Judgment ( 1. ) THE petitioner being aggrieved by the orders passed by respondents Nos. 1 and 2 holding it liable under Section 29 (6) of the Madhya Pradesh General Sales Tax Act, 1958 and imposing penalty thereby under Section 29 (8) of the said Act, has submitted the present petition. ( 2. ) CASE of the petitioner is that it is a registered dealer under the aforesaid Act and has been running the wholesale business of grocery including betel-nuts. He has been filing returns and has been assessed to general sales tax regularly. It is further pleaded that the Sales Tax Officer, Flying Squad, Jabalpur, in exercise of power under Section 29 (6) of the said Act, inspected on August 23, 1988 the transport garage of New Golden Transport Company at Katni. He found 148 bags of betel-nuts, 15 bags of turmeric and 13 bags of red chilli at the garage without any bill or way-bill (Billty ). The Manager of the Transport Company, namely, Lalchand stated that the goods were unloaded at the transport garage from Truck No. MKK-5196. He stated that the truck came from Nagpur without concerning bills and way-bill (Billty ). Out of the aforesaid, the petitioner owned 22 bags of betel-nuts. ( 3. ) THE Assistant Commissioner visited the place of the transporter on August 25, 1988 and seized the goods from the said Lalchand. The transport company made an application on September 5, 1988 for the release of the goods. It was stated that the driver of truck No. MKK-5196 had left behind the envelope containing all the papers at Nagpur Office. These papers were produced after having been received from Nagpur office. ( 4. ) THE goods were not released and instead action of levying penalty under Section 29 (8) of the aforesaid Act was taken. The petitioner also made a submission for the release of goods without penalty. ( 5. ) THE Assistant Commissioner of Sales Tax formed an opinion that the petitioner wanted to evade the tax in collusion with the transporter. Accordingly, the Assistant Commissioner held that the declaration required to be submitted in form XXV-A was not submitted. On October 25, 1988 the Assistant Commissioner of Sales Tax passed a final order imposing penalty of Rs. 7,017 under Section 29 of the Act. Accordingly, the Assistant Commissioner held that the declaration required to be submitted in form XXV-A was not submitted. On October 25, 1988 the Assistant Commissioner of Sales Tax passed a final order imposing penalty of Rs. 7,017 under Section 29 of the Act. Revision petition preferred against the aforesaid order was also rejected vide annexure P8 by the Additional Commissioner of Sales Tax. ( 6. ) MAIN contention of the learned Senior Advocate, Shri H. S. Shrivastava, is that Sub-sections (6) and (8) of Section 29 of the Madhya Pradesh General Sales Tax Act, 1958, are not applicable and the impugned orders contained in annexures P5, P6 and P8 are liable to be quashed. ( 7. ) SHRI Deepak Awasthy, Government Advocate, supported the impugned orders. He submitted that there was sufficient material before the Commissioner to form an opinion that the petitioner kept the goods at the transport garage with the permission of the transporter in order to evade payment of tax. According to the learned Government Advocate, this opinion was formed in a prudent manner taking the material into consideration. Accordingly, he submitted that the penalty was levied rightly and the petition is liable to be dismissed. ( 8. ) IN order to examine the applicability of Sub-sections (6) and (8) of Section 29 of the Madhya Pradesh General Sales Tax Act, 1958, it is necessary to reproduce certain specific provisions as under : Section 2 (d) of the said Act defines "dealer" as follows: dealer means any person who carries on the business of buying, selling, supplying or distributing goods directly or otherwise, whether for cash, or for deferred payment, or for commission, remuneration or other valuable consideration and includes (i) a local authority, a company, an undivided Hindu family or any society (including a co-operative society), club, firm or association which carries on such business ; (ii) a society (including a co-operative society), club, firm or association which buys goods from, or sells, supplies or distributes goods to, its members ; (iii) a commission agent, a broker, a del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supplying or distributing goods on behalf of any principal ; ( 9. ) SUB-SECTIONS (6) and (8) of Section 29 as introduced by the Madhya Pradesh General Sales Tax (Third Amendment) Act, 1983, are reproduced as under: (6) Where the Commissioner has reason to believe that the dealer has stored or kept goods liable to payment of tax without accounting for them in books, registers or accounts maintained by such dealer in the course of his business with a view to their surreptitious sale in order to evade payment of tax in any building, place or vehicle under ownership or control of the dealer in either case whether exclusive or in association with some other person, or in any building, place or vehicle in each case belonging to some other person with express or implied permission of such other person, the Commissioner may enter any such building, place or vehicle with such number of assistants as may be necessary, and inspect and verify if the goods have been accounted for and in the event of his reasonable belief that the dealer has not accounted for such goods with the intention of evading tax, the Commissioner may seize all such goods and take all necessary steps for their removal, proper custody and preservation. (8) If the Commissioner, after taking into consideration the explanation of the dealer and after giving him an opportunity of being heard, is satisfied that the entries relating to said goods were not made in the books of accounts, registers or other documents of the dealer and without any proper justification, the Commissioner shall pass an order imposing a penalty equal to the sum specified in the notice. ( 10. ) THE Assistant Commissioner of Sales Tax, Katni, passed the order contained in annexure P5 demanding thereby a sum of Rs. 3,705 towards sales tax in the form of cash security for the release of goods. It was mentioned in annexure P5 that the proceedings for