JUDGMENT K. S. PARIPOORNAN, J. - Common questions arise for consideration in this batch of cases. The important aspect canvassed in this batch of cases is that section 45A of the Kerala General Sales Tax Act, 1963, (in short, "the Ac") is unconstitutional and violative of article 14 of the Constitution of India. In O.P. Nos. 7361 of 1990 and 6316 of 1990 a subsidiary point is also raised to the effect that the authorities have levied the maximum penalty arbitrarily and in a mechanical manner, and have totally failed to act judicially. 2. Writ Appeal No. 108 of 1990 is preferred against the judgment in O.P. No. 351 of 1990, dated January 15, 1990. The petitioner in the O.P. (O.P. No. 351 of 1990), appellant in the writ appeal, is a firm. According to it, it is keeping true and complete accounts of its business transactions. A search was made of the business premises of the firm on March 8, 1988. Exhibit P1 records were seized. By exhibit P2 dated September 29, 1989, the appellant was directed to produce the accounts for the year 1987-88 for verification, falling which, penalty under section 45A(1)(e) of the Act was threatened. The appellant filed his reply, exhibit P3, dated October 7, 1989, before the Intelligence Officer, who issue exhibit P2. By exhibit P4, dated November 2, 1989, the appellant was again requested to produce the day-book, stock book and all sale and purchase bills. The books seized as per exhibit P1 dated March 8, 1988, were not returned. The appellant filed O.P. No. 9768 of 1989 for the return of the books and the other documents seized. It was allowed by exhibit P5 judgment dated December 6, 1989. Thereafter the 1st respondent, by exhibit P6 dated December 15, 1989, served a notice on the appellant proposing to levy a penalty of Rs. 1,39,944, being twice the amount of tax due on the turnover. According to the Revenue, the firm had not maintained true and correct accounts of its transactions and thereby violated section 27 of the Act. The appellant filed a reply dated January 10, 1990, evidenced by exhibit P7. The very basis of the initiation of proceedings under section 45A, evidenced by exhibit P6 notice, dated December 15, 1989, was questioned. Proceedings were attacked as unauthorised, mala fide and arbitrary. The appellant filed a reply dated January 10, 1990, evidenced by exhibit P7. The very basis of the initiation of proceedings under section 45A, evidenced by exhibit P6 notice, dated December 15, 1989, was questioned. Proceedings were attacked as unauthorised, mala fide and arbitrary. Incidentally in paragraph 6 of exhibit P7 objection the appellant raised a question that section 45A itself is unconstitutional and violative of article 14 of the Constitution of India as it confers unbridled and uncanalised power on the officer to impose the penalty. The appellant has stated therein that mere satisfaction of the officer attracts penalty without any material or evidence and this is opposed to well recognised principles of law. It has also attacked the vires of section 45A on the ground that the burden of proof is cast on the dealer to prove that it has not committed any offence under the Act and this is against all the procedures known to law. Pending adjudication of the said objections, the appellant filed O.P. No. 351 of 1990 and assailed the notices, exhibits P2, P4 and P6. The appellant also prayed for the grant of a declaration that section 45A of the Act is ultra vires and unconstitutional. The learned single Judge by judgment dated January 15, 1990, held that the validity of exhibits P2, P4 and P6 notices is pending consideration before the statutory authorities and so the O.P. is premature. The petition in the O.P. has come up in writ appeal. 3. The facts in the connected O.Ps. are as follows : In O.P. No. 7361 of 1990 the petitioner is a firm. It is carrying on business in cycles. There was a shop inspection of the business premises on April 23, 1987. Certain slips and documents were seized during the inspection. The books seized showed stock variation. Proceedings under section 45A for non-maintenance of true and correct accounts and violation of section 27 of the Act were initiated against the firm. To the notices so sent, the petitioner filed exhibits P17 and P19 replies. When records were examined, as a result of the book seized, which related to the year 1987-88, it turned out that certain transactions related to the year 1986-87. The petitioner was asked to produce the accounts and other documents for the year 1986-87. It was not so done. The petitioner filed his reply exhibit P23. When records were examined, as a result of the book seized, which related to the year 1987-88, it turned out that certain transactions related to the year 1986-87. The petitioner was asked to produce the accounts and other documents for the year 1986-87. It was not so done. The petitioner filed his reply exhibit P23. Notwithstanding the objections filed, exhibits P17 and P19, for the year 1987-88 and exhibit P23 for the year 1986-87, the 1st respondent, Intelligence Officer, passed exhibit P20 order dated June 23, 1990 and exhibit P26 order dated June 16, 1990 for the said years under section 45A of the Act, levying a penalty of Rs. 5,900 and Rs. 68,028 which amounted to double the tax sought to be evaded. In the O.P. The petitioner has challenged exhibits P20 and P26 as unauthorised, illegal and arbitrary. It has also challenged the vires of section 45A of the Act as ultra vires and unconstitutional. Finally there is a challenge that in any view of the matter, in levying the maximum of penalty, the 1st respondent has acted arbitrarily and mechanically and the judicial discretion vested in the authority has not been properly exercised. 