JUDGMENT MRS. MANJULA CHELLUR - The undisputed facts pertaining to this appeal are as under : On September 26, 2005 goods vehicle bearing No. MH 09 Q 6137 carrying the goods under invoices raised by the present appellant in favour of one Sri Enterprises, Bombay, were seized by the Commercial Tax Officer at Arishinakunte check-post on Tumkur Road, stating that the goods vehicle did not have documents like form VAT-505 or form VAT-515. A show-cause notice was issued to the appellant to establish the legality of the movement of goods without the mandatory form VAT-505. However, the respondent did not reply immediately. On the other hand, the owner of the vehicle sought time on the ground that he was not getting any information from the appellant, therefore, he must be allowed to unload the goods at his godown. The above proposed imposition of tax and penalty was made known to one Mr. Shivakumar, who was incharge of the appellant - company. Later on, a letter dated September 21, 2005 was sent saying that in spite of contacting M/s. Kennametal India Ltd., to discharge the proposed penalty, it was not responded. In the meantime, the appellant through their letter dated September 26, 2005 stated that after discussion with the Deputy Commissioner of Commercial Taxes, the penalty had been paid at a re-proposed rate, i.e., two times of the tax amount and they had even paid the said amount of Rs. 49,493. Only after the payment of the said amount, the goods vehicle was released. According to the appellant, it was a bona fide mistake on their part not to hand over required form VAT-505 along with the invoices, when they handed over the goods to the vehicle to be delivered at Bombay to one Sri Enterprises, as these were the rejected goods supplied to them by Sri Enterprises, Bombay, and they have returned the said goods and even the endorsement of the concerned officer of Excise Department would indicate that on August 31, 2005 an endorsement was made by the officer noting the rejection of the goods. The Joint Commissioner of Commercial Taxes on the appeal by the present appellant held that the documents accompanying goods were sent to hold that the vehicle was carrying the rejected goods and it was not an out rate sale from the present appellant to Sri Enterprises. The Joint Commissioner of Commercial Taxes on the appeal by the present appellant held that the documents accompanying goods were sent to hold that the vehicle was carrying the rejected goods and it was not an out rate sale from the present appellant to Sri Enterprises. The revisional authority, on the suo motu show-cause notice issued, found the order of the appellate authority to be improper, illegal and prejudicial to the interest of Government revenue, for the reasons, which read as under : "1. The goods carried in the said goods vehicle were iron and steel items. The iron and steel commodity are considered as special commodity and the consignor/transporter is required to carry VAT delivery note in form No. 505 or VAT-515 in addition to the invoice or bill of sale. The transporter was not carrying any such documents in VAT-505 or VAT-515. He has contravened the provision of section 53(2) of the KVAT Act, 2003 with deliberate intention and wilful attempt to evade the taxes due to the Government. He found that there was violation of the provisions of the said section of the said Act, which also amounts to violation of statutory requirement of law. 1. The honourable High of Karnataka in the case of Larsen and Toubro Limited, Bangalore v. Additional Commissioner of Commercial Taxes, Zone 1, Bangalore [2001] 124 STC 321 (Karn); [2001] 51 ELT 216 (HC) (DB) has held that penalty can be levied for non-compliance to the statutory requirement of law and penalty can be levied even for legal violation also. 2. The honourable High Court of Karnataka in the case of Rajarajeswari Enterprises in writ petition No. dated June 20, 2004 has clear ruled mens rea or wilful attempt to evade the tax legitimately due to the Government cannot be precondition for levy of penalty. In view of the above observations, it is noted that the appeal order needs intervention from this office as it is improper, illegal and prejudicial to the interest of the Revenue. Therefore, while invoking the provisions of section 64(1) of the Act, it is hereby proposed to set aside the appeal order and to restore the penalty order passed under section 53(2) of the KVAT Act, 2003. Therefore, while invoking the provisions of section 64(1) of the Act, it is hereby proposed to set aside the appeal order and to restore the penalty order passed under section 53(2) of the KVAT Act, 2003. However, before doing so, you are hereby provided with an opportunity to show cause against the said proposal adducing evidences if any, either in person or through your legally authorized representative