasthan for which transit pass was supposed to be issued in terms of Section 80 of the Act. Inspite of the fact that the relevant documents were immediately produced which clearly shows that the consignor as well as the consignee were registered dealers, the second respondent has unlawfully seized the goods and refused to release the truck causing undue harassment and pecuniary loss. It is submitted that the mistake in giving the R.C. Number of purchasing dealer was a bonafide clerical error on the part of a clerk of office of the consignor. Since C.S.T./L.C. Number of the consignee on the bill produced was fake and M/s. Sai Traders disowned it being consignee of the goods, the Assessing Authority formed an opinion that the goods were being brought on the strength of the fake documents. Accordingly, he issued a notice under Section 78(5) of the Act for violation of the provisions of Section 78(2) of the Act. Another notice under Section 78(8) of the Act was issued to the petitioner transport Company. The petitioner submitted a representation i.e. reply to the notice under Section 78(8) of the Act. At this stage, petitioner approached to this court seeking direction for the release of the truck and the goods and also to quash the notice under Section 78(4) and (8) of the Act. This Court by order dated 23.1.1993 issued a short notice to the department. Subsequently, it has been brought to our notice that the assessment proceedings had concluded on 20.1.2002 vide Annex. R/1.
M/S GILL SANDHU TRANSPORT CO. (698-02) : SHRI INDRAPRIT SINGH (690-02) :
The petitioner is a transporter having the business in the name of M/s. Gill Sandhu Transport Company and office at Delhi. M/s. N.K. Traders, Bangalore booked goods viz; plastic scrap worth Rs. 56,160/- for delivery at United Plastic Industries, Delhi. The petitioner's truck bearing No. HR 38/D-5084 was intercepted and checked by the second respondent i.e. Assistant Commercial Taxes Officer, Pratapgarh at the check-post Jalia Pipalia, Nimbahera. The driver of the truck namely Raghuvir Singh Under Section 72(2) produced one bill No. 376 dt. 1.12.2001 issued by M/s. N.K. Traders, Bangalore in favour of United Plastic Industries, Delhi pertaining to loose plastic scrap mentioning cost price as Rs. 56,160/-. He also produced a bilty No. 880 dt. 2,12.2001 issued by M/s. Gill Sandhu Cargo Movers Pvt. Ltd. The name of the consignee was shown in the bilty as M/s. United Plastic Industries, Delhi. He aiso produced the challan No. 696 dt. 2.12.2001 issued by M/s. Gill Sandhu Cargo Movers Private Limited bearing truck No. KA/32- 1952 and also HR/38-5084. However, on inspection, it was found that the goods in transit was Supari and not the plastic scrap as disclosed in the bills, billies and the goods challan produced. According to the petitioner, goods viz; Supari were booked in the State of Kerala by a registered dealer M/s. K.T. Mohammed & Sons to another registered dealer M/s. S.K. Enterprises of Delhi. The truck No. KLS 8898 carrying Supari proceeded from Kerala, at Hyderabad where the Company belonging to the petitioner has an office, transported the goods viz; Supari to the truck No. HR/38- 5084 for onward transshipment to Delhi. The driver of the truck inadvertently brought the envelope containing the documents relating to the other truck for different goods viz; plastic scrap. However, at the time of checking by the second respondent on 7.12.2001, he truthfully mentioned that the goods were Supari and he produced the documents. When the second respondent pointed out the discrepancy, the driver reported the matter to the Delhi Office where upon enquiry from Hyderabad office, the mistake of driver was realized and immediately the relevant documents viz; bill of the seller, billy etc. were obtained on fax and submitled to the second respondent. According to the petitioner, it was a bonafide mistake of the driver. On physical verification of the goods, it was found that there were 130 bags of Supari with the weighment of 9100 kgs. The Assessing Authority being satisfied of the foul play issued a notice under Section 78(5) of the Act. A reply to the said notice was submitted by the petitioner. The Assessing Authority arrived at a finding that the documents did not relate to the goods in transit and the photostat copies of the documents produced later-on was only an after thought and concoction. The Assessing Authority imposed a penalty to the tune of Rs. 1,91,000/-on the value of the goods determined at Rs. 6,37,000/-. Since the dealer had not disclosed true information with regard to the consignor and the consignee, the Assessing Authority in exercise of powers Under Section 78(11) also assessed a liability of tax and surcharge under the Rajasthan Sales Tax quantified at Rs. 25,480/- and Rs. 3822/-respectively. The Assessing Authority also issued a notice under Section 78(8) of the Act. After giving an opportunity of hearing and considering the reply, the Assessing Authority has passed the order imposing the penalty i.e. 30% of the value of the goods by order dated 20.12.2001. Petitioner has preferred an appeal against me said order before the Deputy Commissioner (Appeals). The Assessing Authority has also found that the value of the goods shown in the bill was lesser than the fair market price of such goods. On enquiry, it has also revealed that the value of the goods viz; Supari in the State of Rajasthan was Rs. 70/- to Rs. 85/- per kg., whereas in the State of Karnataka, it is Rs. 76/- to Rs. 90/- per kg.
