2011 (3) TMI 1513 - HC - VAT and Sales Tax

Whether penalty of ₹ 56,790 could not be imposed on the respondent - assessee under section 78(5) of the Rajasthan Sales Tax Act, 1994 on account of declaration in form No. ST-18A as per rule 53 of the Rajasthan Sales Tax Rules, 1995 being found to be incomplete? Held that - The assessing authority brushing aside both the contentions of the assessee, viz., (i) there was no requirement in law to furnish ST-18A; and (ii) defect and deficiency in such form ST-18A could be removed and other declaration duly filled-up, was furnished immediately upon opportunity being given since the original form duly and fully filled-up was not sent with the consignment by the supplier, the learned assessing authority, in a rather hasty and mechanical way, imposed the said penalty in question. The appellate authorities rightly set aside the penalty imposed upon the assessee by their concurrent decisions, viz., the first appellate authority on the appeal preferred by the assessee and the Tax Board in second appeal in the appeal preferred by the Revenue. Therefore, on both these counts, the requirement of law being not there in the first instance, and on the second count even if such requirement is presumed on factual matrix also, this court is satisfied that the penalty in question has rightly been set aside by the appellate forums and same do not require any interference by this court in revisional jurisdiction. Against revenue

Summary

Issues Involved:
1. Imposition of penalty under section 78(5) of the Rajasthan Sales Tax Act, 1994.
2. Requirement of declaration in form ST-18A for specific commodities.
3. Applicability of exception clause in rule 53 of the Rajasthan Sales Tax Rules, 1995.
4. Opportunity to rectify deficiencies in declaration forms.
5. Classification of goods under relevant tax entries.

Detailed Analysis:

1. Imposition of penalty under section 78(5) of the Rajasthan Sales Tax Act, 1994:
The Revenue challenged the order of the Tax Board, which upheld the decision of the Deputy Commissioner (Appeals) to dismiss the penalty of Rs. 56,790 imposed on the respondent-assessee. The penalty was initially imposed due to incomplete declaration in form ST-18A for electrical control panel and V-belts, and the absence of such declaration for electrical motors. The Revenue argued, based on Supreme Court decisions in *Guljag Industries v. Commercial Taxes Officer* and *State of Rajasthan v. D.P. Metals*, that the penalty was justified as the goods were electrical goods requiring ST-18A forms.

2. Requirement of declaration in form ST-18A for specific commodities:
The respondent-assessee contended that the commodities in question did not fall under entry No. 8 of the notification requiring ST-18A forms. They argued that the goods were used for the distribution of electricity or power, thus falling under the exception clause of rule 53, which exempts such goods from the requirement of ST-18A forms. The assessee also pointed out that other prescribed documents, such as sale invoices and goods transportation receipts, accompanied the goods.

3. Applicability of exception clause in rule 53 of the Rajasthan Sales Tax Rules, 1995:
Rule 53 exempts goods used in the generation or distribution of electricity from the requirement of ST-18A forms. The court noted that the term "electrical goods" is not defined in the Act or Rules, thus applying the common parlance test. The notification dated March 30, 2000, specifies electrical goods requiring ST-18A forms but exempts those used for power distribution. The court concluded that the imported goods (electrical motors, control panels, and V-belts) were used for power distribution and thus fell under the exception clause.

4. Opportunity to rectify deficiencies in declaration forms:
The respondent-assessee argued that any deficiencies in the ST-18A forms were due to the supplier/transporter and that the assessee should not be penalized. The court referenced the *D.P. Metals* case, emphasizing the need to provide an opportunity to rectify deficiencies in compliance with natural justice principles. The court found that the assessee had furnished the required declarations and offered to correct any deficiencies, but the assessing authority denied this opportunity.

5. Classification of goods under relevant tax entries:
The court examined entries Nos. 96 and 111 of the rate notification dated March 30, 2000, which specify taxable electrical goods. It concluded that the imported goods did not fall under these entries, which cover more domestic electrical appliances. The court determined that the imported goods were industrial electrical goods used for power distribution, thus exempt from the ST-18A requirement.

Conclusion:
The court held that the penalty under section 78(5) was unjustified as the requirement for ST-18A forms did not apply to the imported goods. Additionally, the assessee was not given a fair opportunity to rectify deficiencies. The orders of the appellate authorities were upheld, and the revision petition by the Revenue was dismissed.