4. We will now come to O.P. No. 6316 of 1990. The petitioner herein is the proprietor of a saw mill. According to him he is keeping true and correct books of accounts in the regular course of business. The petitioner's business premises was inspected on July 19, 1986. Certain unaccounted purchases made on March 7, 1985 and sales effected on February 19, 1986, were found out. The Intelligence Officer took the view that the assessee has failed to maintain true and correct accounts and that there is violation of section 27 of the Act. As a result of the inspection of the premises, for violation of section 27 of the Act penalty proceedings under section 45A were initiated for the years 1984-85, 1985-86 and 1986-87. By exhibits P9, P10 and P11 orders, dated March 14, 1989, the Intelligence Officer levied the sums of Rs. 4,743, Rs. 55,297 and Rs. 39,516 by way of penalties for the above three years, being twice the tax due on the suppressed turnover. The revisions filed by the assessee-petitioner were dismissed by the Deputy Commissioner of Sales Tax, evidenced by exhibits P15, P16 and P17 proceedings. 4,743, Rs. 55,297 and Rs. 39,516 by way of penalties for the above three years, being twice the tax due on the suppressed turnover. The revisions filed by the assessee-petitioner were dismissed by the Deputy Commissioner of Sales Tax, evidenced by exhibits P15, P16 and P17 proceedings. The orders levying the penalty for the three years, as also the revisional orders, confirming the said three proceedings, were taken up before the Board of Revenue in further revisions. By exhibit P21 order, dated April 24, 1990, the Board of Revenue dismissed the revisions filed by the assessee for all the three years and upheld the penalties levied for the years 1984-85, 1985-86 and 1986-87. The petitioner attacked the levy of penalties as also the revisional orders as illegal and unauthorised. The petitioner has also prayed for a declaration that section 45A of the Act is ultra vires and unconstitutional. According to the petitioner herein, in any view of the matter, the levy of maximum penalty has been made without an application of the mind and mechanically. It is not in accordance with law. 5. The writ appeal, as also the above two O.Ps. were heard together. The two O.Ps. - O.P. Nos. 6316 of 1990 and 7361 of 1990 - were referred to a Divisional Bench in view of the then pendency of the Writ Appeal No. 108 of 1990, wherein the vires and constitutionality of section 45A of the Act were pending for consideration. 6. We heard Mr. P. G. K. Wariyar, appellant's counsel in W.A. No. 108 of 1990. Mr. Jose who appeared for the petitioners in O.P. Nos. 7361 and 6316 of 1990, adopted the arguments of Mr. P. G. K. Wariyar. We also heard senior Government Pleader Mr. N. N. D. Pillai, who appeared for the respondent-Revenue. 7. The main plea raised in this batch of cases in that section 45A of the Act is ultra vires and unconstitutional. The plea was that the section vests uncanalised and unbridled powers in the officers, to impose the penalty. This is unconstitutional and violative of article 14 of the Constitution of India. Another ground stated in support of the aforesaid attack is that the section permits levy of penalty on the satisfaction of the officer without any material or evidence and this is obnoxious to well recognised principles of jurisprudence. This is unconstitutional and violative of article 14 of the Constitution of India. Another ground stated in support of the aforesaid attack is that the section permits levy of penalty on the satisfaction of the officer without any material or evidence and this is obnoxious to well recognised principles of jurisprudence. Finally it was contended that the section casts the burden on the dealer to prove that he (it) has not committed any offence under the Act. This is a procedure unknown to law. The section, is arbitrary and so it should be struck down. 8. Section 45A of the Act runs as follows : "45A. Imposition of penalty by officers and authorities. - (1) If the assessing authority or the Appellate Assistant Commissioner is satisfied that any person, - (a) being a person required to register himself as dealer under this Act, did not get himself registered; or (b) has failed to keep true and complete accounts; or (c) has failed to submit any return as required by the provisions of this Act or the rules made thereunder; or (d) has submitted an untrue or incorrect return; or (e) has failed to comply with all or any of the terms of any notice or summons issued to him by or under the provisions of this Act or the rules made thereunder; or (f) after purchasing any goods in respect of which he has made a declaration under proviso to sub-section (3) of section 5, has failed to make use of the goods for the declared purpose; or (g) has acted in contravention of any of the provisions of this Act or any rule made thereunder, for the contravention of which no express provision for payment of penalty or for punishment is made by this Act, such authority or officer may direct that such person shall pay by way of penalty, an amount not exceeding twice the amount of sales tax or other amount evaded or sought to be evaded where it is practicable to quantify the evasion or an amount not exceeding five thousand rupees in any other case. Explanation I. - The burden of proving that any person is not liable to the penalty under this section shall be on such person. Explanation