3. Though the constitutional validity of Sub-section (5) of Section 75 of the Act which is the soul of Section 78 has been upheld by the Apex Court, still in the instant petition, the petitioner has challenged the constitutional validity of Sub-sections (4), (8), (10) and (11) of the Act. Mr. Vineet Kothari, learned counsel for the petitioner, submits that the rigour of certain provisions of Section 78 of the Act has made a transporter suffer in the hands of the highhanded behaviour of the authorities of the Commercial Taxes Department. Thus, according to Mr. Kothari, the provisions are draconian in nature, inasmuch as the provisions are being utilized for the purpose of mopping up of additional revenue and that consequently, the penalties are imposed in situations which are totally unjustified. Relying on a decision of the Apex Court in Hindustan Steel Limited v. State of Orissa, 1970 (25) STC 211 (SC), it is submitted that a levy of penalty is wholly unjustified, unless it is demonstrated that there is a definite intention to evade the law; that the conduct is contumacious and that the authority is satisfied that the party would have, but for detection achieved some illegal benefits. It is further submitted that a technical infringement such as non-production of documents on the first occasion namely at the point of checking would only be a procedural technical infringement and that it should not call for a penalty. In alternate, it is submitted that even if it is viewed as technical infringement, some nominal penalty would be justified. Learned counsel has also placed reliance on a decision of the Karnataka High Court in Larsen and Toubro Limited v. Additional Commissioner of Commercial Taxes (2001 (124) STC 321 (Kar).
4. With equal and matching vehemence, Mr. Sangeet Lodha learned counsel for the department, has contended that the evasion of tax has become a chronic disease and this has adversely affected the State revenue obviously against the public interest. Thus, unless an element of fear is introduced in so far as necessary and unless the consequence of breach turns into a penalty of sufficiently effective dimensions, there would be no real method of ensuring compliance. Learned counsel has stoutly refuted the allegations levelled by the petitioner that the powers vested in the officers, who man the checkpost, are utilized for the purpose of mopping up of additional revenue. It is submitted by Mr. Sangeet Lodha that the Government and its officers are aware of this fact that the provisions of Section 78 of the Act can not be used as revenue yielding measure but to ensure compliance. The penalty aspect only acts as a deterrent. Explaining the Scheme, it is submitted that where the goods are moved from one place to another with the relevant documents, there is no question of any harassment but there are persons like the petitioners, who have always been evolving some or the other method to evade the tax and they approach to the Court and try to arouse sympathy. Mr. Lodha has specifically referred to the petitioner Mr. Gill Sandhu Transport Company, which has a history of tax evasion. He has referred to a decision of this Court in Gill Sandhu Transport Company v. State of Rajasthan,1991 (10) RTJS 335. In the similar circumstances on earlier occasion also, the same petitioner was found indulging in tax evasion. It is also submitted by Mr. Lodha that by no stretch of imagination, the fake L,C. Number in the bill can be said to be a bonafide clerical error. According to him, it is a very ingenious attempt to avoid payment of tax by making it appear as it it was an innocent inadvertent act. It is further submitted that the controversy raised in the instant petition is no more res integra after the decision of the Apex Court in State of Rajasthan v. D.P. Metal, 2001 (124) STC 611 (SC), still the constitutional validity of some of the provisions has been challenged only with a view to avoid statutory alternate remedy.
