1985 (1) TMI 280 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Imposition of penalty for failure to register as a dealer under the U.P. Sales Tax Act.
2. Whether mens rea is an essential ingredient for imposing penalty under section 15-A(1)(g) of the U.P. Sales Tax Act.
3. Applicability of penalty provisions to the renewal of registration.
4. Judicial discretion in imposing penalties.

Detailed Analysis:

1. Imposition of Penalty for Failure to Register:
The primary issue revolves around the imposition of a penalty of Rs. 4,800 on the assessee for failing to register as a dealer under the U.P. Sales Tax Act for the assessment year 1973-74. The penalty was imposed under section 15-A(1)(g) of the Act. The assessee's initial appeal to the Assistant Commissioner (Judicial) resulted in the penalty being set aside, citing the failure as a technical defect caused by the Munim's negligence. However, the Tribunal reversed this decision, reinstating the penalty and rejecting the argument that the failure was merely technical.

2. Mens Rea as an Essential Ingredient:
A significant aspect of the judgment is whether mens rea (guilty mind) is necessary for imposing a penalty under section 15-A(1)(g). The Assistant Commissioner (Judicial) initially set aside the penalty, relying on the Supreme Court's decision in Hindustan Steel Ltd. v. State of Orissa, which suggested that penalties should not be imposed without mens rea. However, the Tribunal and later the Division Bench disagreed, citing the absence of mens rea as an essential ingredient in the language of section 15-A(1)(g). The Division Bench emphasized that the legislative intent, as reflected in the wording of various clauses of section 15-A(1), did not require mens rea for clause (g), unlike other clauses that explicitly mentioned terms like "false," "concealed," or "deliberately."

3. Applicability to Renewal of Registration:
The assessee argued that section 15-A(1)(g) did not apply to the failure to renew registration. The Division Bench, however, held that the term "registration" in clause (g) includes both initial registration and renewal. This interpretation was supported by the case of Mool Chand & Brothers v. Commissioner of Sales Tax, which placed registration and renewal on par, except for procedural differences. The Bench concluded that the omission of the word "renewal" in clause (g) did not exclude it from the scope of the provision.

4. Judicial Discretion in Imposing Penalties:
The judgment also addressed the issue of judicial discretion in imposing penalties. The Division Bench clarified that penalties under section 15-A(1) are not automatic and should be imposed only after considering whether the dealer had a satisfactory reason for the default. The Tribunal's decision to sustain the penalty was based on the assessee's failure to provide any satisfactory explanation for not renewing the registration. The Bench noted that the discretion to impose penalties must be exercised judicially, taking into account all relevant circumstances, as highlighted in the Supreme Court's decision in Hindustan Steel Ltd.

Conclusion:
The Division Bench upheld the Tribunal's decision to impose a penalty on the assessee for failing to renew the registration, concluding that mens rea was not required under section 15-A(1)(g) and that the provision applied to both initial registration and renewal. The judgment emphasized the importance of judicial discretion in penalty imposition, aligning with the legislative intent and the specific language of the statute. The revision was dismissed, affirming the Tribunal's order and rejecting the arguments presented by the assessee.