1999 (12) TMI 851 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Breach of second proviso of rule 25C of the Rajasthan Sales Tax Rules, 1955.
2. Levy of penalty and interest for technical breaches.
3. Interpretation of rule 25C and its provisos.
4. Applicability of precedent case law.
5. Nature of the provision (directory or mandatory).

Issue-wise Detailed Analysis:

1. Breach of Second Proviso of Rule 25C:
The assessee furnished a joint declaration in form ST 17 for multiple transactions amounting to Rs. 19,95,483.39 for resale within the State, which breached the second proviso of rule 25C. The proviso mandates that no declaration shall cover more than one transaction unless the total amount does not exceed Rs. 2 lacs within six months. The Board found this breach to be technical, as the essential conditions for exemption were fulfilled.

2. Levy of Penalty and Interest for Technical Breaches:
The assessing officer imposed a penalty equal to the tax amount along with interest, citing the delayed and joint declaration as breaches. The Deputy Commissioner (Appeals) and the Rajasthan Tax Board both concluded that the breach was technical and did not warrant a penalty, as there was no intention of tax evasion or avoidance. The penalty and additional tax were thus deleted.

3. Interpretation of Rule 25C and its Provisos:
The substantive provision of rule 25C requires a dealer to furnish a declaration in respect of each sale for claiming exemption or concessional rate. The second proviso allows a single declaration for multiple transactions if the total does not exceed Rs. 2 lacs within six months. The Board interpreted this rule as directory, emphasizing that the essential condition is obtaining and producing a declaration from the purchasing dealer.

4. Applicability of Precedent Case Law:
The Board relied on the division Bench decision in Commercial Taxes Officer, Pali v. Kanhayalal Mohanlal [1987] 64 STC 449, which held that procedural breaches of rule 25C are technical and do not justify penalties in the absence of mens rea. The Revenue argued that amendments to rule 25C rendered this precedent inapplicable, but the court found that the amendments did not alter the substantive requirements, and the precedent remained valid.

5. Nature of the Provision (Directory or Mandatory):
The court concluded that the provision is directory in nature. The substantive provision requires declarations for exemption, but the procedural aspects, such as the timing and manner of filing declarations, allow for flexibility. The existence of provisions allowing for late filing and alternative proof methods further supports the directory interpretation. The court upheld that technical breaches without intent to evade tax do not necessitate penalties.

Conclusion:
The revision petition by the Revenue was dismissed, affirming the Rajasthan Tax Board's decision that the breach of rule 25C was technical and did not warrant penalties. The court emphasized the directory nature of the procedural requirements and upheld the principle that penalties should not be imposed for technical breaches in the absence of tax evasion intent. The precedent case law remains applicable, reinforcing the directory interpretation of rule 25C.