5. Before dealing with the contentions advanced, it may be apposite to refer the relevant provisions of the Act. Chapter VIII of the Act sets out provisions f.or inspection, search, seizure and anti evasion. Section 77 deals with the power of assessing officer or any other authority duly empowered to make entry in the place of business, inspection and seizure of accounts and goods of dealer. Section 78 deals with the inspection of the goods while in movement and establishment of checkposts. Section 79 provides for establishment of certain checkposts on contract basis. Section makes provision of transit pass for goods in transit passing by road through the State. On repeal of Rajasthan Sales Tax Act 1954, the provisions of Section 22-A, which provided for establishment of checkpost or barrier and inspection of goods while in movement, have been incorporated in Section 78 of the new Act i.e. Rajasthan Sales Tax Act, 1994. Section 22-A (7) was the provision which enabled the State Government to impose penalty in event of person in charge of the goods not producing mandatory documents at the time of check or giving false declaration, has now been incorporated in Section 78(5). It would be useful to read Section 78 in entirety, which is extracted as follows :
"78. ESTABLISHMENT OF CHECK-POST AND INSPECTION OF GOODS WHILE IN MOVEMENT (1) The Commissioner may, with a view to prevent or check avoidance or evasion of tax, by notification in the Official Gazette, direct the setting up of a check-post at such place and for such period as may be specified in the notification, and every officer or official who exercises his powers and discharges his duties at such check-post by way of inspection of documents produced and goods being moved, shall be its Incharge.
The driver or the person incharge of a vehicle or carrier or of goods in movement shall,-
(a) carry with him a goods vehicle record including "challans" and "billies", bills of sale or despatch memos and prescribed declaration forms;
(b) stop the vehicle or carrier at every check-post set up under Sub-section (1);
(c) produce all the documents including prescribed declaration forms relating to the goods before the Incharge of the check-post.'
(d) give all the information in his possession relating to the goods; and
(e) allow the inspection of the goods by the Incharge of the check-post or any other person authorised by such Incharge.
EXPLANATION :- For the purposes of this chapter,-
(i) "vehicle or carrier" shall include any means of transportation including an animal to carry goods from one point to another point;
(ii) "goods" shall include animals also; and
(iii) "goods in movement" shall means,- (a) the goods which are in the possession or control of a transporting agency or person or other such bailee;
(b) the goods which are being carried in a vehicle or carrier belonging to the owner of such goods; and
(c) the goods which are being carried by a person.
(3) Where any goods are in movement within the territory of the State of Rajasthan, an officer empowered by the State Government in this behalf may stop the vehicle or the carrier or the persons carrying such goods, for inspection, at any place within his jurisdiction and the provisions of Sub-section (2) shall mutatis mutandis apply.
(4) Where any goods in movement, other than exempted goods, are without documents, or are not supported by documents are referred to in Sub-section (2), or documents produced appear false or forged, the Incharge of the check-post or the officer empowered under Sub-section (3), may,-
(a) direct the driver or the person incharge of the vehicle or carrier or of the goods not to part with the goods in any manner including by relransporting or rebooking, till a verification is done or an enquiry is made, which shall not take more than seven days;
(b) seize the goods for reasons to be recorded in writing and shall give a receipt of the goods to the person from whose possession or control they are seized;
(c) release the goods seized in Clause (b) to the owner of the goods or to anybody else duly authorised by such owner, during the court of the proceeding if adequate security of the amount equal to the estimated value of the goods is furnished.
(5) The Incharge of the check-post or the officer empowered under Sub-section (3), after having given the person incharge of the goods a reasonable opportunity of being heard and after having held such enquiry as he may deem fit, shall impose on him for possession or movement of goods, whether seized or not, in violation of the provisions of Clause (a) of Sub-section (2) or for submission of false or forged documents or declaration, (a) penalty equal to thirty per cent of the value of such goods).
(6) During the pendency of the proceeding under Sub-section (5), if anybody appears before the Incharge of the checkposl or the officer empowered under Sub-section (3) and prays for being impleaded as a party to the case on the ground of involvement of his interest therein the said Incharge or the officer on being satisfied may permit him to be impleaded as a party to the case; and thereafter, all the provisions of this section shall mutatis mutandis apply to him.
(7) The Incharge of the check-post or the officer empowered under Sub-section (3) may release the goods to the owner of the goods or to anybody else duly authorised by such owner.
