JUDGMENT : ( 1. ) BY this reference under Section 44 (1) of the M. P. General Sales Tax Act, 1958 (hereinafter referred to as "the Act") read with Section 13 of the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 (hereinafter referred to as "the Entry Tax Act"), the Board of Revenue has referred the following question of law to this Court for its opinion : "whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that by not putting the seal on the duplicate of the bills, the assessee had committed violation of provisions of Sub-section (1) of Section 7 of M. P. Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976, and the penalty imposed was in order ?" ( 2. ) THE material facts giving rise to this reference, briefly, are as follows : The assessee is a dealer in cotton and cotton seeds. The assessing authority imposed a penalty on the assessee under Section 7 (5) of the Entry Tax Act, on the ground that the assessee had failed to issue bills containing a statement as required by Rule 7 of the M. P. Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Niyam (hereinafter referred to as "the Rules" ). On appeal before the Deputy Commissioner of Sales Tax (Appeals), Indore, the appellate authority rejected the contention raised on behalf of the assessee that the assessee was not liable to pay penalty. Aggrieved by the order passed by the Deputy Commissioner of Sales Tax (Appeals), the assessee preferred a second appeal before the Board of Revenue. That appeal was dismissed. Aggrieved by the order passed by the Board of Revenue, the assessee sought reference and it is at the instance of the assessee that the aforesaid question of law has been referred to this Court for its opinion. ( 3. ) LEARNED counsel for the assessee contended that the Board of Revenue erred in law in holding that the assessee was liable to pay penalty, as provided by Sub-section (5) of Section 7 of the Entry Tax Act, merely on the ground that the assesses had failed to affix seals on the duplicate of the bills. ( 3. ) LEARNED counsel for the assessee contended that the Board of Revenue erred in law in holding that the assessee was liable to pay penalty, as provided by Sub-section (5) of Section 7 of the Entry Tax Act, merely on the ground that the assesses had failed to affix seals on the duplicate of the bills. Learned counsel for the assessee contended that the facts, on the basis of which penalty could have been imposed on the assessee under Section 7 (5) of the Entry Tax Act, were not found by the assessing authority and hence, the assessee was not liable to pay any penalty in terms of Section 7 (5) of the Entry Tax Act. In reply, it was contended on behalf of the department that under Rule 7 of the Rules, the assessee was required to maintain the counterfoil or duplicate of the bills for each sale of local goods effected by him to another registered dealer, in the manner prescribed by Rule 7 and as the assessee failed to do so, the assessee became liable to pay penalty. ( 4. ) AT the time of hearing, learned counsel for the parties agreed that the question referred to this Court by the Board does not bring out the real controversy between the parties. It is true that Rule 7 of the Rules requires a registered dealer to maintain the counterfoil or duplicate of every bill issued for each sale of local goods effected by him to another registered dealer in the manner provided by that rule. But penalty has not been imposed on the assessee for contravention of that rule. Penalty has been imposed on the assessee under Section 7 (5) of the Entry Tax Act. With the consent of the parties, therefore, we reframe the question referred to us as follows : "whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee had committed violation of the provisions of Section 7 (1) of the M. P. Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 and was, therefore, liable to pay penalty under Section 7 (5) of the said Adhiniyam ?" ( 5. ) SUB-SECTION (1) of Section 7 of the Entry Tax Act requires a dealer to issue a bill containing a statement in the manner prescribed and Sub-section (5) of Section 7 further lays down that if the registered dealer has failed to make the statement, as required by Sub-section (1) of Section 7 of the Entry Tax Act, then it shall be presumed that he has facilitated the evasion of entry tax on the goods so sold and would be liable to pay penalty, as laid down in that provision. In view of these provisions, it is clear that before a penalty could be imposed on a registered dealer under Section 7 (5) of the Entry Tax Act, it must be found that (1) he had sold local goods to other registered dealers, and (2) has failed to make the statement in the bill issued by him on such sale in the prescribed manner. Rule 7 of the Rules prescribes that manner. It runs as under : "7. Manner of issue of bill, cash memo or invoice under Section 7.-- A registered dealer required to issue a bill, cash memo or invoice under Sub-section (1) or Sub-section (2) of Section 1, shall, for each sale of local goods effected by him to another registered dealer, issue a bill, cash memo or invoice after recording therein the statement referred to in Subsection (1) of Section 7. The statement may be recorded by affixing a rubber stamp and, as far as may be read, as follows : local goods for. . . . . . . . . . . . . . . . . . (enter here name of local area), entry tax not paid. Every such dealer shall also maintain the counterfoil or duplicate of each such bill, cash memo or invoice and preserve it till the completion of assessment. " ( 6. ) THEREFORE, unless it is found that the bill issued by a registered dealer for sale of local goods does not record a statement, as required by Rule 7, an assessee cannot be held to be liable to pay penalty under the provisions of Section 7 (5) of the Act. " ( 6. ) THEREFORE, unless it is found that the bill issued by a registered dealer for sale of local goods does not record a statement, as required by Rule 7, an assessee cannot be held to be liable to pay penalty under the provisions of Section 7 (5) of the Act. Failure to maintain a counterfoil or a duplicate of such bill in the prescribed manner may amount to contravention of Rule 7 but in the instant case, penalty is not levied on the assessee for contravention of any rule but for failure to record the statement required by Section 7 (1) and prescribed by Rule 7 in the bills issued in respect of sale of local goods. It has not been found in the instant case that the assessee had failed to record the statement, as prescribed by Rule 7, in any bill issued by him in respect of sale of local goods. In the absence of such finding, penalty under Section 7 (5) of the Entry Tax Act could not have been imposed on the assessee. ( 7. ) OUR answer to the question referred by the Board to this Court is that the Board was not justified in holding that the assessee had committed violation of the provisions of Section 7 (1) of the Entry Tax Act and was liable to pay penalty under Section 7 (5) of the Entry Tax Act. Reference is answered in favour of the assessee and against the Department. In the circumstances of the case, parties shall bear their own costs of this reference.