VIJAI HOSIERY MILLS Vs. STATE OF RAJASTHAN

JUDGEMENT

(1.) THIS is a reference under section 15 (3a) of the Rajasthan Sales Tax Act, 1954 (which will hereinafter be referred to as "the Act"), by the Board of Revenue for Rajasthan, Ajmer, in pursuance of the order of this Court dated 30th September, 1969, passed in D. B. Civil Misc. Application (Sales Tax) No. 44 of 1969. The question that has been referred to us reads as follows : " Whether, after the amendment of section 5 of the Rajasthan Sales Tax Act by section 6 of the Rajasthan Amending Act (Act No. 13 of 1964), sales tax could be levied by the State of Rajasthan on the goods sold by the petitioner during the period from 14th May, 1964, to 31st December, 1964, by virtue of Notification, Excise and Taxation Department, No. F. 5 (40) FD (R & T)/63-XIII dated 2nd March, 1963, issued by the Government of Rajasthan and penalty could be imposed on it under section 16 (1) (i) of the said Act ?"

(2.) FOR a correct appreciation of the contentions advanced by the learned counsel for the parties, we may refer to a few facts giving rise to the reference. The petitioner, M/s. Vijai Hosiery Mills, is a registered dealer under the Act. The period for assessment under consideration is from 1st January, 1964, to 31st December, 1964. The assessee showed a turnover of Rs. 1,79,214 on account of sale of "banians", but did not deposit the tax at the time of filing the return on the ground that the sale of "banians" was exempt from payment of sales tax by virtue of Notification No. F. 5 (99)E&t/60 dated 26th March, 1962. The Commercial Taxes Officer, Circle B, Jaipur, however, did not accept the petitioner's contention and held that "banians" did not fall within the definition of the term "garments" but were a hosiery product and, consequently, liable to be taxed. He also levied a penalty of Rs. 10,752. 84, an amount equal to the amount of tax. Aggrieved by the order of the assessing authority, the petitioner filed an appeal before the Deputy Commissioner (Appeals), Commercial Taxes, Jaipur II, but was unsuccessful. Thereafter, the petitioner filed a revision application before the Board of Revenue for Rajasthan, Ajmer, but that too was dismissed. The petitioner then made an application under section 15 (1) of the Act to the Board for making a reference to this Court, but that application was not decided within the prescribed period. Consequently, the petitioner approached this Court under section 15 (2) of the Act and this Court by its order dated 30th September, 1969, required the Board to state a case and refer the question of law arising out of its revisional order. The question has already been extracted above.

(3.) HAVING come to the conclusion that there was no mala fide or mens rea on the part of the petitioner, we must hold that the taxing authorities were not justified in imposing penalty on the petitioner under section 16 (1) (i) of the Act. Hence, we answer the question of imposition of penalty in favour of the assessee, i. e. , in the negative. There will be no order as to costs. Reference answered accordingly. .