(8) Where the driver or the person incharge of the vehicle or the carrier is found guilty for violation of the provisions of Sub-section (2), subject to the provisions of Sub-section (10), the Incharge of the check-post or the officer empowered under Sub-section (3) may detain such vehicle or carrier and after affording an opportunity of being heard to such driver or person incharge of the vehicle or the carrier, may impose a penalty on him as provided in Sub-section (5).
(9) The Incharge of the check-post or the officer empowered under Sub-section (3) may release the vehicle or the carrier on the payment of the amount of penalty imposed under Sub-section (8) or on furnishing such security as may be directed by such Incharge or Officer.
(10) Where a transporter, while transporting goods, is found to be in collusion with a trader to avoid or evade tax, the Incharge of the check-post or the officer empowered under Sub-section (3) shall detain the vehicle or carrier of such transporter and after affording him an opportunity of being heard and with the prior approval in writing of the Deputy Commissioner (Administration) having jurisdiction, may confiscate such vehicle or carrier.
(11) If a transporter fails to give information as required from him under Clause (d) of Sub-section (2) about the consignor, consignee or the goods within such time as may be specified or transports the goods with forged documents, besides imposing the penalty under Sub-section (5), it shall be presumed that the goods so transported have been sold in the State of Rajasthan by him and he shall be deemed to be a dealer for those goods under this Act.
(12) The provisions of this Act shall for the purpose of levy, collection and assessment of tax, determination of interest, payment and recovery of tax and interest, appeal, review or revision, apply to the transporter deemed to be a dealer under Sub-section (11)."
6. Thus, with a view to prevent evasion of tax, goods while in movement, Sub-section (1) of Section 78 enables the Commissioner to set up check posts anywhere within the territory of the State. Sub-section (2) casts a duty on the driver or the person incharge of the vehicle or carrier or of goods in movement to stop the vehicle or carrier on every check post set up under Sub-section (1) and to carry with him goods vehicle record including challans and bilties, bills of sale or despatch memos and prescribed declaration forms and further to furnish all such informations in his possession with respect to vehicle and the goods, as and when called upon to do so. Explanation added to Sub-section (2) separately explains a "vehicle or carrier" and "goods in movement". Sub-section (3) enables an authorised officer to stop the vehicle for inspection anywhere within the territory of the Stale. Sub-section (4) of Section 78 of the Act provides enquiry as to verification of the documents pertaining to goods in movement. In case of goods other than exempted goods which are in movement are found to be without document or are not supported by the documents referred to in Sub-section (2) or the documents produced are false and forged, then under Sub-section (4), the incharge of the check post or the empowered officer may direct non-parting of the goods till the verification is done or an enquiry is made or seize all goods after recording reasons for doing so or release the seized goods to the owner or anybody authorised by him, if adequate security of the amount equal to the estimated value of the goods is furnished. The legislature has provided the outer limit of period of enquiry i.e. not more than seven days. While Sub-section (5) provides for enquiry from incharge of goods, with respect to documents referred to in Sub-section (2), Sub-section (8) provides enquiry from incharge of the vehicle pertaining to documents referred to in Sub-section (2). Sub-section (5) provides mandatory levy of penalty equal to 30% of the value of goods for possession or movement of goods in case of violation of Clause (a) of Sub-section (2) of Section 78 of the Act or for submission of false or forged documents or declaration. The rule embodied the rule of natural justice inasmuch as such penalty can not be levied without giving reasonable opportunity of being heard and holding such enquiry as the incharge officer so empowered, may deem fit. Sub-section (6) permits a person having interest therein to get himself impleaded. The incharge of the check post or the officer empowered under Sub-section (3) may release the goods to its owner or to anybody else authorised by him under Sub-section (7) or to release the vehicle or carrier on payment of amount of penalty imposed under Sub-section (8) or on furnishing such security as may be directed under Sub-section (9). Sub-section (8) enables the incharge of the check post or the officer empowered under Sub-section (3) to detain a vehicle carrying the goods in movement regarding which the driver or the person in charge has been found guilty in violation of the provisions of Sub-section (2). This excludes the case falling under Sub-section (10) i.e. the case of collusion between the transporter and the trader. This provision also enables the assessing authority to levy penalty on incharge of the vehicle upto 30% of the value of goods, but the provision is discretionary unlike Sub-section (5), however such a penalty can not be imposed without giving opportunity of hearing to incharge of the vehicle. Sub-section (10) deals with the cases of collusion between the transporter and the trader. It empowers the incharge of the check post or the officer empowered under Sub-section (3) to detain the vehicle or carrier beyond seven days and to confiscate in case of collusion between the transporter and the trader to avoid or evade tax, after giving the opportunity of being heard and prior approval in writing of the Deputy Commissioner (Administration) having jurisdiction. This provision alongwith Sub-section (11) has been inserted w.e.f. 14.5.1999. Sub-section (11) provides that in a case where the transporter fails to give a minimum information as to who is the consignor and the consignee of the goods in movement, there shall be a presumption that the goods so transported have been sold and he shall be deemed to be a dealer for those goods under the Act. .
