Assistant Commercial Taxes Officer, Flying Squad vs Chalniwala Steel Corporation

Dr. Vineet Kothari, J.—The learned Tax Board by the impugned order dated 21.09.2004 and 31.12.2008 had rejected the appeal of the Revenue and upheld the deletion of the penalty under Section 78(5) of the RST Act upon checking of goods viz. iron rods ("Saria"), on the ground that there was some discrepancy in the relevant Bill/Bilty/s documents checked in transit. It was found by the Assessing Authority that in the declaration form the number of Bill was mentioned as "39" whereas the number of actual Bill carried by the driver was bearing "Bill No. 34". The Tax Board thus upheld the order dated 17.12.2003 of the Deputy Commissioner (Appeals), Commercial Taxes Department, Udaipur, setting aside such penalty. The relevant findings of the Tax Board in the original order impugned dated 21.09.2004 is quoted herein below:-

Later on, Revenue filed application for amendment/review of the said order after the judgment of Hon''ble Supreme Court in the case of Guljag Industries, but it was rejected by the learned Tax Board on 31.12.2008 in the following manner:-

Briefly stated, the facts of the case are that on 05.09.1999, a goods vehicle number RJ-27-G-4365 carrying iron from Ahmedabad to Udaipur, was intercepted and checked by the authorities of the Department, and on scrutiny of the documents it was found that the driver did not possess the relevant Bilty/s. It was also found that in the declaration form number of Bill was mentioned as "39" whereas the number of actual Bill carried by the driver was bearing "Bill No. 34". Therefore, on finding this as the violation of Section 78(2) of the RST Act, penalty was imposed vide order dated 07.09.1999. Upon a challenge being laid by the respondent-assessee by filing appeal before the learned Dy. Commissioner (Appeals), the same was allowed vide order dated 17.12.2003 setting aside the penalty order dated 07.09.1999. The second appeal preferred by the petitioner Revenue also came to be dismissed by the learned Tax Board vide order dated 21.09.2004 and its review application filed by the Revenue rejected on 31.12.2008.

The petitioner-Revenue has filed the present revision petition in this Court aggrieved by the said orders of Tax Board.

The position of law with regard to the imposition of penalty under Section 78(5) of the Act is that there is no requirement in law for Revenue to establish mens rea on the part of assessee in these penalty proceedings under Section 78(5) of the Act, has been settled by the catena of judgments of the Hon''ble Supreme Court and has been reiterated by the Full Bench of this Court in a recent case decided upon a reference in the case of Assistant Commercial Taxes Officer Vs. Indian Oil Corporation Ltd. , in which the Full Bench, headed by Hon''ble the Acting Chief Justice, held as under:-

"34. The suspicion or doubt on the documents to be false or forged, per se, does not attract levy of penalty under sub-section (5) of Section 78 of the RST Act, 1994. In such case, an opportunity is to be given under Rule 55(1) of the RST Rules, 1995, to a person, to produce the required documents and/or declaration forms completed in all respects, when the goods enters or leaves the nearest check-post of the State. It is only when a person despite giving such an opportunity, is not able to produce the document and/or declaration forms completed in all respects, when the goods enters or leaves the nearest check-post of the State, or the documents are found to be false or forged, after enquiry, that a penalty may be imposed, which is a civil liability for compliance of the provisions of Act for the purposes of checking the evasion of tax. It is thus not correct to submit that penalty for submission of false or forged document or declaration, necessarily involves adjudication, for which mens rea is relevant, and is a necessary ingredient. Any doubts in this regard have been clarified by the Hon''ble Supreme Court in Guljag Industries v. Commercial Taxes Officer (supra), in which it has been clearly held in para 30, after quoting the provisions of Section 78, that;

"In the present case also the statute provides for a hearing. However, that hearing is only to find out whether the assessee has contravened Section 78(2) and not to find out evasion of tax which function is assigned not to the officer at the check-post but to the AO in assessment proceedings. In the circumstances, we are of the view that mens rea is not an essential element in the matter of imposition of penalty under Section 78(5)."

In view of the aforesaid discussion, our answers to the questions referred, are as follows:-

(i) 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.

(ii) 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.

(iii) The amendment of Rule 55 of the RST Rules, 1995, in pursuance to the decision of the Hon''ble Supreme Court in State of Rajasthan and Another v. M/s. D.P. Metals (supra), authorises the authority empowered, to make an enquiry of violation of Section 78(2), and not to adjudicate a 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.

(iv) 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."

With the decision on the aforesaid referred questions, let the S.B. Sales Tax Revision No. 92/1999, and other connected Sales Tax Revisions, be sent back and be listed before the Bench having jurisdiction to decide the matters, in accordance with the opinion given by us and the answers provided above on such opinion."

In view of above legal position, this Court is of the opinion that concurrent findings of facts arrived at by the both the appellate authorities below that the documents were in order and nothing specific was pointed out by the assessing authority as to how these documents were not complete or lacking, therefore, no question of law is found to arising in the present case and the revision petition filed by the Revenue is devoid of any merit and deserves to be dismissed.

With these observations and directions, the revision petition filed by the Revenue is accordingly dismissed. No costs. A Copy of this order be sent to the concerned parties forthwith.