2016 (4) TMI 4 - HC - VAT and Sales Tax

Court rules intent not required for penalty under Section 78(5) Rajasthan Sales Tax Act

Assistant Commercial Taxes Officer, Anti Evasion-II, Jaipur Versus L.G. Electronics India Pvt. Limited

The court clarified that mens rea is not relevant for determining liability for penalty under Section 78(5) of the Rajasthan Sales Tax Act, 1994. The ... Imposition of penalty - Section 78(5) of the Rajasthan Sales Tax Act, 1994 - Mandatory declaration form ST-18A was blank and the goods were under stock transfer - Whether mens rea is required to be proved - Held that:- as per decision of Hon'ble Apex Court in the case of Guljag Industries v. Commercial Taxes Officer [2007 (8) TMI 344 - SUPREME Court] and Larger Bench of this court in the case of ACTO Versus Indian Oil Corporation Ltd. [2015 (11) TMI 1078 - RAJASTHAN HIGH COURT], mens rea is not essential and therefore, the observation of the Tax Board in this regard is reversed. Rule 53 clearly postulates that a declaration form is required to be carried by an assessee duly filled in, signed and sealed despite all the other documents being available with the incharge of the vehicle. If there is requirement of carrying declaration form and the form is left blank for any reason whatsoever, then it is a clear-cut case of non-carrying requisite document. It is apparent that the assessee was aware that the declaration form is required to be carried, which was duly signed by the authorized signatories of the respondent but for the reasons best known to it, all other particulars were admittedly left blank. The mandate of law and requirement is to be fulfilled. Thus the Hon'ble Apex Court has clearly held that declaration forms 18A/18C, which have been duly signed by the assessee but left blank, then section 78(2)(a) stood attracted. Also an opportunity was granted by the AO to the assessee of proving its case which included filling up of the declaration form, which the assessee now claims before this court, but after almost 15 years, the matter can not be remitted back to the AO for rectifying the deficiency/discrepancy which remained in the declaration form ST-18A. So, when an opportunity was already granted, second opportunity, in the facts and circumstances of the case and that too after fifteen years, is not required to be given. Therefore, penalty under Section 78(5) of the Rajasthan Sales Tax Act, 1994 has to be imposed. - Decided in favour of revenue Issues Involved:1. Relevance of mens rea for determining liability for penalty under Section 78(5) of the Rajasthan Sales Tax Act, 1994.2. Necessity of proving mens rea for imposing penalty under Section 78(5) on violation of Section 78(2).3. Impact of amendment to Rule 55 of the Rajasthan Sales Tax Rules, 1995.4. Requirement of carrying a duly filled declaration form ST-18A.Issue-wise Detailed Analysis:1. Relevance of Mens Rea for Determining Liability for Penalty under Section 78(5) of the Rajasthan Sales Tax Act, 1994:The Larger Bench of the court clarified that 'the requirement of mens rea is not relevant for the purpose of determining the liability for penalty, in terms of section 78(5) of the RST Act, 1994.' This means that the intent or mental state of the assessee is not a necessary consideration when determining whether a penalty should be imposed for violations under this section.2. Necessity of Proving Mens Rea for Imposing Penalty under Section 78(5) on Violation of Section 78(2):The court further elaborated that 'the mens rea is not required to be proved as necessary ingredient for imposition of penalty under sub-section (5) of section 78, on proving violation of sub-section (2) of section 78 of the RST Act, 1994.' This reinforces the stance that the presence of mens rea is not a prerequisite for imposing penalties under these provisions.3. Impact of Amendment to Rule 55 of the Rajasthan Sales Tax Rules, 1995:The amendment to Rule 55, following the Supreme Court's decision in State of Rajasthan v. D.P. Metals, authorizes the empowered authority to 'make an enquiry of violation of section 78(2), and not to adjudicate as to whether the mens rea was present in violation of sub-section (2) of section 78, for imposing penalty under sub-section (5) of section 78 of the RST Act, 1994.' This means that the focus of the enquiry should be on the violation itself rather than the intent behind it.4. Requirement of Carrying a Duly Filled Declaration Form ST-18A:The court emphasized that 'rule 53 clearly postulates that a declaration form is required to be carried by an assessee duly filled in, signed and sealed despite all the other documents being available with the incharge of the vehicle.' In this case, the vehicle was found with a blank declaration form ST-18A, which constituted a clear violation of the statutory requirements. The court noted that the assessee was aware of the necessity of carrying the declaration form, which was signed but left blank. The court referred to the Supreme Court's judgment in Guljag Industries v. Commercial Taxes Officer, which held that carrying a blank but signed declaration form attracts the provisions of Section 78(2)(a).Judgment:The court concluded that the penalty imposed by the assessing officer was justified as the declaration form ST-18A was left blank, which is a violation of the statutory requirements. The court reversed the orders of the Deputy Commissioner (Appeals) and the Tax Board, which had deleted the penalty on the basis that mens rea was not proved. The court held that mens rea is not essential for imposing penalties under Section 78(5) and that the statutory requirements must be strictly adhered to. The appeal by the Revenue was allowed, and the penalty imposed on the assessee was upheld.