II. Explanation I. - The burden of proving that any person is not liable to the penalty under this section shall be on such person. Explanation II. - For the purposes of this sub-section the expression "assessing authority" includes any officer not below the rank of Sales Tax Officer specified by the Government in this behalf by notification in the Gazette. (2) No order under sub-section (1) shall be passed unless the person on whom the penalty is proposed to be imposed is given an opportunity of being heard in the matter. (3) The Deputy Commissioner may, on application by any person on whom a penalty is imposed under sub-section (1) within thirty days from the date of receipt by him of the order imposing such penalty, for reasons to be recorded in writing confirm, reduce or waive such penalty or remand the case to the assessing authority or Appellate Assistant Commissioner, as the case may be, for reconsideration : Provided that the Deputy Commissioner may admit an application made after the expiry of the said period of thirty days if he is satisfied that the applicant had sufficient cause for not making the application within the said period. (4) An order of the Deputy Commissioner under sub-section (3) shall, subject to the provisions of sub-section (5), be final. (5) The Board of Revenue may, either suo motu or on application, call for and examine the record of any order passed under sub-section (1) or sub-section (3) and make such order as it thinks fit : Provided that the Board of Revenue shall not admit an application made after the expiry of thirty days from the date of receipt by the applicant of the order under sub-section (1) or sub-section (3), as the case may be, unless it is satisfied that the applicant had sufficient cause for not making the application within the said period : Provided further that no order enhancing a penalty or cancelling the waiver of a penalty shall be passed unless the person affected thereby is given an opportunity of being heard in the matter. (6) An order of the Board of Revenue under sub-section (5) shall be final." The king-pin of the section is that if the assessing authority or the Appellate Assistant Commissioner is "satisfied" that any person has evaded or sought to evade sales tax on other amount, an amount not exceeding twice the amount of sales tax or other amount evaded or sought to be evaded may be imposed as penalty. In case it is not possible to specify the quantum, the penalty levied shall not exceed Rs. 5,000. In other words, evasion or attempt at evasion of sales tax or other amount exigible under the Act is the very foundation for initiation of proceedings under section 45A of the Act. It is common ground that the section does not impose an absolute liability. At one stage it was suggested feebly that mental element, like knowledge, reason to believe, intention, etc., is not specified under any of the sub-sections of section 45A(1) of the Act and so the concerned authority may on proof of mere default levy the penalty. A mere look at section 45A(1) will show that the language contains an inbuilt element of mens rea or mental element. The words used are "evasion" or "sought to be evaded". Webster's New World Dictionary at page 503, gives the following meaning to the word "evasion" : "1. an avoiding of a duty, question, fact, etc., by deceit or cleverness. 2. a means of doing this; subterfuge; equivocation; excuse." Webster's New Third International Dictionary, page 787 gives the following shades of meaning : "2a : the act or an instance of evading, dodging, or equivocating : failure to answer or state one's position directly or candidly (it was not a case of quibbling, or concealment .... it was sheer, blank, bottomless ignorance - S. H. Adams) .... b. the act of evading, dodging or circumventing a law, responsibility, or obligation : specify : the act of failing to pay taxes or of minimizing taxes in violation of law." Chambers' Twentieth Century Dictionary, 1958 Edition, page 368, gives the following meaning : "act of evading or eluding : an attempt to escape the force of an argument or accusation : an excuse. - adjs ..... - adjs ..... evasive that evades or seeks to evade : elusive : not straightforward : shuffling." The Random House Dictionary of the English Language, College Edition, at page 547, contains the following meaning for the word "evasion" : "1. the act or an instance of escaping, avoiding, or shirking something ...... 3. a means of evading : subterfuge : an excuse or trick to avoid or get around something." In The Concise Oxford Dictionary, at page 418, the following meaning is given for the word "evasion" : "Act, means of evading : shuffling excuse." In the Shorter Oxford English Dictionary, 3rd Edition, Volume I, at page 690, the following meaning is given for the word "evasion" : "1. The action of evading or escaping, as by artifice or contrivance; escape (now rate); dodging, prevarication. b. Means of evading; shuffling excuse, subterfuge ME. 2. Going out, exit (rate)." In Stroud's Judicial Dictionary, 4th Edition, Volume 2, at page 946, the word "evasion" is described as follows : "'Everybody agrees that "evade" is capable of being used in two senses : (1) which suggests underhand dealing; (2) which means nothing more than the intentional avoidance of something disagreeable' (Simms v. Registrar of Probates 69 L.J.P.C. 56). Probably, it may be said that it is in the first of these two meaning that the word is generally used in penal statutes, e.g., section 27 (South Australia) Succession Duties Act, 1893 [which corresponded with section 8 of the Succession Duty Act, 1853 (clause 51)] whereby property comprised in any 'non-testamentary disposition' made 'with the intent to evade the payment' of succession duty, was rendered liable to double duty. 