2015 (5) TMI 1020 - HC - VAT and Sales Tax

Imposition of penalty - Section 78 (5) of the RST Act - Form ST-18A accompanying in the goods in transit was not complete - No requirement in law for Revenue to establish mens rea on the part of assessee - Held that - in view of catena of judgments of the Hon ble Supreme Court and full bench judgment of this court in the case of ACTO Vs. Indian Oil Corporation Ltd. 2015 (11) TMI 1078 - RAJASTHAN HIGH COURT , the mens rea is not required to be proved as necessary ingredient for imposition of penalty under sub-section (5) of section 78. - Matter remanded back

Summary

Issues:
Penalty under Section 78(5) of the RST Act for incomplete ST-18A Form in goods in transit.

Analysis:
The High Court addressed the issue of penalty under Section 78(5) of the RST Act due to an incomplete ST-18A Form accompanying goods in transit. The Tax Board had set aside the penalty, citing the incomplete form as the reason. The Court clarified that there is no requirement to establish mens rea on the part of the assessee for imposing such penalties. This position was supported by previous judgments of the Supreme Court and a recent Full Bench decision of the High Court. The Court emphasized that suspicion of false or forged documents alone does not warrant a penalty under Section 78(5) of the RST Act. The law mandates providing an opportunity to produce complete documents before imposing penalties. The Court highlighted that mens rea is not a necessary element for penalty imposition under this section.

The Court referred to a case involving Indian Oil Corporation Ltd. where it was established that the purpose of penalties under Section 78(5) is to ensure compliance with tax evasion prevention measures. The Court emphasized that penalties are civil liabilities for non-compliance with tax provisions and are not dependent on proving mens rea. The judgment clarified that penalties for false or forged documents do not require adjudication on mens rea. The Court also discussed the relevance of Rule 55 of the RST Rules in authorizing inquiries into violations of Section 78(2) without the need to establish mens rea for imposing penalties under Section 78(5).

Based on the settled legal position and precedents, the Court remanded the matter back to the Assessing Authority to pass fresh orders in accordance with the law. The Court directed the Assessing Authority to provide the respondent-assessee with an opportunity to be heard, as per the judgment's guidelines. The revision petition filed by the Revenue was disposed of with these observations and directions, without imposing any costs. The Court emphasized the importance of following legal procedures and principles in imposing penalties under Section 78(5) of the RST Act.