imposing penalty will be taken up subsequently. A penalty of Rs. 7,017 was imposed in exercise of powers under Section 29 (8) of the said Act, by the Assistant Commissioner of Sales Tax, Katni, vide annexure P6 which was challenged in revision before the Additional Commissioner of Sales Tax, Jabalpur. The revision application was dismissed vide annexure P8. A penalty of Rs. 7,017 was imposed in exercise of powers under Section 29 (8) of the said Act, by the Assistant Commissioner of Sales Tax, Katni, vide annexure P6 which was challenged in revision before the Additional Commissioner of Sales Tax, Jabalpur. The revision application was dismissed vide annexure P8. Section 29 of the Act gives a Scheme for the exercise of power to require production of accounts and documents and to inspect, search and seizure books of accounts, documents and goods. Sub-section (6) quoted above is applicable only if the following factors are found to exist: (i) Where the Commissioner has reason to believe that the dealer has stored or kept goods liable to payment of tax without accounting for them in books, registers or accounts ; (ii) Dealer has stored or kept such goods with a view to their surreptitious sale in order to evade payment of tax ; (iii) Dealer has stored or kept the goods in any building, place or vehicle under ownership or control of the dealer in either case whether exclusive or in association with some other person ; (iv) Dealer has stored or kept goods in any building, place or vehicle in each case belonging to some other person with express or implied permission of such other person. ( 11. ) THE Commissioner is empowered to enter into any such building, place or vehicle if the aforesaid factors are found to exist. In the present case, the goods were found at the garage of Nagpur Golden Transport Company, Katni. There is no iota on record to establish that the petitioner was made aware of arrival of such goods and the goods were kept at the transport garage on the request of the petitioner. The department had no evidence before it that the delivery of the goods in question was offered to the petitioner. In order to apply Section 29 (6) of the Madhya Pradesh General Sales Tax Act, 1958, it is obligatory on the part of the department to establish that intimation of arrival of the goods at the transport company was duly received by the dealer and that the goods were stored or kept even at the garage of the transporter on account of express or implied permission of the dealer. ( 12. ) IT is true that form No. XXV-A was not produced by the transporter. ( 12. ) IT is true that form No. XXV-A was not produced by the transporter. However, the dealer/petitioner cannot be blamed for it. The goods were stated to have been sent by the seller (consignor) through the truck. However, before receiving them, the petitioner could not have been blamed for any fault or laches on the part of the seller. The department was free to proceed against the seller or the transporter for contravention of any provision of law. However, the petitioner who happened to be a dealer cannot be said to have stored or kept goods at the garage of the transporter before he received the intimation about the arrival of the goods. The learned Assistant Commissioner of Sales Tax, Katni, and Additional Commissioner of Sales Tax, Jabalpur, have not taken into consideration that the goods are not proved to have been stored or kept at the garage of the transporter by the dealer. There was no discussion of evidence about the express or implied permission of the dealer for storing or keeping the goods at the garage of the transporter. ( 13. ) THE honourable Supreme Court of India in the case of Anantharam Veerasinghaiah and Co. v. Commissioner of Income-tax AIR1980 SC 1146 , [1980 ]123 ITR457 (SC ), 1980 Supp (1 )SCC13 , [1980 ]3 SCR618 (Civil Appeal No. 2592 of 1972), has clearly held: It is for the revenue to prove those ingredients before a penalty can be imposed. Since the burden of proof in a penalty proceeding varies from that involved in an assessment proceeding, a finding in an assessment proceeding that a particular receipt is income cannot automatically be adopted as a finding to that effect in the penalty proceeding. In the penalty proceeding the taxing authority is bound to consider the matter afresh on the material before it. . . It is further held that the mere falsity of the explanation given by the assessee, was insufficient without there being in addition cogent material or evidence from which the necessary conclusion attracting a penalty could be drawn. ( 14. In the penalty proceeding the taxing authority is bound to consider the matter afresh on the material before it. . . It is further held that the mere falsity of the explanation given by the assessee, was insufficient without there being in addition cogent material or evidence from which the necessary conclusion attracting a penalty could be drawn. ( 14. ) IN Hindustan Steel Ltd. v. State of Orissa 1970 25 STC 211, it has been held by the honourable Supreme Court: 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 exercised judicially and on a consideration of all the relevant circumstances. ( 15. ) APPLYING the aforesaid parameters, it is found that the authorities have imposed a penalty without giving a specific finding about the existence of the conditions requisite for the exercise of the powers under Section 29 (6) and (8) of the Madhya Pradesh General Sales Tax Act. They appear to have merely proceeded on the surmises and conjectures that the petitioner has acted in connivance with the transporter. Before imposing a penalty, the authorities ought to have arrived at a finding about the existence of the ingredients of Section 29 (6) of the said Act. ( 16. ) IN the result, the petition is allowed. The orders contained in annexures P6 and P8 are quashed. The authorities are directed to decide the matter afresh after taking into consideration the pre-requisites essential for the exercise of powers under the said provisions. It is, however, made clear that the authorities will be within the rights to proceed against the consignor or the transporter for breach of any of the provisions of law, which was in force at the relevant time. No order as to costs.