'Evade', there, 'means some device or stratagem; some arrangement, trust, or other device (whether concealed, or apparent on the face of the non-testamentary disposition) by which what is really a part of the estate of the deceased is made to appear to belong to somebody else in order to escape payment of duty. 'Evade', there, 'means some device or stratagem; some arrangement, trust, or other device (whether concealed, or apparent on the face of the non-testamentary disposition) by which what is really a part of the estate of the deceased is made to appear to belong to somebody else in order to escape payment of duty. ' per Way, C.J., adopted by P. C. Simms v. Registrar of Probates [1900] AC 323)." From the various shades of meaning given in the above dictionaries for the word "evasion", it is clear that it is not the mere default that is made the foundation for the liability (penalty); it is a contumacious or fraudulent or other blame-worthy or objectionable conduct of an assessee in fulfilling his obligations mentioned in section 45A(1) of the Act, that will attract the levy of penalty. We have no doubt in our mind that mens rea or the mental element is embedded in the crucial word "evaded" or "sought to be evaded" occurring in section 45A(1) of the Act. 9. We should next consider the question whether the mere ipse dixit or casual mention of satisfaction by the officer, without any material, will be sufficient to levy the penalty. The section itself postulates that if the assessing authority or the Appellate Assistant Commissioner is "satisfied" "that any one of the defaults has taken place, the concerned authority may initiate proceedings for the levy of penalty". It is trite law that every statutory authority should act bona fide, reasonably and fairly, and within the frontiers limited by the particular statute. It is not the mere ipse dixit of the officer that will enable him to initiate the proceedings or to levy the penalty, he should be "satisfied" that the statutory requisites for the exercise for the power exists. The courts can properly enquire independently in appropriate cases whether the "condition precedent" exists; the discretion vested in the officer under section 45A of the Act is not an unexaminable or unfettered discretion. Decisions are legion to hold that when the exercise of discretionary power is vested in a statutory authority on his being "satisfied" of certain facts, there should be material on record to substantiate the same. It is true that the language used in section 45A(1) is "subjective". Though literally, the language is so, the practical approach of the courts has been to insist on objective evaluation. It is true that the language used in section 45A(1) is "subjective". Though literally, the language is so, the practical approach of the courts has been to insist on objective evaluation. There are decisions of the House of Lords, Privy Council and other courts to this effect. (See Wade on Administrative Law, 5th Edition, pages 396 to 401). In Secretary of State for Education and Science v. Metropolitan Borough of Tameside [1976] 3 All ER 655 (CA) at page 671, Lord Denning M.R. stated thus : "To my mind, if a statute gives a Minister power to take drastic action if he is satisfied that a local authority have acted or are proposing to act improperly or unreasonably, then the Minister should obey all the elementary rules of fairness before he finds that the local authority are guilty or before he takes drastic action overruling them. He should give party affected notice of the charge of impropriety or unreasonableness and a fair opportunity of dealing with it. I am glad to see that the Secretary of State did so in this case. He had before him the written proposals of the new council and he met their leaders. In addition, however, the Minister must direct himself properly in law. He must call his own attention to the matters he is bound to consider. He must exclude from his consideration matters which are irrelevant to that which he has to consider. And the decision to which he comes must be one which is reasonable in this sense, that it is, or can be, supported with goods reasons or at any rate be a decision which a reasonable person might reasonably reach. Such is, I think, plain from Padfield v. Ministry of Agriculture, Fisheries and Food [1968] 1 All ER 694; [1968] AC 997 which is a landmark in our administrative law and which we had in mind in Secretary of State for Employment v. Associated Society of Locomotive Engineers and Firemen [1972] 2 All ER 949; (1972) 2 QB 455. Such is, I think, plain from Padfield v. Ministry of Agriculture, Fisheries and Food [1968] 1 All ER 694; [1968] AC 997 which is a landmark in our administrative law and which we had in mind in Secretary of State for Employment v. Associated Society of Locomotive Engineers and Firemen [1972] 2 All ER 949; (1972) 2 QB 455. So much for the requirements if the Minister is to be 'satisfied'." Scarman, L.J., went further and said at page 675 : "I do not accept that the scope of judicial review is limited quite to the extent suggested by counsel for Secretary of State." [Bad faith, misdirection in law, taking account of irrelevant matter, omitting to consider relevant matters, taking a view that no reasonable man could take.] "I would add a further situation to those specified by him; misunderstanding or