1997 (8) TMI 478 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of the Deputy Commercial Tax Officer, Vepery Assessment Circle, to levy penalty under Section 10-A of the CST Act.
2. Requirement of mens rea for levying penalty under Section 10(b) of the CST Act.
3. Application of the rule of contemporanea expositio or contemporaneous exposition in the imposition of penalty.

Detailed Analysis:

Issue 1: Jurisdiction of the Deputy Commercial Tax Officer, Vepery Assessment Circle
The Tribunal had initially ruled that the Deputy Commercial Tax Officer, Vepery Assessment Circle, was not competent to levy penalties under Section 10-A of the CST Act because he was not the officer who issued the certificate of registration. This decision was based on the Supreme Court case of State of U.P. v. Dyer Meakin Breweries Ltd. However, the High Court distinguished the present case from Dyer Meakin Breweries, noting that the bifurcation of the Purasawalkam Assessment Circle into Purasawalkam and Vepery Assessment Circles did not affect the jurisdiction of the Vepery officer, who was competent to levy penalties as per Section 10-A of the CST Act. The relevant portion of Section 10-A states that penalties can be imposed by either the authority who granted the certificate or the authority competent to grant such a certificate. Therefore, the Deputy Commercial Tax Officer, Vepery Assessment Circle, was deemed competent to impose penalties.

Issue 2: Requirement of Mens Rea for Levying Penalty
The Tribunal had found that the mens rea (guilty mind) was a necessary element for imposing penalties under Section 10(b) of the CST Act, and since the department failed to establish this, the penalties were not sustainable. The High Court disagreed, citing the Division Bench decision in Vijaya Electricals v. State of Tamil Nadu, which clarified that mens rea is not required for civil obligations like tax delinquency. The court held that a finding of "false representation" by the assessee suffices to attract Section 10(b) of the CST Act. The court further explained that "blameworthy conduct" could be inferred from established facts, either directly or indirectly. The established facts in this case indicated that the assessee-dealers had made false representations, thereby justifying the imposition of penalties.

Issue 3: Application of the Rule of Contemporanea Expositio
The Tribunal had also ruled that the authorities erred in not applying the rule of contemporanea expositio, which suggests that long-standing administrative practices should guide the interpretation of statutes. The Tribunal referred to instructions from the Board of Revenue that suggested a lenient view should be taken for technical defects in the use of C forms. However, the High Court noted that these instructions were not presented for review and emphasized that any such instructions could not override statutory provisions. The court held that the rule of contemporanea expositio could not be used to negate the clear statutory mandate of Section 10-A of the CST Act.

Conclusion:
The High Court set aside the Tribunal's order and restored the penalties imposed by the Appellate Assistant Commissioner. The court held that the Deputy Commercial Tax Officer, Vepery Assessment Circle, had the jurisdiction to impose penalties, that mens rea was not required for such penalties under Section 10(b) of the CST Act, and that the rule of contemporanea expositio could not override the statutory provisions. Both tax cases (revision) were allowed, and the common order of the Appellate Assistant Commissioner was restored. No costs were awarded.