N.M. Kasliwal, J.
1. This is a reference application under Section 15 of the Raja-sthan Sales Tax Act, 1954, by the Commercial Taxes Officer (Revision), Ajmer, for giving a direction to the Board of Revenue to refer the following question of law arising out of the order of the Board of Revenue dated 27th February, 1980 :
Whether, under the facts and circumstances of the case, penalty imposed under Section 16(1)(i) of the Rajasthan Sales Tax Act was rightly set aside by the Board of Revenue when the assessee after legally collecting the tax from purchasers withheld the same
2. M/s. Shri Gopal Industries Ltd., Kota (hereinafter referred to as the assessee), was dealing in the manufacture and sale of cotton yarn. While considering the return for the period 1st July, 1965, to 30th June, 1966, the assessing authority also imposed a penalty of Rs. 7,000 under Section 16(1)(i) of the Act for collecting sales tax on sales of cotton waste and not depositing the same in the State treasury. On appeal by the assessee, the Deputy Commissioner (Appeals) reduced the amount of penalty by Rs. 975 only and the rest of the penalty was maintained. The assessee then filed a revision before the Board of Revenue and a learned single Member of the Board rejected the revision by his order dated 23rd October, 1978. The assessee then filed a special appeal under Section 14(4A) of the Act, which came up for consideration before a Division Bench of the Board of Revenue. The Division Bench of the Board held that the conduct of the assessee never actually amounted to fraudulent evasion or concealing his liability to tax. The transactions in question were clearly included in the statements, which were furnished and not only that, the assessee on his own claimed deduction under Rule 29 which could have only been under the bonafide belief that the transactions were not liable to tax. The Board further observed that the conduct of the assessee cannot be termed as avoiding the payment of tax since he came out with clean hands and placed all the facts before the assessing authority. In the result the special appeal was allowed and the judgment of the learned single Member was set aside. The department then filed a reference application under Section 15 of the Act before the Board of Revenue and the same was also dismissed by the Division Bench of the Board by order dated 12th December, 1980, holding that whether there was concealment or not was a question of fact and whether the circumstances of a case attracted the clear provisions of Section 16(1)(i), was also a question of fact. The department has now filed this reference application in this Court.
3. The learned counsel for the department contended that the assessee was all along paying sales tax on the sale of cotton waste and without any valid reason kept the sales tax for the period 1st July, 1965, to 30th June, 1966, with him, though he had collected the same from the customers. The assessee could not have kept the amount of sales tax with him and the question that sales tax was chargeable on sale of cotton waste, was well-settled and in these circumstances, there was no question of any bona fide on the part of the assessee in not depositing the amount of sales tax in time. It was also contended that the Board of Revenue in its order dated 27th February, 1980, did not consider all the facts and circumstances of the case, specially the fact that the assessee was paying the sales tax on sales of cotton waste for all the assessment years prior to the year in question, i. e., 1966-67. There was no change of law, which could have justified the assessee to take a different view for the assessment year 1966-67 and the fact that the amount of sales tax was kept by the assessee for about three years clearly showed his mala fide intention and the penalty was correctly imposed on him. It was further submitted that in any case the question which arises for determination as reproduced above, is a question of law. It is further argued that in the facts and circumstances of this case whether the assessee avoided the payment of tax fraudulently, was a question of law and is called for determination by this Court.
4. Mr. Bafna, the learned counsel for the assessee, contended that the assessee had not concealed any facts in the return filed by him. The amount in question was shown in the suspense account and the deduction from the sales tax was sought under rule 29. There was no mala fide intention on the part of the assessee and he had bona fide felt that the sales of cotton waste was not liable to tax. The assessee had filed the return in time mentioning all those facts and if the assessing authority itself took three years in deciding the matter, the assessee cannot be said to be at fault in retaining the amount of sales tax for three years. The assessing authority has found the transaction of cotton waste as liable to duty and the same has been paid by the assessee.
5. We have given our careful consideration to the arguments advanced by the learned counsel for both the parties. Section 16(1)(i) of the Act, at the relevant time, was as follows :
Fraudulently evades or avoids the payment of tax or conceals his liability to tax.
6. The Board found that the assessee had not concealed any facts in the return filed by him, on the contrary the transactions in question were clearly included in the statement furnished by him and he was claiming deductions under Rule 29. Nothing was concealed by the assessee and all the facts including the transactions in question were shown in the return and it was for the assessing authority to allow deductions or not under Rule 29 as claimed by the assessee.
7. It was observed by a Division Bench of this Court in Additional Commissioner of Income-tax, Rajasthan v. Gem Palace as under :
Held, that the Tribunal was right in holding that the question whether there was any concealment of .income and whether there was any fraud or gross or wilful neglect in the filing of the proper return of its income on the part of the assessee was essentially a question of fact and from the finding of the Tribunal it could not be said that the Tribunal was not mindful of the explanation to Section 271(1)(c) of the Act. The Tribunal came to the conclusion that there was no fraud or gross or wilful neglect on the part of the assessee and on the basis of that finding the penalty was cancelled. It was purely a finding of fact and no question of law arose and as such the Tribunal could not be directed to make a reference.
7. Mr. Joshi, the learned counsel for the department, placed reliance on State of Gujarat v. Raipur . : 1SCR618 and Aryodaya Spinning and Weaving Company Ltd. v. State of Bombay  11 STC 141 and contended that in view of the aforesaid authorities the question was well-settled that the transactions relating to cotton waste were liable to tax.
8. On a perusal of the Aryodaya Spinning and Weaving Company Ltd.'s case  11 STC 141 it is found that the Bombay High Court had taken the view that although the normal business of the assessees was the manufacture of yarn and cloth, cotton waste, which was a subsidiary product, was normally sold, and in the circumstances, an intention to carry on business of selling the subsidiary product as a part or an incident of the business of the assessees might be inferred and the transaction of sale might be regarded as an activity in the course of the business of the assessees.
9. However, the question which calls for determination in the case before us is whether, in the facts and circumstances of this case, any question of law arises if a Division Bench of the Board of Revenue has dicided the question of fact in favour of the assessee that there was no fraudulent evasion or avoidance of the payment of tax by the assessee. In the present case, the Board of Revenue in its order dated 27th February, 1980, after considering various authorities observed as under :
The transactions in question were clearly included in the statements which were furnished and not only that, the assessee on his own claimed deductions under Rule 29 which could have only been under the bona fide belief that the transactions were not liable for tax. Similarly, his conduct cannot be termed as avoiding the payment of tax since he came out with clean hands and placed all the facts before the assessing authority.
10. In our view, the above fiding is purely a finding of fact and no question of law arises in case of such a finding given by the Board of Revenue. We find no force in the contention of Mr. Joshi that the Board of Revenue did not take into consideration the circumstance that the assessee was paying tax on such transactions in all the returns for the assessment years prior to 1966-67. It is a matter of record and it cannot be said that the Board of Revenue was not aware of this fact.
11. In view of these circumstances, we are clearly of the opinion that no question of law arises for determination in this case and the reference application is accordingly dismissed.