SUPERTRONIX Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) BY Order dated 26. 6. 1997, the learned Single Judge found that the validity of the unamended section was upheld in the case of sree HAJEE AHAMAD BAVA vs ASSISTANT COMMERCIAL TAX officer Learned Counsel for the petitioner relied the decision given in the case of STATE OF HARYANA vs SANTLAL and submitted that certain questions which have not been raised and considered in the previous decisions require consideration by the division Bench and accordingly the matters were referred to the division Bench by the order of the Hon'ble Chief Justice. All these petitions are disposed of by this common judgment since the questions involved are common. Validity of Section 28a (2) and 28a (4) as enacted by Karnataka Taxation Laws (Third amendment) Act, 1996 have been challenged as being violative of article 14, 19 (1) (g), 301 and 304 (b) of the Constitution of India and declare the same asked the learned Counsel for the petitioner not to argue individual cases in respect of levy of penalty. For the sake of convenience facts of M/s. Kanpha Labs are taken into consideration. The petitioner is dealing in drugs and medicines. The goods were coming from Maharashtra which were intercepted on 10. 5. 1997. Notice was issued to the driver. The executive officer of the petitioner firm appeared before the Check Post Authority and filed the objections. Since there was no seal of the Entry Check post on the documents produced, penalty was levied of Rs. 54,822/- under Section 28a (4) on 12. 5. 1997. Reply submitted was considered as evasive. Provisions of Section 28a (2) and (4) are as under: section 28-A (2) The owner in charge of a goods vehicle or a boat snail (a) Carry with him a goods vehicle record, a trip sheet or a log book as the case may be; and (b) carry with him a bill of sale or a delivery note obtained from the prescribed authority or such other documents, containing such particulars as may be prescribed, in respect of the goods other than those mentioned in sub-clause (c) carried in the goods vehicle or boat; and (c) carry with him in addition to a bill of sale, a delivery note obtained from such authority containing such particulars as may be prescribed, if the goods carried in the goods vehicle or boat are arecanut, cardamom, cashew, coconut, coffee, copra, edible oil including vanaspati, iron and steel, liquor, oil seeds, pepper, rubber, timber or such other goods as may be notified by the commissioner; and (d) produce the documents referred to in sub-clauses (b) and (c) before any officer-in-charge of check post or barrier Or any other officer as may be empowered by the State Government in this behalf and obtain seal of such officer affixed thereon, and in respect of a bill of sale, shall give one copy marked as original, to such officer and carry and retain with him the other copy until termination of movement of the goods; and (e) on entering the State Limits, report at the first situate check post or barrier and on leaving the State Limits report at the last situate check p9st or barrier and shall give a declaration containing such particulars as may be prescribed in respect of the goods carried in the goods vehicle or boat, before any officer-in-charge of the check post or barrier or any other officer as may be empowered by the State Government in this behalf. 28a (4) The officer incharge of a check post or a barrier or any other officer not below the rank of a Commercial Tax Inspector and not higher in rank than a Deputy Commercial Tax Inspector and not higher In rank than a Deputy Commissioner of commercial Taxes, in respect of any contravention of, or non-compliance with the provisions of sub-section (2) or (3) or (3-A)or (3-B), for which sufficient cause is not furnished, levy a penalty, which, - (a) shall not be less than one half of the amount of tax leviable and not exceeding the amount equivalent to the amount of tax leviable in respect of the goods under transport, if a dealer registered under the Act accepts that he is the consignor or consignee of the goods, as the case may be, (b) in cases other than those falling under Clause (a) shall not be less than double the amount of tax leviable and not exceeding three times the amount of tax leviable in respect of the goods under transport. Provided that,-i) where the amount of penalty leviable in more than the value of the goods, the amount of penalty leviable shall be restricted to such value; ii) no penalty shall be leviable on the goods under transport liable to single point tax under the Act, if the owner or person-in-charge of the goods vehicle or boat produces proof at the time of interception of the goods vehicle or boat that such goods had already been subjected to tax under this Act; iii) in respect of contravention of sub-section (3-B), where the penalty levied is not paid, the carrier or bailee or person in charge of the goods vehicle shall jointly and severally be liable to pay such penalty and such amount of penalty shall for the purpose of Section 13 be deemed to be an amount due under the Act. iv) before levying any penalty under this sub-section, the officer shall give the person-in-charge of the goods vehicle or boat or carrier, or bailee, or a dealer registered under the Act, as the case may be, a reasonable opportunity of being heard. Explanation.- Where the destination of the goods to be delivered in the State is not less than one hundred kilometers, from the check post or barrier or any other place at which the goods vehicle or boat is intercepted, reasonable opportunity of being heard shall be a period of not less than ten days. It is submitted that the provisions of Section 28a (2) can apply only in respect of intra state sale and not in respect of interstate trade. Reliance is placed in the judgment given in 16 STC 894; 60 stc 328; 83 STC 49; 89 STC 524; STRP 45/91 dated 24. 6. 1993; wp. ,no. 9422/94 dated 31. 3. 1994. It is submitted that in the case of HANRAJ BAGRECHA vs STATE of BIHAR it was observed by the Apex Court that the State cannot extend its territorial jurisdiction to interstate movement and therefore detention of goods and vehicle and initiation of penal proceedings are restrictions on the movement of goods between Maharashtra and Karnataka. No taxable event under the KST Act has taken place therefore the penalty which has been levied is dehors the law, Entry 54 List II of Seventh Schedule of the Constitution. It submitted that the Karnataka Act 15/96 received the asset of the Governor on

(2.) 8. 1996 and published in the Gazette on 5. 9. 1996. This provision imposes restriction on the movement of goods and impedes free flow of trade and commerce throughout the country which is guaranteed under Article 301 of the Constitution and places unreasonable restriction on the fundamental right to carry on trade and buy goods from any place and places throughout the country. The amendment has not received Presidential assent as required under Article 304 (b) of the Constitution. It is only the regulatory measures which could be imposed but restriction on the movement of trade and commerce cannot be put by the State Legislature. If the State intends to impose any restriction on movement of goods or freedom of trade and commerce, it has to do so by following the constitutional requirement of getting assent of President of India under article 304 (b) of the Constitution. The restriction must be reasonable and in public interest. Reliance is placed on the decision given in the case of HANSRAJ BAGRECHA vs STATE OF BIHAR (supra)and ATIABARI TEA CO, vs STATE OF ASSAM. It is also submitted that no rules have been framed by the State government and the Form 34 which is prescribed under the old law cease to operate after deletion of the old Section 28a (2) and thereafter no form is prescribed. Since there is no liability of tax under the KST Act, penalty cannot be levied as held in SAFEGUARD packaging vs STATE. The penalty has been levied as a matter of course in a routine manner. The provisions of Section 28a are not to levy confiscatory penalty on the petitioner for the technical default of driver or default due to circumstances beyond driyers control. The objections submitted are not taken into consideration. Learned Counsel for the petitioner while referring to the decision of Atiabari Tea Co Ltd. , has drawn our attention to the following observations: