Muhammad Sair Ali, J.--Through this consolidated order we intend to dispose of C.A. 312, 313, 314, 315, 316, 317, 318, 319, 320, 321, 322, 323, 324, 325 and 326 of 2002 filed by registered persons against imposition of penalty as finally reduced by the learned Customs Excise and Sales Tax Appellate Tribunal, Lahore to Rs, 10,000/- in case of each appellant by way of their consolidated judgment dated 3.4.2002.
2. The appellants were charged and finally found to have received different sums of sales tax refunds on the basis of fake invoices ranging between Rs, 2057/- in case of M/s. Ramzan Majeed Weaving Factory, Faisalabad and Rs, 7241/- in case of M/s. Tayyab Weaving Factory, Faisalabad.
3. In the consolidated order in original recorded by Deputy Collector (Adjudication) Faisalabad dated 30.1.2002 it was observed that the respondents did not contest the charge. Before him it was contended that claim of these sums of refunds was only on account of lack of knowledge as regards the status of the suppliers and that if they had an intention to commit tax fraud, they would have claimed heavy amounts against fake invoices.
4. The adjudicating authority however, recorded the following consolidated order against all the appellants.
"The charges as enumerated in the show-cause notice are, however established. I, therefore, adjudge an amount of Rs, 2049/- upon the respondents to be recovered from them alongwith Additional Tax under Sections 34 & 36 of Sales Tax Act, 1990-. As the charges are admittedly established, the undersigned is left with no option but to impose a penalty of Rs, 25,000/- upon the respondents under Section 33(4a) of the Act."
5. Learned Tribunal in their order dated 3.4.2002 noted the claim of the learned counsel for the appellants that principal amount of tax as well as additional tax had already been paid. The prayer for remission of penalty in toto was however, declined though the total amount of penalty of Rs, 25,000/- was found to be somewhat harash. Accordingly it was directed to be reduced to Rs, 10,000/- in case of every appellant.
6. Learned counsel for the appellants claims that the amount of penalty is still on the higher side as there was no intention to commit tax fraud on the part of any of the appellant. Secondly, that in view of SRO 396(1)/2001 dated 18.6.2001 the appellants are entitled to total remission of penalty in each case.
7. Learned counsel for the revenue on the other hand claims that the order of the learned Tribunal in reducing the amount of penalty from Rs,. 25,000/- to Rs, 10,000/- is rather beneficial to the appellants. Also states that the aforesaid SRO relied upon at the bar is not applicable to the case of the appellants being manufacturers inasmuch that SRO is available to registered, enrolled or enlisted retailer and not manufacturers.
8. Having heard the learned counsel for the parties we will agree that the aforesaid SRO is not applicable to the case of the appellants. However, we will readily agree that the imposition of penalty of Rs, 25,000/-and then its reduction to Rs, 10,000/- by the Tribunal is still on the higher side.
We are in agreement with the contention put forth at the bar that had there been any intention to commit fraud, the appellants would not have attempted it for as meagre a sum as Rs, 2057/-. The department as well as the Tribunal should have allowed the appellants an allowance for absence of mens rea coupled with the fact that not only they did not contest the charge but also willingly re-paid the refunds alongwith additional tax.
9. The nature of penalty provisions in taxing statutes and the proceedings held to bring them home are criminal or at least quasi-criminal in nature. In such like proceedings proving of mens rea, in the view of their Lordships in re. Additional Commissioner of Income Tax us. Narayandas Ramkishan, (1976) 34 Tax 189 (Ind.) is an essential ingredient. It was held that the Revenue was under a statutory obligation to prove that the assessee had acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of his obligation.
Although the issue before their Lordship was slightly different from the one before us yet the principle laid applies on all fours to the facts in hand. Their Lordships were considering the legality of penalty for the late filing of return in the perspective of the legal provisions requiring an assessee to show reasonable cause for such late filing. The principle that was laid down by their Lordships needs to be kept in mind by all revenue authorities while enforcing penalty provisions. It is that ; "Leavy of penalty is a matter of discretion which must be exercised by the authorities judiciously on consideration of relevant circumstances. Penalty should not be imposed merely because it is lawful to do so. If the offence is of a technical or venial in nature, the authorities will be justified in refusing to levy penalty."
10. Judging the impugned order on this touchstone we are of the view that the purpose of penalty provisions as also the intended deterrence will be very well served if the amount of penalty in the case of every appellant is reduced to a token sum of Rs, 250/-.
11.Appeals allowed in the above terms. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.