JUDGMENT Dr. Vineet Kothari - By this revision petition, the petitioner - assessee has challenged the impugned order of the learned Tax Board dated December 31, 2007, whereby, the Tax Board has upheld the penalty of Rs. 88,669 imposed by the assessing authority under section 77(8) of the Rajasthan Sales Tax Act, 1994. The learned counsel for the petitioner, Mr. Dinesh Mehta, vehemently submitted that upon remand by the first appellate authority, learned CTO in the proceedings under section 77(8) of the Act in the impugned order dated September 9, 2002 found that excess stock of Rs. 3,23,364 was found in the category of sales tax paid goods on which tax cannot be levied on the present assessee, whereas, less stock was found on physical verification to the extent of Rs. 2,77,649 in the category of goods taxable at four per cent. He submitted that the difference in the stock found by the assessing authority is upon deduction of normal G.P. rate of 19.22 per cent from the total sale value of the goods found in the sales tax paid category of goods at the business place of the petitioner - assessee. He, therefore, urged that in the absence of actual physical stock being found in excess and that too in sales tax paid goods category, penalty under section 77(8) of the Act could not have been imposed by the assessing authority and the learned Tax board has also fallen into error in upholding the same. On the other hand, Mr. Ankur Mathur, learned counsel for the Revenue, relying upon the provisions of section 77(8) of the Act, which are reproduced below, urged that the only basis for imposing penalty under section 77(8) of the Act is the "possession of the goods not accounted for" by the assessee irrespective of the category, whether sales tax paid goods or taxable goods, therefore, penalty provision gets attracted in the present case, since excess stock was found on the basis of deduction of normal G.P. rate from the normal sale value, which is also a recognized method of determining the stock of the assessee. He submitted that the assessing authority cannot be faulted in imposing the said penalty. 77. Power of entry, inspection and seizure of accounts and goods. - "(1) to (7) ... He submitted that the assessing authority cannot be faulted in imposing the said penalty. 77. Power of entry, inspection and seizure of accounts and goods. - "(1) to (7) ... (8) The assessing authority or the officer referred to in sub-section (6) may, after having given the dealer an opportunity of being heard and after having held such further inquiry as it may consider fit, impose on him, for the possession of goods not accounted for, whether seized or not under sub-section (6), a penalty equal to the amount of the five times of the tax leviable on such goods or thirty per cent of the value of such goods, whichever is less; and such authority or officer may release the goods, if seized, on payment of the penalty imposed or on furnishing such security for the payment thereof as it may consider necessary." Having heard the learned counsels, this court is of the opinion that the learned Tax Board has erred in upholding the penalty under section 77(8) of the Act on the stated reasons in the impugned penalty order of the assessing authority. The purpose of section 77(8) of the Act, as quoted above, which deals with inspection, search, seizure is obviously to check possible evasion of tax if the goods in the hands of the assessee attracting sales tax under the provisions of the Sales Tax Act are found to be in excess stock than the stock reflected as per the regular books of accounts maintained by the assessee. Undoubtedly, the basis for invoking the provisions of section 77(8) of the Act is "possession of the goods not accounted for" whether seized or not and penalty in the range of five times of the tax leviable on such goods or thirty per cent of the value of such goods, whichever is less, gets attracted. But, if the goods for which allegedly excess stock not accounted for in the books of accounts is found, even assuming for the argument sake, validly on the basis of deduction of G.P. rate from the sale value, still such penalty cannot be imposed because the goods in question are admittedly of sales tax paid category in the hands of the present assessee and not taxable category. The range of penalty to be determined on the basis of two factors would simply be not available, if one of the factors is zero, namely, no tax liability is attracted in the sales tax paid goods in the hands of the assessee. In the present case, obviously the question of imposing penalty thirty per cent of the value of the goods would not arise as the lesser factor, namely five times of the tax liability is zero. Therefore, no penalty under section 77(8) of the Act can be imposed in such circumstances. Had it been a case of excess stock found in the category of taxable goods in the hands of the assessee, even if such excess stock was determined on the basis of sale value minus G.P. rate, it could have been a good case for the Revenue to impose such a penalty under section 77(8) of the Act. However, in view of there being no dispute that the alleged excess stock found at the time of survey was of sales tax paid category on which admittedly no further tax liability is attracted as goods are already tax paid, impugned penalty is not attracted. The theory that stock estimates can be arrived at by reducing general G.P. rate from the sale value has a caveat. The stocks in hand to be determined during surveys cannot be determined with precision with this method. Physical verification of stocks is the only reasonably precise method. Therefore, for such a broad-based determination of stocks in hand calculated by reducing G.P. rate from sale value, does not furnish a very cogent reason and foundation for imposition of penalty under section 77(8) of the Act. Moreover, this court finds that this aspect of the matter as to whether this penalty ought to be applied in the category sales tax paid goods or not does not find discussion in the order of the assessing authority. After finding the alleged difference between the stock calculated as per sale value minus G.P. rate and stock reflected in the regular books of accounts maintained by the assessee, the assessing authority straightway computed the five times of the tax rate as penalty under section 77(8) and this aspect of the matter as to whether the goods being tax paid or taxable has escaped the attention of the assessing authority altogether. Unfortunately, learned Tax Board also has not addressed itself to this aspect of the matter. In these circumstances, the imposition of penalty on the petitioner - assessee is found to be unjust and illegal. Consequently, this revision petition is allowed and the impugned order of penalty passed by the learned authorities below including that of learned Tax Board dated December 31, 2007 is set aside. The amount of penalty, if already deposited by the assessee, may be refunded back to the assessee with interest in accordance with law, within a period of three months from today. No costs.