or to file your written objections or both before the undersigned within ten days from the date of service of this notice, or failing which it is proposed why the order of appellate authority should not be set aside and the penalty order of CTO (TRCP) (Outward) to be upheld." After hearing the authorised person representing the appellant, the revisional authority did not accept the contentions of the appellant that the goods under transportation were the rejected goods of the appellant, hence, it was not a transaction falling under rule 157(1)(a) of the KVAT Rules of 2005. Therefore, the concerned notification of the Commissioner of Commercial Taxes did not apply to the facts of the said case. After taking into consideration the documents and also the material placed by the concerned authorised officer, the revisional authority opined that the documents submitted did not specifically prove that the vehicle was carrying the rejected goods because the invoices were also raised by the present appellant as consignor in the name of Sri Enterprises as consignee. We have secured the original file from the Department as well. On perusal of these records, we note that at the check-post when they verified the vehicle, they found that the consignor had not transported the goods, namely, iron and steel which are the special commodities along with form VAT-515 or VAT-505. Therefore, according to them, there is contravention of proviso to section 53(2) of the KVAT of 2003 and as the value of the goods was Rs. 6,18,658, the rate of interest at four per cent would be Rs. 24,746 and penalty at three times would come to Rs. 74,239. As per the rules and the provisions of section 53, sub-section (2) of the KVAT Act, whenever the goods leave the destination and especially if they are special commodities like iron and steel the required form had to accompany the goods. Apparently, there was no such form along with the goods. 74,239. As per the rules and the provisions of section 53, sub-section (2) of the KVAT Act, whenever the goods leave the destination and especially if they are special commodities like iron and steel the required form had to accompany the goods. Apparently, there was no such form along with the goods. According to the appellant, the excise pass was sent to the Joint Commissioner of Commercial Taxes with details of materials rejected forwarding the copies of the invoices to the concerned officer, but they were not taken into consideration. On September 26, 2005 the appellant after receiving the notice from the check-post demanding penalty of Rs. 74,239, after discussion with the Deputy Commissioner, enclosed DD for Rs. 49,493 towards two times penalty and sought for release of the documents immediately. They did not even say that the said payment was paid under protest. However, the appellate authority while disposing of the appeal filed by the appellant takes into consideration that the documents tendered at the time of checking contained all the details and the same are disrupted. According to the appellate authority the rejected goods were sent back to the consignee and it was not an inter-State sale. If at all the said goods were transported as a result of rejection of goods to Sri Enterprises, there ought, to have been some correspondence between the present appellant M/s. Kannametal Widia and Sri Enterprises and therefore, they were carrying the goods. None of the said correspondence is placed on record and it would be difficult to accept that they were transporting the rejected goods and it was not inter-State sale. On the other hand, we also note another deficit of form VAT-505 was not accompanying the goods and only a invoice raised as if certain rejected goods were sent to Sri Enterprises by the appellant and a consignor was accompanying the goods. Therefore, in the absence of any documents accompanying the goods on September 18, 2005, the revisional authority was justified in saying that the documents produced by them run contrary to each other. The invoices and the records showing rejection of goods indicated sale of goods. Therefore, in the absence of any documents accompanying the goods on September 18, 2005, the revisional authority was justified in saying that the documents produced by them run contrary to each other. The invoices and the records showing rejection of goods indicated sale of goods. We do not find any good ground to differ with the said opinion as the facts and the material placed before us would indicate the mandatory requirement of enclosing the concerned form VAT-505 was not there along with the goods so also the excise documents were absent along with the goods. Though excise gate pass was available, but that was not enough to come to the conclusion that it was return of rejected goods and not an inter-State sale. Accordingly, the appeal is rejected.