Penalty for non-carrying declaration form not sustained where form was available and produced on interception day

Penalty under section 78(5) was not leviable where the declaration form ST-18C had been obtained before dispatch and was produced on the same day of interception, as the lapse was treated as inadvertent non-carrying rather than a post-interception defence. The Court held that the assessee should have been given an opportunity before penal action, and on those proved facts the penalty could not be sustained. It further noted that mens rea was not necessary for penalty under section 78(5), but that did not change the result because the penalty was otherwise unjustified.

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Issues: Whether penalty under section 78(5) of the Rajasthan Sales Tax Act, 1994 was leviable where the declaration form was available with the assessee and was produced on the same day of interception, and whether the absence of mens rea affected such penalty.

Analysis: The declaration form ST-18C had been obtained before dispatch of the goods and was produced immediately on demand on the very day the vehicle was checked. On these facts, the breach was treated as a case of inadvertent non-carrying of the form at the time of interception rather than a post-interception attempt to create a defence. In that situation, and in the light of the principle that an opportunity should be afforded before penal action, the Court held that no penalty could be sustained. The Court also noted that mens rea was not necessary for penalty under section 78(5), but that did not alter the result because the penalty was otherwise not leviable on the proved facts.

Conclusion: Penalty under section 78(5) was not leviable, and the issue was decided in favour of the assessee and against the Revenue.

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