ignorance of an established and relevant fact." The above decision of Court of Appeal was affirmed by the House of Lords. (Secretary of State v. Metropolitan Borough of Tameside [1976] 3 All ER 665 from pages 679 to 704). In the House of Lords, Lord Wilberfone stated thus at pages 681-682 : "The section is framed in a 'subjective' form - if the Secretary of State 'is satisfied'. This form of section is quite well-known, and at first sight might seem to exclude judicial review. Sections in this form may, no doubt, exclude judicial review on what is or has become a matter of pure judgment. But I do not think that they go further than that. If a judgment requires, before it can be made, the existence of some facts, then, although the evaluation of those facts is for the Secretary of State alone, the court must enquire whether those facts exist, and have been taken into account, whether the judgment has been made on a proper self direction as to those facts, weather the judgment has not been made on other facts which ought not to have been taken into account. If these requirements are not met, then the exercise of judgment, however bona fide it may be, become capable of challenge : See Secretary of State for Employment v. Associated Society of Locomotive Engineers and Firemen (No. 2) [1972] 2 All ER 949 at 967; (1972) 2 QB 455 at 493, per Lord Denning M.R." The Supreme Court of India had occasion to consider the scope of the power vested in the authorities in "subjective" language or terms and the extent to which judicial review is permissible in such cases. The courts has reviewed the entire case law (English and Indian) in some cases and the leading English decisions - (a) Padfield's case, (b) Tameside case, (c) C.C.S.V. case and (d) Laker Airways Ltd. case have been adverted to and relevant observations therein were quoted with approval. It is not necessary to catalogue all the decisions on the subject. To mention only a few : Barium Chemicals Ltd. v. Company Law Board [1966] 36 Comp Cas 639 (SC); AIR 1967 SC 295 , Raghupathy v. State of A.P. (1988) 4 SCC 364 at pages 380, 382, 384 and 385, Shalini Soni v. Union of India AIR 1981 SC 431 , Commissioner of Income-tax v. Mahindra and Mahindra Ltd. [1983] 144 ITR 225 (SC) at page 237; AIR 1984 SC 1182 at page 1188, Liberty Oil Mills v. Union of India AIR 1984 SC 1271 at page 1289 and Rampur Distillery and Chemicals Co. Ltd. v. Company Law Board [1970] 40 Comp Cas 916 (SC); AIR 1970 SC 1789 . We would also mention that a Full Bench of this Court in Balakrishna Pillai v. State of Kerala (1988) 2 KLT 1039 (FB) at pages 1046 - 1049, has dealt with the matter in little detail. Suffice it to say that it is not the mere ipse dixit of the officer that will enable him either to initiate the proceedings or to levy the penalty under section 45A of the Act. We cannot accept the plea that section 45A vests in the concerned authority any blanket power to enable him to levy the penalty without any material or evidence. We should remember that the power is vested in a responsible officer who is sufficiently high-placed in the hierarchy. The power is not vested in any minor official. We cannot accept the plea that section 45A vests in the concerned authority any blanket power to enable him to levy the penalty without any material or evidence. We should remember that the power is vested in a responsible officer who is sufficiently high-placed in the hierarchy. The power is not vested in any minor official. It can be exercised only when one or the other of the matters mentioned in section 45A(1) of the Act, which is the very foundation for the jurisdiction, exists. It should also be remembered that the exercise of power visits the assessee with dire consequences. The concerned official should so exercise the power bearing in mind the constitutional guarantees enshrined in articles 14, 19 and 21 of the Constitution of India. The limitation implicit in the exercise of statutory powers by public authorities is laid down in series of the decisions of the Supreme Court and it is unnecessary to restate all of them. - See S. N. Mukherjee v. Union of India AIR 1990 SC 1984 , Ajay Hasia v. Khalid Mujib Sehravardi AIR 1981 SC 487 , A. L. Kalra v. The Project and Equipment Corporation of India Ltd. AIR 1984 SC 1361 at page 1367, Neelima Misra's case (1990) 2 SCC 746 . Suffice it to say that if the exercise of power by any of the statutory authorities is shown to be illegal, unfair or irrational (unreasonable) the resultant action will be annulled, or struck down in appropriate proceedings - See again Balakrishna Pillai's case (1988) 2 KLT 1039 (FB), paragraph 14. In the light of the guidelines afforded by the decisions of the highest courts, it is idle to contend that section 45A confers on the statutory authority unbridled or uncanalised power to impose penalty. The power vested in the statutory authority is hedged in by limitation and if there is any transgression of the limits imposed by law the exercise of power will be annulled or struck down. It is not an unexaminable discretion vested in the officer. The power can be exercised only on the basis of materials and on valid and reasonable grounds. 10. Section 45A is a penal provision. It is not an unexaminable discretion vested in the officer. The power can be exercised only on the basis of materials and on valid and reasonable grounds. 