2013 (5) TMI 763 - HC - VAT and Sales Tax

Penalty under section 78(5) of the Rajasthan Sales Tax Act 1994 - declaration form ST-18-A prescribed under rule 53 of the RST Rules read with section 81 of the Act was found blank or not completely filled up - Held that - It may be that a show-cause notice may have been given to the respondent-assessee at the time of penalty proceedings in these cases but a bare perusal of the order passed by the assessing officer reveals that even full contention appears to have not been mentioned by the authority levying penalty. Be that as it may it is also equally true that the assessee has succeeded in all these cases before the two appellate authorities and matter at such stage should normally not be restored back. The assessee (respondent) deserves to be given a fresh opportunity of hearing and specific show-cause notice with the nature of defects and deficiencies in complying with the provisions of section 78(2) of the Act and it is only thereafter that the penalty proceedings deserve to be decided afresh by the assessing authority dealing with all the issues raised by the assessee (respondent) and that can be only when fresh show-cause notice is issued to the respondents by complying with the principles of natural justice. Appeal partly allowed.

Summary

Issues:
1. Imposition of penalty under section 78(5) of the Rajasthan Sales Tax Act, 1994 based on incomplete declaration form ST-18-A.
2. Compliance with principles of natural justice in penalty proceedings.

Imposition of Penalty under Section 78(5) of the Rajasthan Sales Tax Act, 1994:
The revision petitions were filed by the petitioner-Department challenging the order of the Tax Board which upheld the decision of the Deputy Commissioner (Appeals) that the penalty under section 78(5) could not be imposed on the respondent-assessee if the declaration form ST-18-A was found blank or incomplete, provided other supporting documents were in order. The petitioner relied on judgments by the apex court in similar cases, where penalties were upheld for incomplete declaration forms. However, the respondent's counsel argued for a fresh hearing based on directions from previous judgments of the court. The court acknowledged the need for compliance with natural justice principles in penalty proceedings and decided that the respondent deserved a fresh opportunity for a hearing. The court quashed the previous orders and directed the assessing authority to decide the penalty proceedings afresh within six months, ensuring the principles of natural justice were followed.

Compliance with Principles of Natural Justice in Penalty Proceedings:
The court emphasized the importance of following natural justice principles in penalty proceedings under section 78(5) of the Act. Despite the show-cause notice given to the respondent-assessee, the court noted that the authority may not have fully considered the contentions before levying the penalty. While the respondent had succeeded before the appellate authorities, the court, considering the judgments in favor of the Revenue, decided to grant a fresh opportunity for a hearing to the respondent. The court directed the assessing authority to issue a specific show-cause notice outlining the defects in compliance with the Act and to decide the penalty proceedings only after a fresh hearing, ensuring all issues raised by the respondent were addressed. The court partly allowed the revision petitions, quashed the previous orders, and instructed the assessing authority to pass fresh orders within six months, maintaining the principles of natural justice.

In conclusion, the judgment focused on the imposition of penalties under the Rajasthan Sales Tax Act, emphasizing the need for compliance with natural justice principles in penalty proceedings. The court granted the respondent a fresh opportunity for a hearing, directing the assessing authority to decide the penalty proceedings afresh within a specified timeframe while ensuring all issues raised by the respondent were addressed in accordance with the principles of natural justice.