SUPREME COURT OF INDIA

Before:- Ruma Pal and C.K. Thakker, JJ.

Civil Appeal No. of 2005 (Arising out of SLP(C)No. 21170/2003). D/d. 13.5.2005.

State of Rajasthan and Anr. - Appellants

Versus

M/s. Kedar Das Surendra Kumar - Respondent

A. Rajasthan Sales Tax Act, 1994, Sections 78(4) and 83(1) - Truck carrying dry fruits intercepted and goods seized - Issuance of notice under Section 83(1) and 78(4) by Assistant Commercial Tax Officer (ACTO) and demand raised by way of penalty - Appeal pending thereagainst - However, admittedly no stay order against order of ACTO by appellate authority - Therefore in terms of Section 83(2) as it then stood, the dealer was bound to sell the goods to ACTO which implies a mandatory obligation on the part of ACTO to purchase the same

[Para 6]

B. Rajasthan Sales Tax Act, 1994, Sections 78(4),(5) and 83(1) - Truck carrying dry fruits intercepted and goods seized - Issuance of notice under Sections 78(4) and 83(1) - Appeal filed against before Appellate authority - As no stay of order of Assistant Commercial Tax Officer issuing said notice by appellate authority, appellant rightly directed by High Court to purchase the goods and thus respondent's appeal before Appellate authority regarding Section 83 has become infructuous - Held, appeal now must be limited only to question to levy of penalty under Section 78(5) of Act.

[Para 8]

ORDER

Ruma Pal, J. - Leave granted.

2. The respondent was transporting dry fruits between Delhi to Pali in Jodhpur. The respondent's truck in which its goods were carried was intercepted and twelve packets were seized. Notices under Section 78 (4) and Section 83(1) of the Rajasthan Sales tax Act, 1994, were issued. After hearing the parties, the Assistant Commercial Tax Officer (ACTO) raised a demand for Rs. 38,939/- by way of penalty and also directed the release of the goods. However, it was stated that if the goods were spoiled for any reason, then there was no liability of the State Government.

3. The respondent filed an appeal challenging this order of the Assistant Commercial Tax Officer. While the appeal was pending, the respondent also filed a writ petition. It was submitted before the learned Single Judge by the respondent that by issuing a notice under Section 83(1), the appellants had opted for purchasing the goods but no payment had been made till date. The writ petition was disposed of on the basis of agreement of counsel for the State that steps would be taken to make payment, as provided under Section 83 of the Act. However, it was submitted that the payment would be made after the State adjusted the penalty which had been levied on the respondent.

4. Despite having agreed before the learned Single Judge, the appellants preferred an appeal before the Division Bench. The Division Bench noted that the order impugned before it had been agreed to by the counsel for the appellants. It was also held that the proceedings under Section 78 of the Act were separate from the proceedings under Section 83 and that once the notice under Section 83(1) was issued, it was obligatory on the part of the Assistant Commercial Tax Officer to make payment of the articles seized.

5. The Division Bench accordingly dismissed the appeal of the appellants and reaffirmed the Single Judge's order while directing payment to be made under Section 83(1) of the Act. However, it went further and directed that the State could recover the amount of the purchase price of the goods from the Assistant Commercial Tax Officer who had issued the notice under Section 83(1) of the Act.

6. Learned counsel on behalf of the appellants has reiterated the same submissions as had been taken before the Division Bench, namely, that the appeal was pending from the order of the Assistant Commercial Tax Officer. However, admittedly there was no stay of the order of the ACTO by the Appellate Authority. Therefore, in terms of Section 83(2) of the Act, as it then stood, the dealer was bound to sell the goods to ACTO. This implies a mandatory obligation on the part of the ACTO to purchase the same. It is to be noted that under Section 83(2) as it then stood, that if the dealer did not deliver the goods for the purpose of effecting such sale, he would be liable to further penalty.

7. In the circumstances, the High Court was wholly correct in directing the appellants to make payment of the purchase price as determined for the purpose of levy of penalty by the appellants to the respondent. It is true that the appeal is pending.

8. But in the circumstances of the case that must be limited only to the question to levy of the penalty under Section 78(5) of the Act. It is made clear that while making the payment, the appellants would be entitled to set apart the quantum of the penalty as determined on the basis of purchase price which would be subject to the outcome of the appeal before the Appellate Authority. The direction of the High Court giving liberty to the State Government to recover the purchase price from the ACTO personally is set aside. In view of this order, the respondent's appeal before the Appellate Authority regarding Section 83 has necessarily become infructuous. However, the appeal relating to Section 78(5) proceedings will continue

9. The appeal is disposed of.

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