7. In State of Rajasthan v. D.P. Metals (supra), the Apex Court while examining the constitutional validity of Section 78(5) of the Rajasthan Sales Tax Act found that the challenge to the vires of Section 22-A and 22-B of the Rajasthan Sales Tax Act, which was the precursor to the present Section 78 of the Act of 1994 was repelled in various cases being Indian Roadways Corporation v. State of Rajasthan and Sarna Transport Corporation v. State of Rajasthan. The Court also observed that Sections 22-A and 22-B of the Rajasthan Sales Tax Act, which were specifically challenged in Indian Roadways and Sarna Transport Cases (supra) were upheld and the said provisions are pari materia with the new Section 78 of the Act of 1994. Infact, the reading of paras 21, 22 and 23 of the judgment of the Apex Court in State of Rajasthan v. D.P. Metal's case (supra) clearly shows that it is not open for the petitioner to assail the validity of any of the sub sub-sections of Section 78 of the Act of 1994. It is settled law that once the validity of a provision has been upheld than the same is not open to assail afresh on any other ground. It will be profitable to extract paras 21, 22 and 23 of the judgment of the Apex Court as follows :
"21. The provisions of Sections 22-A and 22-B of the Rajasthan Sales Tax Act, 1954, were the precursor to the present Section 78 of the 1994 Act. The validity of Section 22-A and other connected provisions were impugned in Writ Petition Nos. 1555-56 of 1983 in Indian Roadways Corporation v. State of Rajasthan. By a short order dated April 23, 1986 the validity of these provisions were upheld in the following words :
"We have explained in Sodhi Transport Co. v. State of U.P. (1986 (62) STC 381 (SC); 1996 (2) SCC 486) decided on March 20, 1996, the object of establishing check-posts and introducing provisions in the sales tax law of a State which would facilitate inspection of goods which are carried from one State to another through a third State. In the above-mentioned decision, we have upheld the provisions of Section 28-B of the Uttar Pradesh Sales Tax Act, 1948 and the rules made thereunder. For the same reasons, we uphold the provisions of Sections 22-A and 22-B of the Rajasthan Sales Tax Act, 1954 and the Rules 61, 62, 62-A, 62-B and 63 and forms 18-A and 18-B of the Rajasthan Sales Tax Rules, 1955. These writ petitions are disposed of accordingly. There will be no order as to costs."
22. Yet another challenge to the vires of Sections 22-A and 22-B of the Rajasthan Sales Tax Act was made but was repeiled in Civil Appeal No. 152 of 1990 in Sarna Transport Corporation v. State of Rajasthan by an order dated July 23, 1996 which reads as follows :
"The writ petition that the appellants filed in the Rajasthan High Court sought to challenge the vires of Sections 22-A and 22-B of the Rajasthan Sales Tax Act, 1954. The writ petition was rejected.
The challenge to these sections has been repelled by this Court by its order dated April 23, 1986 in Writ Petition Nos. 1555-56 of 1983 - Indian Roadways Corporation v. State of Rajasthan.
Mr. Puri, learned counsel for the appellants, submitted that, nonetheless, an order should be made in terms of an interim order made by this Court in some matters, There is no prayer for such relief in the writ petition that was filed before the High Court. Secondly, that was an order pending the disposal of the Civil Appeals that were then before this Court. Such an order cannot, therefore, be passed in this matter.
The appeal is dismissed. No order as to costs."
