Assistant Commercial Taxes Officer, Flying Squad-I, Jaipur vs Indian Oil Corporation Ltd.

J.K. Ranka, J.—Instant sales tax revision petition is directed against order of the Tax Board dated September 14, 1998. It relates to penalty which was imposed upon the respondent-assessee under section 22A(7) of the Rajasthan Sales Tax Act, 1994. It may be observed that a Larger Bench was constituted by the honourable the Chief Justice to resolve and decide the following questions framed after noticing a conflict of opinions in the Division Bench judgments of this court in Parasnath Granite India Ltd. Vs. State of Rajasthan and Another, , and in Maharana Talkies v. State of Rajasthan (D.B. Civil Special Appeal No. 858 of 1994, decided on November 29, 2004), reported in [2004] 19 Sales Tax Today 239 , as well as Lalji Mulji Transport Company Vs. State of Rajasthan and Another, , as follows:

"(i) Whether requirement of mens rea is relevant for the purpose of determining the liability for penalty in terms of section 78, sub-section (5) of the Rajasthan Sales Tax Act, 1994?

(ii) Whether the mens rea is required to be proved as a necessary ingredient for imposition of penalty under sub-section (5) of section 78 on proven violation of sub-section (2) of section 78 of the Rajasthan Sales Tax Act, 1994?

(iii) Whether in view of the amendment to rule 55 of the Rajasthan Sales Tax Rules, 1995 pursuant to the decision of the honourable Supreme Court in the case of State of Rajasthan and Another Vs. M/s D.P. Metals, , on sufficient cause being shown whether any authority empowered would be justified in not imposing the penalty in the absence of mens rea being proved?

(iv) Whether the mens rea is required to be proved as a necessary ingredient for imposing of penalty under sub-section (5) of section 78 on proved violation of sub-section (2) of section 78 of the Rajasthan Sales Tax Act, 1994?"

The Larger Bench of this court vide order dated February 26, 2015 ( Assistant Commercial Taxes Officer Vs. Indian Oil Corporation Ltd.--> ) passed in the instant sales tax revision petition and other connected revision petitions has answered the questions as follows (pages 223 and 224 in 82 VST):

"(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 to rule 55 of the RST Rules, 1995, in pursuance to the decision of the honourable Supreme Court in State of Rajasthan and Another Vs. M/s D.P. Metals, , authorises the authority empowered, 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.

(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."

After answering the questions in the instant sales tax revision and other connected sales tax revisions, the same had been ordered to be listed before the Bench having jurisdiction to decide the matters, in accordance with the opinion given and the answers provided by the Larger Bench on such opinion and accordingly the instant revision petition is being decided.

The brief facts, which can be noticed, are that mobil oil of the respondent-assessee was being carried in vehicle No. DIL-4500 on July 13, 1995 from IOC, Delhi to IOC, Jaipur and noticing that the declaration form ST-18A was not available with the vehicle, the officer, who intercepted the vehicle, sought to levy penalty and accordingly not satisfied with the explanation, imposed penalty to the extent of Rs. 1,95,000.

The matter was carried in appeal before the Deputy Commissioner (Appeals) (for short, "the DC (A)") who sustained the penalty.

On a further appeal by the assessee-respondent, the Tax Board allowed the appeal and deleted the penalty.

Counsel for the petitioner contended that the Tax Board has, solely on the basis that mens rea was not there and that other documents supported the goods being carried out, has deleted the penalty when in the light of judgment of the Larger Bench of this court mens rea was not required to be proved as a necessary ingredient for imposition of penalty and the judgment of the Tax Board on merits deserves to be reversed. She also relied on the judgment of honourable apex court in the case of Guljag Industries Vs. Commercial Taxes Officer, .

On the contrary, learned counsel for the respondent-assessee contends that though in the light of the judgment of the honourable apex court and this court in Larger Bench, mens rea is not essential but the admitted facts are that the vehicle was intercepted on July 13, 1995 on which particular day, there was no requirement of carrying the declaration form ST-18A in the light of the Notification No. 4(1)FD/Tax/Div/2003-314 dated March 30, 2000 and admittedly, the transaction was prior to March 30, 2000. He further contended that in the assessees'' own case, this court has already taken a view that in the case of branch transfer or stock transfer, if the transaction is prior to March 30, 2000, carrying of declaration form ST-18A was not required and thus penalty is not required to be levied on account of this alternative plea. He relied upon the judgment rendered by this court in the case of Assistant Commercial Taxes Officer v. Kamlesh Kumar Rajesh Kumar , [2015] 77 VST 405 (Raj) and Assistant Commercial Tax Officer, Flying Squad-1, Jaipur v. Indian Oil Corporation Ltd. [2006] 15 Tax Up Date 207 (Raj).

I have considered the arguments advanced by counsel for the parties and in so far as the issue of mens rea is concerned, when the Larger Bench of this court has already opined that mens rea is not essential, therefore, the issue, with regard to mens rea, is decided in favour of the Revenue, but in the instant case, the penalty is not leviable as admittedly the vehicle was intercepted on July 13, 1995 and on or before March 30, 2000, in the light of the notification, referred to above, there was no requirement of carrying declaration form ST-18A and once there was no requirement or necessity of carrying the declaration form ST-18A in a case of branch/stock transfer, then penalty under section 22A(7) is not required to be levied. Admittedly, it is a case of branch/stock transfer and therefore, on this alternative plea and in the light of the judgment in assessees'' own case, referred to supra and the judgment rendered by this court in the case of Assistant Commercial Taxes Officer v. Kamlesh Kumar Rajesh Kumar , [2015] 77 VST 405 (Raj) , the instant revision petition deserves to be dismissed though for different reasons. Consequently, the revision petition stands dismissed. The question is answered in favour of the assessee and against the Revenue. No costs.