Penalty cannot be imposed without application of mind.

This writ petition has been filed challenging the order of the Transport Commissioner, Chennai in Memo No.6491 I/E4/86 dated 4.7.1996. The petitioner is the owner of the stage carriage plying on the inter-State route Bangalore to Kelamangalam. The Permit of the above route was issued by State Transport Authority of Karnataka State and it is covered by the inter-State agreement entered into between the States of Mysore and Tamil Nadu in the year 1973.

2. The case of the petitioner is that the permit was originally given to the petitioner's father Chuddappah whereby he was entitled to entry of vehicle into Tamil Nadu State free of tax and was liable only for payment of tax to the primary State. Subsequently, the petitioner applied for variation of the route up to Royacottah and the primary Authority in Karnataka State granted the variation. However, the State Transport Authority of Tamil Nadu refused to counter sign the variation. The petitioner therefore filed an appeal before the State Transport Appellate Tribunal, Chennai, to direct the authority to counter sign the variation which was allowed and the State transport authority made the counter signature for the variation subject to payment of tax to Tamil Nadu.

3. The State Transport Authority demanded tax to be paid by the permit holder for the State of Tamil Nadu in respect of the variation. The petitioner therefore filed W.P.No.743 8 of.1986 before this Court and challenged the demand of tax. While admitting the write petition Court by way of an order in W.M.P.No.1 of 1986 granted interim stay. However, the order was vacated on 14.7.1987 and as a the same, the petitioner filed W.A.No.127 of 1987. The Division Bench of this Hon'ble in C.M.P.No.12961 of 1987 dated 17.9.1987 disposed of the writ appeal directing the appellant/petitioner herein to furnish a bank guarantee of Rs.20,000 (Rupees Twenty Thousand only) and the appellant/petitioner accordingly furnished the bank guarantee. One other condition passed by the Bench as extracted in the impugned proceedings is that the appellant petitioner should furnish security for the balance by an undertaking not to alienate the vehicle and with further direction that the petitioner should not ply the vehicle on the extended route from 1.9.1987. It is relevant to point out that the demand for tax is for the period August 1986 to August 1987, as stated in Annexure 1 and Annexure 2 of the impugned proceedings.

4. Subsequently, the W.P.No.7438 of 1986 came to be dismissed on 3.1.1996 by the common order based on the judgment of the Supreme Court of India in C.A.Nos.2454-55 of 1980 dated 26.9.1991 and the liability for payment of tax was directed to be decided by the Government of Tamil Nadu.

5. In the meanwhile, the impugned proceedings of the Transport Commissioner came to be passed on 4.7.1996, demanding tax and penalty as follows:

(a) According to the Clause 1 (a) of the Inter State Agreement published in G.O.Ms.No.1178 Home dt.30.4.1973 the routes mentioned in Appendix I to IV only are to be operated by the operators of both the States with the route specified therein. As the variation of permit involving extension of the route from Kelamangalam to Royacottah was outside the scope of Inter-State Agreement it was granted on a condition that the operator should pay separate tax to Tamil Nadu.

(b) Further according to notification No. 11(2) Ho/1871 (U) 74 issued in G.O.Ms.No.817 Home dt.1.4.1974 Under Sec.20 of Tamil Nadu Motor Vehicles Taxation Act, 1974 the Motor Vehicles which ply in accordance with the agreement entered into with other States and published under Sec.63(3-B) of the Motor Vehicles Act, 1939 (repealed) alone are exempted from payment of tax in this State. The Motor Vehicle Act, 1939 and the Taxation Act, 1974 are two different enactments. The notification under Taxation Act, referred to above is the basis to decide whether or not the vehicle in question is entitled for exemption. As the counter signature of per