23. From the aforesaid decisions, it would be clear that the consistent view of this Court since the case of Sodhi Transport Company's case (1986) 62 STC 381 (SC); (1986 (2) SCC 486) has been that provisions similar to Section 78(5) have been held to be within the legislative competence of the State. Infact, validity of Sections 22-A and 22-B of the Rajasthan Sales Tax Act which was specifically challenged in Indian Roadways case (S.P. Nos. 1555-56 of 1983 decided on April 23, 1986) and Sarna Transport case (C.A. No. 152 of 1990) decided on July 23, 1996) were upheld by this Court and the said provisions are in pari materia with the new Section 78 of the 1994 Act."
8. Thus, it is evident that validity of Section 22-A of the Act of 1954 in Indian Roadways Corporation v. State of Rajasthan, Wrti Petition 1986 Nos. 1555-56 and in the matter of Rajdhani Express Transport Company v. State of Rajasthan, and further Sarna Transport Corporation v. State of Rajasthan , Special Appeal No. 152/90, has been upheld which is in pari materia with Section 78 of the Act of 1994. The validity of the said provision has also been examined and upheld by the Supreme Court in Gill Sandhu Haryana Transport Company v. State of Rajasthan. Thus, infact the entire controversy stands concluded after the decision of this court in D.P. Metals' case (supra).
9. Be that as it may, we have given fresh look to Sub-sections (4), (8), (10) and (11) of Section 78 of the Act of 1994. Challenging the constitutional validity of Section 78(4), it is contended by Mr. Kothari that the provision to detain a vehicle merely for the purpose of verification of documents for a long period of seven days is arbitrary. It is submitted that in absence of any guidelines, the provision is likely to be misused and may breed corruption. We are unable to agree with the submission of the learned counsel. Sub-section (4) of Section 78 provides an outer limit for holding an enquiry in a case where the goods in movement are without documents or not supported by the documents referred-to in Sub-section (2) or documents produced, appear false or forged. If the incharge of the vehicle of the goods produces the requisite documents, there is no question of detaining a vehicle even for a very short period. The maximum period of seven days has been provided for the convenience of transporters. Often, the parties ask for time to produce the relevant documents and they are used to take much more time. In view of this, the legislature has provided the outer limit for the enquiry. As regards the charge of breeding corruption, it is settled law that possibility of misuse of provision cannot be a ground to hold a provision unreasonable. Reference is made to Mafatlal Industries Ltd. v. Union of India, 1997 (5) SCC 536. Thus, Sub-section (4) of Section 78 can not be held to be unjust or arbitrary to declare the provision ultravires of the Constitution of India.
10. The constitutional validity of Sub-section (8) of Section 78 is challenged on twin grounds firstly it gives an arbitrary power to the concerned authority to detain the vehicle even after seven days, as such, it somehow only serves the purpose to compel the transporter to pay the huge penalty and secondly levy of penalty under Sub-section (8) amounts to double penalty i.e. 30% under Sub-section (5) and again 30% under Sub-section (8), which comes to 60%. We are unable to agree with the submission of the learned counsel. The scheme of Section 78 shows that levy of penalty under Sub-sections (5) and (8) are on different persons. While under Sub-section (5), the penalty is on the incharge of goods evading tax, the penalty under Sub-section (8) is on the driver or the transporter, in case of violation of Sub-section (2). Further levy of penalty under Sub-section (8) upto 30% of the value of goods is not mandatory, as unlike word 'shall' used in Sub-section (5), the word used in Sub-section (8) is 'may'. Thus, under Sub-section (8), there is discretion vested with the assessing authority in the matter of levy of penalty. As regards detention of vehicle, Sub-section (8) is required after enquiry under Sub-section (5). For all practical purposes, such enquiries are almost simultaneous. If the parties co-operate with the enquiry, vehicle is not required to be detained for long. It may further be noticed that Sub-section (9) provides a provision for release of vehicle during such enquiry on furnishing such security as may be directed by such incharge or officer. Thus, we hold the Sub-section (8) intravires of the Constitution.