10. Section 45A is a penal provision. The guidelines to be borne in mind with regard to such penal provision has been stated by the Supreme Court in Hindustan Steel Ltd. v. State of Orissa [1970] 25 STC 211 (SC) at page 214 : "An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercise judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when, there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute." The observations aforesaid were referred to with approval in a subsequent decision in Shiv Dutt Rai Fateh Chand v. Union of India [1983] 53 STC 289 at 314 (SC); AIR 1984 SC 1194 at page 1212, paragraph 35. The court has stated the law thus : "The argument urged on behalf of the dealers in the State of Haryana is that this section which authorises the levy of penalty at 'a sum not less than twice and more than ten times the amount of tax' on proof of the defaults mentioned therein is violative of article 14 as there is no guidance given to the authority levying the penalty about the quantum of penalty. There is no substance in this plea. The provision in question itself suggests that the levy to be made under it is in the nature of a penalty which requires the authority concerned to apply his mind to all relevant aspects of the default alleged to have been committed by a dealer. There is no substance in this plea. The provision in question itself suggests that the levy to be made under it is in the nature of a penalty which requires the authority concerned to apply his mind to all relevant aspects of the default alleged to have been committed by a dealer. First the default committed by the dealer should be established at an enquiry after giving the dealer concerned an opportunity of being heard. The degree of remissness involved in the default is a relevant factor to be taken into account while levying penalty. The section provides both the minimum and the maximum amount of penalty leviable and it is correlated to the amount of tax which would have been avoided if the turnover returned by such dealer had been accepted as correct. The order levying penalty is quasi-judicial in character and involves exercise of judicial discretion. The considerations which should weigh with the authorities while imposing penalty are well-known and have been settled by many decisions. Hindustan Steel Ltd. v. State of Orissa [1970] 25 STC 211 (SC); [1970] 1 SCR 753; AIR 1970 SC 253 is one such decision." See also the decision in Cement Marketing Co. of India Ltd. v. Assistant Commissioner of Sales Tax [1980] 45 SC 197 (SC) at page 200; AIR 1980 SC 346 at page 348, paragraph 5. Avadh Behari Rohatgi, J. in Jiten & Company v. Sales Tax Officer [1977] 39 STC 308 (Delhi) at page 312 in his illimitable style expressed as what is meant by the word "satisfied" in the following words : "The phrase 'satisfied' occurs in many taxing statutes and is a familiar one for a great many years; see for example section 271 of the Income-tax Act, 1961, and section 56 of the Delhi Sales Tax Act, 1975. The phrase 'is satisfied' means, in my view, simply 'makes up it mind' : per Lord Pearson in Blyth v. Blyth [1966] 1 All ER 524 at 541. Dixon, J. defined it as 'actual persuasion'. That means a mind not troubled by doubt or to adopt the language of Smith, J., 'a mind which has reached a clear conclusion' : See Angland v. Payne (1944) NZ LR 610 at 626." 11. A brief analysis of section 45A itself negatives the plea that the section confers uncanalised or unguided power in the statutory authority. That means a mind not troubled by doubt or to adopt the language of Smith, J., 'a mind which has reached a clear conclusion' : See Angland v. Payne (1944) NZ LR 610 at 626." 11. A brief analysis of section 45A itself negatives the plea that the section confers uncanalised or unguided power in the statutory authority. We have already referred to the requirements in law in order to conform to the basic requirement that the "authority is satisfied". The initiation of proceedings is discretionary or permissive. It appears that even if a person has committed any one of the defaults specified in section 45A(1) of the Act and the concerned authority is also "satisfied" about the same, the levy of penalty is not compulsive, but only enabling or permissive. The maximum amount of penalty that can be levied is alone indicated. No minimum is specified. Before the penalty is imposed on a person, the authorities are bound to give an opportunity to such person. Needless to say that the opportunity afforded should be real, effective and meaningful. That is what is envisaged by expressly providing for observing the principles of natural justice - an opportunity of being heard in the matter. Against the imposition of penalty, the aggrieved person has got a right to canvass the order of the lower authority before the Deputy Commissioner. There is a further right of revision from any order that may be passed by the Deputy Commissioner, to the Board of Revenue. In other words, there are two forums, before which, an order imposing the penalty can be canvassed, to obtain redress. In these circumstances, where the exercise of the power by the statutory authority itself is discretionary and also hedged in by limitations, and the order passed is also examinable by two higher authorities to afford redress, it is idle to contend that section 45A confers unbridled or uncanalised power to impose penalty. The plea is without substance. 12. The only further plea made out was that under explanation I to section 45A, the burden of proving that any person is not liable to pay penalty is cast on such person. It is true that explanation I is not happily worded. The plea is without substance. 