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IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL     APPEAL     NO.      5734     OF     2012   (SPECIAL LEAVE PETITION(C.)NO.18404 OF 2008)

ASST. COMMERCIAL TAXES OFFICER      ...APPELLANT

                VERSUS

M/S. G.D. PHARMACEUTICALS LTD.        ...RESPONDENT

O     R     D     E     R   

1. Delay condoned.

2. Leave granted.

3. We have heard learned counsel for the appellant  to the lis.

4. This appeal is directed against the judgment  

and order passed by the Rajasthan High Court in  

S.B. Sales Tax Revision Petition No.47/2006, dated  

30.04.2007.

5. The issue raised in this appeal is squarely  

covered by the decision of this Court in the case  

of State of Rajasthan & Anr. Vs. D.P.Metals,  

(2002)1 SCC 279.  In the said decision, the Court  

has stated that :

“ ...

31. Such submission of false or forged docu- ments   or  declaration  at   the check-post  

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or even thereafter can safely be presumed to  have been motivated by desire to mislead the  authorities. Hiding the truth and tendering  falsehood would per se show existence of mens  rea, even if required. Similarly where, des- pite opportunity having been granted under  Section 78(5) if the requisite documents re- ferred to in sub-clause 2(a) are not pro- duced, even though the same should exist,  would clearly prove the guilty intent. It is  not possible to agree with the counsel for  the respondents that breach referred to in  Section 78(5) can be regarded as technical or  venial. Once the ingredients of Section 78(5)  are established, after giving a hearing and  complying with the principles of natural  justice, there is no discretion not to levy  or levy lesser amount of penalty. If by mis- take some of the documents are not readily  available at the time of checking, principle  of natural justice may require some oppor- tunity being given to produce the same. This  provision cannot be read as to imply that the  penalty of 30% is the maximum and lesser  penalty can be levied. The legislature  thought it fit to specify a fixed rate of  penalty and not give any discretion in  lowering the rate of penalty. The penalty so  fixed is meant to be a deterrent and we do  not see anything wrong in this. This quantum  of penalty under the circumstances enumerated  in Section 78(5) cannot, in our opinion, be  regarded as illegal. The legislature in its  wisdom has though it appropriate to fix it at  30% of the value of goods and it had the  competence to so fix. As held by this Court  in Rai Ramakrishna & Others v. The State of  Bihar [1963]50ITR171(SC) ; "The objects to be  taxed so long as they happen to be within the  legislative competence of the legislature can  

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be taxed by the legislature according to the  exigencies of its needs, because there can be  no doubt that the State is entitled to raise  revenue by taxation. The quantum of tax  levied by the taxing statute, the conditions  subject to which it is levied, the manner in  which it is sought to be recovered, are all  matters within the competence of the legis- lature, and in dealing with the contention  raised by a citizen that the talking statute  contravenes Art. 19, courts would naturally  be circumspect and cautions" as such there  cannot, in the present case, be any valid  challenge to the rate of penalty provided for  in Section 78(5) of the Act.  ”  

6. Following the aforesaid decision, the appeal is  

allowed and the orders passed by the First  

Appellate Authority Board and the High Court  

are set aside and the order passed by the  

Original Authority is restored. No costs.

7. Ordered accordingly.

.......................J. (H.L. DATTU)

.......................J. (CHANDRAMAULI KR. PRASAD)

NEW DELHI, AUGUST 06, 2012.

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