11. As regards Sub-section (10), it is submitted by the learned counsel that while the Commissioner has not issued appropriate notification under Section 80(3) of the Act for issuing of transit pass, the rigor of provisions of Sub-section (10) of confiscation of vehicle is being given effect-to. It appears that the learned counsel has challenged the validity of this provision only for the sake of challenge. In the instant case, this provision has not been invoked. In our view, there is nothing wrong in the provision, as this has been enacted to provide a deterrent provision to check the serious cases of evasion of tax where there is a collusion between the trader and the transporter. The legislature has provided two safeguards firstly the opportunity of hearing to the party concerned and secondly, the approval of the Deputy Commissioner (Administration). It is well settled that non-arbitrariness is the essential facet of Article 14 pervading the entire realm of State action. The audi alteram partem is the antithesis of arbitrariness. Procedural safeguards of requirement of natural justice is provided. We may usefully refer the decision of the Apex Court in Basudeo Tiwary v. Sido Kanhu University, 1998 (8) SCC 194. Accordingly, we uphold the constitutional validity of the provision.
12. As far as the challenge to Sub-section (11) is concerned, when the driver of the incharge of the vehicle or the goods is not in a position to give the details of the consignee and the consignor, the only conclusion can be drawn is that the person carrying goods inside the State, is a dealer of the goods and he has brought for the purpose of sale within the State. Therefore, in our view, the provision is intravires of the Constitution of India.
13. From the above discussion, it clearly emerges that Section 78 of the Act has been enacted with a view to check evasion of tax by transporters who are found carrying goods with fake bilties, incomplete documents and under suspicious names. The constitutional validity of such provisions has been upheld by the various decisions of the Apex Court. It is now realized that unless an element of fear is introduced in so far as is necessary and unless the consequence of breach turns into penalty of sufficiently effective measures, there shall be no real method of ensuring compliance. It will not be correct to protect a tax evader saying that there is absence of mens rea. The Apex Court in D.P. Metals' case (supra) has rejected the submissions regarding absence of mens rea by observing that the submission of false or forged documents or declaration at the check post or even thereafter can safely be presumed to have been motivated by desire to mislead the authorities. The Court further observed that hiding the truth and tendering falsehood would per se show existence of mens rea, even if required. On the question of mens rea, our view that is has no application in fiscal statute is fortified by decision of the Supreme Court in R.S. Joshi v. Ajeet Mills, AIR 1977 SC 2279. It is settled law that provisions to check evasion of sales tax are within the legislative competence of the State legislature under Entry 54 of List II of 7th Schedule to the Constitution of India. Thus, the provisions to make imposition of tax efficacious or to prevent evasion thereof, are within the legislative competence of the State legislature. Thus, the plain and simple scheme of Section 78 is that the vehicle passing through the State of Rajasthan carrying goods to be delivered in another State and carries the documents as referred in Section 78(2) and produces at the check post or anywhere else where a person authorised ask him to do so, if it is done honestly and faithfully, there is absolutely no problem. However, if a transporter or a trader is entering into an adventurism with a view to evade tax, he must be ready to face the consequence of penalty at the rate of 30%, seizure of vehicle and in aggravated case, the confiscation of the vehicle. The provisions cannot be said to be arbitrary, as they provide full opportunity of hearing to the parties affected. The Sales Tax Act also provides provision of appeal and review. The requirement of the laws is meant to be strictly construed particularly in areas of evasion of tax. We can not lose sight of the fact that often there are attempts to avoid statutory obligation or requirement for oblique reason. An undue indulgence and leniency in favour of the tax evaders on technical or misplaced sympathetic grounds leads to serious consequences affecting the revenue and, as such, development and security of the State. We are not oblivious of the fact that the penalty provisions cannot be used as a revenue yielding provision. The object of the penalty provision is to ensure compliance in the larger public interest. We are also conscious of the fact that in such a situation, a trader or the transporter is also not unnecessarily harassed. If, in a given case, it is found that the provision has been misused by the authority, sufficient safeguards are provided under the statute and the Constitution. But a statutory provision cannot be struck down only on apprehensions or hypothetical grounds. Thus, we hold the entire provisions of Section 78 of the Act intravires of the Constitution.
14. We are not entering into the merits of the case in view of the efficacious alternate statutory remedy available under the Rajasthan Sales Tax Act. Petitioners are relegated to such remedy.
15. Consequently, we find no merit in all the three writ petitions and they are dismissed. Keeping in view peculiar facts of the case, we direct that in case, any of the petitioners files appeal within a period of two weeks from today, the Appellate Authority shall entertain the same without objection to limitation and insistence on depositing 10% pre deposit. No order as to costs.