12. The only further plea made out was that under explanation I to section 45A, the burden of proving that any person is not liable to pay penalty is cast on such person. It is true that explanation I is not happily worded. But the import of the section in the context is only this : "the burden of proving that any person has not evaded or sought to evade the tax or other amount, for which penalty is leviable under the section, shall be on such person." It is true that ordinarily the burden is on the Revenue to prove that a dealer or an assessee has committed an offence under the Act. But there is no fetter or restriction on the power of the Legislature either to provide presumptions of law or change the burden of proof, provided they are within the limits contemplated by law. All that is necessary is that there should be some rational connection between the fact proved and the ultimate fact presumed and the inference of one fact from proof of another fact, shall not be so unreasonable as to be purely arbitrary. There should be a rational connection between that is proved and what is permitted to be rational connection between that is proved and what is permitted to be inferred therefrom. Similarly, there should be nexus or rational connection between the purpose of the legislation and change effected in the burden of proof. It cannot be denied that the State Legislature can enact the sales tax law, which is within its competence under Schedule VII, List II, entry 54. In enacting such a law, the State Legislature has got wide powers to provide for incidental or ancillary matters to make the legislation effective, including provisions for preventing evasion of tax. It can also set machinery for preventing evasion of sales tax. All such incidental or ancillary provisions, including provisions for preventing evasion of tax will be part of the power to legislate for levy of sales tax. Unless there are effective provisions to check evasion, the working of the Act will be rendered altogether meaningless and it will be difficult for the Revenue to gather its legitimate dues. The various obligations imposed by the Act on a dealer for a proper and successful working of the Act, if not conformed to, should be effectively enforced. Unless there are effective provisions to check evasion, the working of the Act will be rendered altogether meaningless and it will be difficult for the Revenue to gather its legitimate dues. The various obligations imposed by the Act on a dealer for a proper and successful working of the Act, if not conformed to, should be effectively enforced. It is for the effective enforcement of the said provisions, a deterrent provision is enacted as section 45A. The various matters to be complied with and specified in section 45A(1), are all matters within the exclusive knowledge or domain, of the dealer or the assessee. He will be in a better position to point out the reasons or the special circumstances which disabled him from complying with the obligations imposed by the Act. It is in this background the Legislature has thought fit to change the burden of proof. In cases where proceedings under section 45A are initiated, it is open to a dealer to prove that he has not evaded or sought to evade any sales tax or any other amount due under the Act. Such matters will ordinarily be within the exclusive knowledge of the dealer or the assessee or other person. We are of the view, that there is sufficient nexus or connection between the provision, section 45A(1) and explanation I, and explanation I is not one arbitrarily made. It cannot be stated that explanation I is either unauthorised or otherwise unfair or unreasonable; nor can it be said that explanation I is hit by article 14 of the Constitution of India or any of the constitutional guarantees. In this context, we are reminded of the observations of Holmes, J. in William N. McFarland v. American Sugar Refining Co. [1916] 241 US 79 at pages 86-87, 60 Law Ed 899 at page 904 (K) which was quoted with approval by a Constitution Bench of the Supreme Court in A. S. Krishna v. State of Madras AIR 1957 SC 297 at page 303. It is as follows : "As to the presumptions, of course of Legislatures may go a good way in raising one or in changing the burden of proof, but there are limits. It is as follows : "As to the presumptions, of course of Legislatures may go a good way in raising one or in changing the burden of proof, but there are limits. It is essential that there shall be some rational connection between the fact proved and the ultimate fact presumed, and that the inference of one fact from proof of another shall not be so unreasonable as to be a purely arbitrary mandate. Mobile J & K C.R. Co. v. Turnipseed (1910) 219 US 35 at page 43; 55 Law Ed 78 at page 80 (L)." (See also Sampathu Chetty's case AIR 1962 SC 316 , page 325, paragraph 16 and page 333, paragraph 35). A kindred provision occurring in the Income-tax Act, 1961, by way of explanation to section 27(1)(c) was upheld by the Courts in Saeed Ahmad v. Inspecting Assistant Commissioner of Income-tax [1971] 79 ITR 28 (All.), Rajputana Stores v. Inspecting Assistant Commissioner of Income-tax [1975] 99 ITR 499 (Gauhati). Scheme explained : Commissioner of Income-tax v. Drapco Electric Corporation [1980] 122 ITR 341 (Guj) and Commissioner of Income-tax v. Sri Pawan [1987] 168 ITR 1 (Ker). Therefore the plea that section 45A(1) is ultra vires and unconstitutional, fails. We are of the view, that the said statutory provision is only in the realm of evidence and not a rule of substantive law. The burden of proof is shifted to the shoulders of the assessee, since it is a matter within his own knowledge and the evidence as to which is