CADBURY INDIA LTD. Vs. STATE OF M.P.

JUDGEMENT

(1.) Petitioner No. 1, M/s Cadbury India Limited is a company registered under the provisions of the Companies Act and have established a industrial unit at Malanpur, Growth Centre, district Bhind (hereinafter referred to as the Company). In this unit, the Company manufactures chocolates. It is the case of the Company that the factory was established at Malanpur on the basis of invitation extended by the Government of Madhya Pradesh arid certain benefits have been granted to the Company by the Government of Madhya Pradesh which includes exemption from payment of entry tax as per eligibility certificate, Annexure P/11 dated 13th November, 2001 for the period 17th November, 1997 to 16th November, 2002, so also, facility of deferment of tax payment under the Madhya Pradesh Deferment of Tax Rules, 1994 for the period up to 13th March, 2006. According to the Company for the purpose of manufacturing chocolates at their industrial unit in Malanpur, Cocoa Bean is the raw material, head office of the Company is situated in Mumbai, purchase the raw material is done by the office at Mumbai. The purchased raw material is then sent to M/s Dr. Writers Food Products Private Limited, Phaltan, district Satara, Maharashtra for converting the said beans into Low Moisture Cocoa Mass (hereinafter referred to as LMC). The arrangement with M/s Dr. Writers Food Product Limited is that they will send the consignment of LMC to the Company at Bhind. A consignment of LMC was sent on 26th August, 2002 through M/s Sandeep Transport Company (petitioner No. 2). The driver of the transporter was handed over all the documents, namely; Excise advice -cum -invoice No. 287 dated 26th August, 2002 copy of MTRs., and Form No.75 dated 28th August, 2002 bearing No. B:381x45. However, because of some mistake in the office at Mumbai and due to over sight, Form No. 75 was left in Mumbai but all other documents including Excise advice -cum -invoice and MTRs were sent along with the vehicle. Copies of these documents are filed as Annexure P/2 and Annexure P/3 respectively. It is stated that when truck No. MH04/P -6825 came to Gawadi Check Post in the State of Madhya Pradesh under the jurisdiction of Assistant Commissioner, Commercial Tax, Check Post, Gawadi, Sendhwa and when the vehicle was checked by the authorities at the check post on 26th August, 2004 and it was discovered that Form No. 75 was not available with the driver. Driver of the truck immediately contacted the office at Mumbai and informed about the same. The Form No. 75 was sent vide letter dated 31st August, 2002 and was submitted to the Assistant Commissioner, Check Post at Gawadi, copy of the same is filed as Annexure P/4. However, despite this, the Assistant Commissioner issued a show cause notice, Annexure P/5 and imposed penalty of Rs. 13.00 lacs under section 45(A) 12 of the Madhya Pradesh Commercial Tax Act, 1994 (hereinafter referred to as the Act). Being aggrieved by the order of imposing penalty, Company preferred a appeal before the Deputy Commissioner, Commercial Tax vide Annexure P/6. The appellate authority vide order dated 6th May, 2003 (Annexure P/7) remanded the matter back to the assessing authority for decision afresh. After remand, assessing authority passed orders on 29th July, 2003 (Annexure P/8) reducing the penalty from Rs. 13.00 lacs to 10.00 lacs. Against this order, revision petition was filed before the Additional Commissioner and the revisional authority vide impugned order, Annexure P/9 dated 25th August, 2004 has affirmed the order. It is the case of the Company that they have deposited amount of Rs. 13.00 lacs (Rupees thirteen lacs only). Inter alia contending that imposition of penalty is unsustainable and seeking quashing of the orders passed in the matter of imposing penalty and seeking refund of the amount, the Company has filed this petition.

(2.) Smt. Nandita Dubey, learned counsel for the Company taking me through the provisions of section 45 -A sub -section (7), (10) and (12) of the Act, thereof submitted that the purpose of imposing penalty is to check the evasion of tax and to punish a person who evades tax. According to Smt. Nandita Dubey, in the present case, there is no intention for avoiding tax. She pointed out that what was transported by the consignee was not a saleable product, it was only the raw material in the form of LMC which was to be used for manufacturing chocolates in the factory situated at Malanpur, therefore, the same could not be taxed. That apart, inviting my attention to the delivery challan, excise advice -cum -invoice, MTRs and other documents she points out that in all these documents the particulars of the material and other details are clearly mentioned. It was a case where because of oversight and carelessness, Form No. 75 did not accompany the consignment. The Form No. 75 was also produced and submitted within three days but the authorities have imposed the penalty which is unsustainable accordingly the learned counsel submitted that as there is no intention on the part of the Company to evade tax and there being no malice, a bona fide mistake technical in nature is not condoned and tax and penalty imposed without taking note of the totality of the facts and circumstances of the case. It is pointed out by her that under sub -section (7) of section 45 -A, three eventualities are contemplated which may entitle imposition of penalty. In the present case, the conditions stipulated in clause (a) to sub -section (7) is found to be breached and this being a technical breach, the authorities should have condoned the delay and should not have been imposed any penalty. Placing reliance on a judgment rendered by the Supreme Court in the case of M/s. Hindustan Steels Ltd. vs. State of Orissa, : AIR 1970 SC 253, Hardwari Mall & Sons vs. Assistant Commercial Tax Officer, Chichira Check Post and others, : (2006) 147 STC 27(Cal), Assistant Commercial Taxes Officer, Flying Squad IV, Jaipur vs. Gaurav Steels Ltd., : (2006) 147 STC 36 (Raj), Smt. Nandita Dubey submitted that in the facts and circumstances of the case, authorities concerned have acted in a arbitrary and unjustified manner in the matter of imposing penalty. Taking me through the reasons indicated by the revisional authority, appellate authority and the assessing authority and the purpose and import of imposing penalty, she submitted that action of the respondents in the present case is not just, fair and reasonable, and therefore, she seeks for interference in the matter.

(3.) Smt. Ami Prabal, Deputy Advocate General taking me through section 45 -A of the Act and other documents available on record emphasized that once a breach, statutory in nature is established, imposition of penalty is the discretion of the competent authority and the discretion having been exercised on the statutory breach being proved, this Court is not required to interfere in the matter. That apart, a preliminary objection is raised by the respondents with regard to territorial jurisdiction of this Bench to deal with the matter. It is stated that the cause of action for imposing penalty arose when the vehicle was checked in Gawadi check post under jurisdiction of Indore Bench and as the entire cause of action arose within the territorial jurisdiction of Indore Bench and as impugned order is passed by the authorities, i.e., Commissioner, Commercial Tax, Indore and Assistant Commissioner, Commercial Tax, Sendhwa, that being so, Gwalior Bench has no jurisdiction in the matter.