2015 (5) TMI 1053 - HC - VAT and Sales Tax

Larger Bench Rules No Mens Rea Needed for Penalty Under Sales Tax Act, Upholds Penalty in Documentation Discrepancy Case

Assistant Commercial Taxes Officer, Flying Squad Zone-I, Jaipur Versus Khetan Sales Corporation

Assistant Commercial Taxes Officer, Flying Squad Zone-I, Jaipur Versus Khetan Sales Corporation - [2015] 86 VST 91 (Raj) Issues involved:1. Conflict of opinions in Division Bench judgments regarding the requirement of mens rea for penalty under section 78 of the Rajasthan Sales Tax Act, 1994.2. Resolution of questions framed by a Larger Bench regarding the liability for penalty in sales tax matters.3. Application of the judgments in Assistant Commercial Taxes Officer v. Indian Oil Corporation Ltd. and Guljag Industries v. Commercial Taxes Officer to a specific case involving overwritings and cuttings in declaration forms.Analysis:1. The High Court addressed the conflict of opinions in Division Bench judgments by constituting a Larger Bench to resolve questions related to the requirement of mens rea for imposing penalties under section 78 of the Rajasthan Sales Tax Act, 1994. The Larger Bench, in the case of Assistant Commercial Taxes Officer v. Indian Oil Corporation Ltd., clarified that mens rea is not necessary for determining penalty liability under the Act.2. The Court considered the questions framed by the Larger Bench and applied the answers provided in the Indian Oil Corporation Ltd. case to a specific sales tax revision petition. The case involved goods being transmitted with discrepancies in declaration forms, leading to the imposition of a penalty under section 78(5) of the Act. The Deputy Commissioner (Appeals) and Tax Board had previously deleted the penalty, but the Court re-evaluated the situation.3. In analyzing the specific case, the Court emphasized the presence of overwritings and cuttings in the declaration form, considering them as clear indicators of evasion of tax. Citing the Guljag Industries case, the Court reiterated that even if material particulars are missing, it can still constitute tax evasion. The Court concluded that the assessing officer was justified in levying the penalty, contrary to the decisions of the Deputy Commissioner (Appeals) and the Tax Board, which were deemed unjustified.4. Consequently, the Court quashed the order of the Tax Board, reinstated the assessing officer's decision, and allowed the sales tax revision petition in favor of the Revenue. The judgment highlighted the importance of the Larger Bench's ruling on mens rea and its application to cases involving discrepancies in documentation, ultimately upholding the penalty imposition in the specific matter at hand.