in his own power to produce. The test laid down by the Supreme Court in Izhar Ahmad Khan v. Union of India AIR 1962 SC 1052 is relevant on this aspect. It is satisfied in this case. 13. We hasten to state though under explanation I, the burden of proving that a person has not evaded or sought to evade any sales tax or other amount, is on such person, it is really a situation where a person is asked to prove the negative. The burden is akin to that in a civil case, where the adjudication is made on preponderance of probabilities. The person, on whom the burden is so cast, need not lead any positive material to discharge the burden nor to the truth. He may rely on any material on record, whether it was produced by him or by the Revenue. The burden is akin to that in a civil case, where the adjudication is made on preponderance of probabilities. The person, on whom the burden is so cast, need not lead any positive material to discharge the burden nor to the truth. He may rely on any material on record, whether it was produced by him or by the Revenue. Normally, he would be taken to have discharged the onus if in the absence of any material or proof by the department to the contrary, he could raise probabilities in his favour or point out circumstances, which could create doubts, the benefit of which can be given to him. Since the person is required to prove a negative fact, the matter should be evaluated only on preponderance of probabilities - See Commissioner of Income-tax v. Sankarsons and Company [1972] 85 ITR 627 (Ker), Commissioner of Income-tax v. S. P. Bhatt [1974] 97 ITR 440 (Guj), Commissioner of Income-tax v. Patna Timber Works [1977] 106 ITR 452 (Pat), Commissioner of Income-tax v. Prafulla Kumar Mullik [1976] 104 ITR 648 (Orissa), Commissioner of Income-tax v. Ketini Krishnamurty [1976] 103 ITR 487 (Orissa) and Commissioner of Income-tax v. Narang & Co. [1975] 98 ITR 462 (Delhi). 14. In the light of the above discussion, the appellant in W.A. No. 108 of 1990 is not entitled to any relief. All that we need to say is that in the light of the guidelines laid down by us herein, the objections filed by the appellant, exhibit P7, will be considered and disposed of by the concerned Intelligence Officer. The matter is only at the notice stage. It is primarily for for the authority, who has initiated the proceedings to determine as to whether the proceedings are maintainable in the light of the various objections raised before it and even so, what is the nature of the final order that should be passed, reckoning the various aspects brought to its notice. All this require appreciation of facts and circumstances. It is not for this Court, in exercise of the powers under article 226 of the Constitution of India, to make a roving inquiry into the facts at this stage. We, therefore, direct the 1st respondent to consider and dispose of exhibit P7, after affording an opportunity to the appellant and pass a considered order. 15. It is not for this Court, in exercise of the powers under article 226 of the Constitution of India, to make a roving inquiry into the facts at this stage. We, therefore, direct the 1st respondent to consider and dispose of exhibit P7, after affording an opportunity to the appellant and pass a considered order. 15. Since we have repelled the plea that section 45A is ultra vires and unconstitutional, the only other additional plea that remains to be adjudicated is the plea of the counsel for the petitioner in O.P. Nos. 7361 of 1990 and 6316 of 1990. The plea made out was that the authorities have levied the maximum amount of penalty, without independent evaluation and appraisal and the penalty has been levied mechanically, without disclosing grounds that the situation demands the levy of the maximum penalty. We are of the view, that this plea of the petitioners in these two O.Ps. is entitled to acceptance, in view of a Bench decision of this Court in St. Michael's Oil Mills v. State of Kerala [1988] 68 STC 360; (1987) 2 KLT 610 . After indicating the basis of the levy of penalty, this Court has laid down that the quantum of penalty should depend upon the gravity of the offence. If it is not so, and the maximum penalty is levied, in a mechanical manner, it is a pointer to show that the officer has not exercised the judicial discretion vested in him according to law. See R. v. Barnsley [1976] 3 All ER 452 (CA), R. v. Secretary [1990] 1 All ER 469 (CA) (479 to 481). There has been abdication of the judicial discretion vested in the officer. Besides, the levy of penalty will be irrational or unreasonable and will militate against the "Wednesbury" principle". The doctrine of "proportionality" forms part of the rule that the orders should be reasonable or rational. On this short ground, we quash exhibits P9, P10, P11, P15, P16, P17 and P21 in O.P. No. 6316 of 1990. We also quash exhibits P20 and P26 in O.P. No. 7361 of 1990. We direct the concerned Intelligence Officer to reappraise the matter and pass fresh orders in accordance with law in these two O.Ps. 16. Subject to the observations contained in this judgment, Writ Appeal No. 108 of 1990 is dismissed. O.P. Nos. We also quash exhibits P20 and P26 in O.P. No. 7361 of 1990. We direct the concerned Intelligence Officer to reappraise the matter and pass fresh orders in accordance with law in these two O.Ps. 16. Subject to the observations contained in this judgment, Writ Appeal No. 108 of 1990 is dismissed. O.P. Nos. 7361 of 1990 and 6316 of 1990 are allowed to the limited extent as stated hereinabove. Writ appeal dismissed. Writ petitions partly allowed.