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

J.K. Ranka, J.—Instant sales tax revision petition is directed against the order dated January 28, 2002 passed by the Rajasthan Tax Board, Ajmer in Appeal No. 1442/99/Jaipur whereby the appeal filed by the Revenue has been dismissed. It may be observed that a Larger Bench was constituted by 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, , decided on June 2, 2004, and in Maharana Talkies v. State of Rajasthan (D.B. Civil Special Appeal No. 858 of 1994), reported in [2004] 19 Sales Tax Today 239 , decided on November 29, 2004, 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 passed in Assistant Commercial Taxes Officer Vs. Indian Oil Corporation Ltd.--> in Sales Tax Revision Petition No. 92 of 1999 and other connected revision petitions has answered the questions as Mows (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 of 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 Assistant Commercial Taxes Officer Vs. Indian Oil Corporation Ltd.--> and other connected sales tax revisions, the matters were ordered to be listed before the Bench having jurisdiction to decide the matters, in accordance with the opinion given by the Larger Bench on such opinion, accordingly the instant revision petition is being decided.

The facts relevant for disposal of the present revision petition are that goods, namely; cycle tyre tubes and moped tyres, etc., were being transmitted from Ludhiana to Jaipur on November 10, 1997 in a vehicle No. DL-I/GA/4471 and during the course of interception on Sikar Road at Jaipur Nagar Nigam Check-post, it was noticed by the officer that the declaration form ST-18A had several over writings and cuttings and there were other discrepancies also in the invoices which were being carried on in the said vehicle and a show-cause notice was accordingly given and being not satisfied with the explanation so offered, penalty was levied under section 78(5) of the RST Act.

The matter was carried in appeal before the Deputy Commissioner (Appeals) who though found that there were several over writings and cuttings but held that all the over writings and cuttings, were minor, it can be on account of human error or clerical error and allowed the appeal by deleting the said penalty. The Revenue carried appeal before the Tax Board, who also upheld the order of the Deputy Commissioner (Appeals), who had deleted the penalty.

Counsel for the petitioner vehemently contended that it is a case where cuttings and overwriting not only in material columns were found but also in all the columns, and it was not apparent as to who has initiated the cuttings and over writings. He further contended that even if there were initials but same will not make material difference as several discrepancies were noticed, he further contended that in the original form while earlier 8472 kg. was mentioned which was corrected to 9196 kg. He further contended that there was some price of material earlier which was corrected to Rs. 6,90,737.50 and even the bill number was changed from B5121 to B5175. He further contended that in the light of the judgment rendered by the honourable apex court in the case of Guljag Industries Vs. Commercial Taxes Officer, , where it was held that even, if material particulars are not filled in then too it can be a case of evasion of tax while in the instant case, it is a clear-cut case of re-use of ST-18A form which apparently was certainly reused. He further contended that in the light of the judgment of Larger Bench in Assistant Commercial Taxes Officer Vs. Indian Oil Corporation Ltd.--> , mens rea is not essential and contended that the order of the Tax Board deserves to be reversed.

None appeared on behalf of the respondent despite notices having been served.

I have considered the arguments advanced by the counsel for the petitioner and perused the judgment of the honourable Larger Bench of this Court in Assistant Commercial Taxes Officer Vs. Indian Oil Corporation Ltd.--> and the judgment of the honourable apex court in the case of Guljag Industries Vs. Commercial Taxes Officer, , in my view, the Tax Board as well as the Deputy Commissioner (Appeals) ought not to have deleted the penalty in the manner which has been deleted because it is a clear-cut case of overwriting and cuttings in almost all columns and once there were overwritings and cuttings in the declaration form, by holding that it could have been on account of human error or clerical error was not sufficient for the Tax Board in coming to the said conclusion. The honourable apex court in the case of Guljag Industries Vs. Commercial Taxes Officer, , has specifically expressed that even if material particulars are lacking or unfilled then too it is clear-cut case of evasion of tax when in the instant case, over-writings and cuttings have been noticed and admitted even by both the appellate authorities.

In the light of the judgment of the honourable Larger Bench of this court and the judgment of the honourable apex court in Guljag Industries Vs. Commercial Taxes Officer, mens rea is not essential. Such over writings and cuttings in declaration form, in all columns would certainly fall in the category of forged, fabricated or false declaration form and therefore, in my view, the assessing officer was correct in levying the penalty and the Deputy Commissioner (Appeals) as well as the Tax Board were unjustified in deleting the same, therefore, the order of the Tax Board is quashed and set aside and order of the assessing officer is restored. Consequently, the question is answered in favour of the Revenue and against the assessee and the present sales tax revision petition is allowed. Let a copy of this order be sent to the assessee for information.