ORDER A. R. TIWARI, J. - At the instance of the applicant (Commissioner of Sales Tax), the Tribunal (Board of Revenue) has stated the case under section 44(1) of the M.P. General Sales Tax Act, 1958 (for short, the "Act") and referred the undernoted question, categorised as of law, for our consideration and opinion : "Whether, on the facts ad circumstances of the case, the Board of Revenue was right in law in holding that no penalty under section 43(1) can be imposed for filling incorrect returns and without proving means rea ?" 2. Briefly stated, the facts of the case are that the non-applicant is a manufacturer of cloth and synthetic yarn. During the period October 1, 1983 to September 30, 1984, the non-applicant showed the total purchases in its return. The return was, however, in conflict with the position shown in the books of accounts. Penalty of Rs. 67,000 was imposed under section 43(1) of the Act for filing false return and of Rs. 4,500 under section 17(3) of the Act for late payment of tax and Rs. 100 under rule 69A of the M.P. General Sales Tax Rules, 1959 for non-submission of form VIII. The assessee filed the first appeal which was allowed in part. Penalty under section 43(1) of the Act was reduced by Rs. 17,000. Still dissatisfied, the assessee filed the second appeal before the Tribunal. The Tribunal vacated the order of penalty under section 43(1) of the Act in its entirety. The applicant felt aggrieved by this quashment of penalty and thus, filed the application under section 44(1) of the Act. The Tribunal, then stated the case and referred the aforesaid question. 3. We have heard Shri Surjeet Singh, learned Government Advocate for the applicant, in detail for the purposes of final disposal of this application. None appeared for the non-applicant. Despite orders dated April 12, 1994, September 14, 1994, December 4, 1995 and April 15, 1996, the applicant did not take steps for payment of process fee and supply of correct address of the non-applicant. 4. Section 43(1) of the Act provides as under : "43 (1). None appeared for the non-applicant. Despite orders dated April 12, 1994, September 14, 1994, December 4, 1995 and April 15, 1996, the applicant did not take steps for payment of process fee and supply of correct address of the non-applicant. 4. Section 43(1) of the Act provides as under : "43 (1). If the Commissioner or the appellate authority, in the course of any proceedings under this Act, is satisfied that a dealer has concealed his turnover or the aggregate of purchase prices in respect of any goods or has furnished inaccurate particulars of such sales or purchases, as the case may be, or has furnished a false return, the Commissioner or the appellate authority, as the case may be, may after giving the dealer a reasonable opportunity of being heard, direct that the dealer shall in addition to the tax payable by him, pay by way of penalty a sum, which shall be, - (i) fifty per cent of the tax evaded if the tax evaded is twenty per cent to fifty per cent of the total tax payable by him; or (ii) one hundred per cent of the tax evaded, if the tax evaded is fifty-one per cent to one hundred per cent of the total tax payable by him; or (iii) one hundred and fifty per cent of the tax evaded if the tax evaded is above one hundred per cent of the total tax payable by him." 5. It emerges from the aforesaid provision that the Commissioner or appellate authority is empowered to impose penalty. The word used is "may". This shows that the discretion is conferred. But as stated by Lord Mansfield in classic terms in John Wilkes' (1770) 4 Burr 2528, the discretion is required to be sound and has to be regulated by law and governed by rules. In other words, it cannot be arbitrary or capricious. The discretion is exercisable on satisfaction that the dealer has concealed the turnover or aggregate of purchase prices or has furnished inaccurate particulars or has furnished false return. The ground pressed by the applicant before the Tribunal was that it was a case of submission of incorrect return. In other words, it was not contended by the applicant that it was a case of inaccurate particulars or false return. 6. The ground pressed by the applicant before the Tribunal was that it was a case of submission of incorrect return. In other words, it was not contended by the applicant that it was a case of inaccurate particulars or false return. 6. The Tribunal examined the question and held as under : "A perusal of the assessment order reveals that notice for imposition of penalty under section 43(1) was issued for filing incorrect returns. The assessing officer was not satisfied with the explanation offered by the appellant. The assessing officer did not make any positive finding about deliberateness, falsity or mens rea in filing the incorrect returns. Anything incorrect or incorrect returns as such do not attract penalty under section 43(1) of the Act. When the incorrect return is attended by deliberateness or falsity or mens rea, then only penalty under section 43(1) is attracted. Since the falsity of the returns is alleged by the department, the burden of proof is also on the department. Unless and until that burden is discharged, the department has no authority to impose penalty under section 43(1). Since there is no positive finding that there is deliberateness or falsity or mens rea in filing the incorrect returns, the assessing officer was not right in levying penalty under section 43(1) of the Act. The Appellate Deputy Commissioner is also not justified in upholding the penalty levied. As a result, the penalty under section 43(1) of the Act is hereby set aside." 7. In [1982] 50 STC 36 (MP) (Bhojmal & Sons v. Commissioner of Sales Tax, M.P.), it was held as under : "...........In the circumstances, it cannot be said that the filling of the inaccurate return was accompanied by a guilty mind and therefore, as held by the Supreme Court in Cement Marketing Co. of India Ltd. v. Assistant Commissioner of Sales Tax, Indore [1980] 45 STC 197 (SC), the imposition of penalty on the assessee under section 43(1) of the Act read with section 9(2) of the Central Act was not justified on the facts and in the circumstances of the case. Our answer to question No. (3) therefore is in the negative and against the department." 8. The Tribunal appreciated the facts and features and concluded that incorrect return was not accompanied by a guilty mind. Our answer to question No. (3) therefore is in the negative and against the department." 8. The Tribunal appreciated the facts and features and concluded that incorrect return was not accompanied by a guilty mind. It is, thus, clear that there was no mens rea or deliberate attempt to conceal the fact and figures. The applicant-department failed to show existence of mens rea. Non-applicant showed non-existence. There is no case of evasion. 9. That being so, we are satisfied that the Tribunal did not commit any error and reached the conclusion which is on firm foundation and is not liable to be dislodged or demolished. Our answer is based on facts. 10. The non-applicant-assessee placed the material on record to show that there was no mens rea. In view of this position, it is not pertinent to say as to which side had the burden in regard to mens rea. We hold that the Tribunal was right in setting aside the direction about penalty under section 43(1) of the Act. We may add that the question evidently through typographical error has incorporated section 42(1) of the Act whereas the correct provision is section 43(1) of the Act. 11. In the result, we answer the question in favour of the assessee and against the Revenue. 12. This miscellaneous civil case thus, stands decided in the terms indicated above, but without any orders as to costs. 13. A copy of this order shall be transmitted to the Tribunal. Reference answered accordingly.