1993 (2) TMI 299 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Imposition of penalty under section 15-A(1)(o) of the U.P. Sales Tax Act, 1948.
2. Requirement of mens rea for imposing penalty.
3. Compliance with section 28-A of the Act regarding transportation of goods.

Issue-wise Detailed Analysis:

1. Imposition of penalty under section 15-A(1)(o) of the U.P. Sales Tax Act, 1948:
The revision was directed against the order dated March 30, 1988, passed by the Sales Tax Tribunal, Meerut, which imposed a penalty of Rs. 5,200 under section 15-A(1)(o) of the U.P. Sales Tax Act. The applicant, a registered firm, had purchased goods from Jodhpur and consigned them to Bilari. The truck carrying the goods was stopped at Modi Nagar check-post, where the driver allegedly tried to speed away, arousing suspicion. Despite producing form XXXI later, the goods were seized and released on furnishing security. The Sales Tax Officer imposed a penalty based on the report that the driver attempted to evade verification. This penalty was upheld by the Assistant Commissioner (Judicial) and the Sales Tax Tribunal, which reduced the penalty amount to Rs. 4,000.

2. Requirement of mens rea for imposing penalty:
The applicant argued that mere non-production of form XXXI at the check-post does not incur penalty unless it is shown that it was done to evade tax. The court referred to sections 15-A(1)(o), 28-A(1)(a), 28-A(2)(a), and 28-A(6) of the Act, emphasizing that mens rea is a necessary ingredient for establishing the offense under section 15-A(1)(o). The court cited various decisions, including Jain Shudh Vanaspati Ltd. v. State of U.P. and Oriental Carbon Ltd. v. Commissioner of Sales Tax, which held that mere non-production of form XXXI does not justify penalty unless it is proven that the action was an attempt to evade tax. The court also referred to the Supreme Court's decision in Gujarat Travancore Agency v. Commissioner of Income-tax, which distinguished between civil and criminal liabilities, stating that mens rea is required for criminal liability but not necessarily for civil obligations.

3. Compliance with section 28-A of the Act regarding transportation of goods:
Section 28-A of the Act requires transporters to carry certain documents, including form XXXI, before importing or transporting goods. Sub-section (6) of section 28-A allows detention of goods if they are transported without proper documents and if it is established that the transportation was an attempt to evade tax. The court noted that the requirement to obtain necessary papers and follow formalities under section 28-A is mandatory. However, if an explanation is offered and accepted that documents could not be produced at the check-post due to justifiable reasons, penalty cannot be imposed. In this case, the applicant had obtained form XXXI before transporting the goods, and the driver had shown the papers at the check-post. The Tribunal's finding that form XXXI was produced but not shown at the check-post was erroneous. The court held that the explanation given by the applicant justified the claim that there was no intention to evade tax, and therefore, the penalty was not warranted.

Conclusion:
The revision was allowed, and the orders passed by the respondents were set aside. The court concluded that the Tribunal's view was erroneous in law, as the applicant had provided a valid explanation for non-production of form XXXI at the check-post, indicating no intention to evade tax. There was no order as to costs.