2015 (5) TMI 1053 - HC - VAT and Sales Tax

Levy of penalty - section 78(5) of the RST Act 1994 - Held that - In the light of the judgment of the honourable Larger Bench of this court and the judgment of the honourable apex court in Guljag Industries v. Commercial Taxes Officer mens rea is not essential. Such overwritings and cuttings in declaration form in all columns would certainly fall in the category of forged fabricated or false declaration form and therefore in my view the assessing officer was correct in levying the penalty and the Deputy Commissioner (Appeals) as well as the Tax Board were unjustified in deleting the same therefore the order of the Tax Board is quashed and set aside and order of the assessing officer is restored. - Decided in favor of revenue.

Summary

Issues involved:
1. Conflict of opinions in Division Bench judgments regarding the requirement of mens rea for penalty under section 78 of the Rajasthan Sales Tax Act, 1994.
2. Resolution of questions framed by a Larger Bench regarding the liability for penalty in sales tax matters.
3. Application of the judgments in Assistant Commercial Taxes Officer v. Indian Oil Corporation Ltd. and Guljag Industries v. Commercial Taxes Officer to a specific case involving overwritings and cuttings in declaration forms.

Analysis:
1. The High Court addressed the conflict of opinions in Division Bench judgments by constituting a Larger Bench to resolve questions related to the requirement of mens rea for imposing penalties under section 78 of the Rajasthan Sales Tax Act, 1994. The Larger Bench, in the case of Assistant Commercial Taxes Officer v. Indian Oil Corporation Ltd., clarified that mens rea is not necessary for determining penalty liability under the Act.

2. The Court considered the questions framed by the Larger Bench and applied the answers provided in the Indian Oil Corporation Ltd. case to a specific sales tax revision petition. The case involved goods being transmitted with discrepancies in declaration forms, leading to the imposition of a penalty under section 78(5) of the Act. The Deputy Commissioner (Appeals) and Tax Board had previously deleted the penalty, but the Court re-evaluated the situation.

3. In analyzing the specific case, the Court emphasized the presence of overwritings and cuttings in the declaration form, considering them as clear indicators of evasion of tax. Citing the Guljag Industries case, the Court reiterated that even if material particulars are missing, it can still constitute tax evasion. The Court concluded that the assessing officer was justified in levying the penalty, contrary to the decisions of the Deputy Commissioner (Appeals) and the Tax Board, which were deemed unjustified.

4. Consequently, the Court quashed the order of the Tax Board, reinstated the assessing officer's decision, and allowed the sales tax revision petition in favor of the Revenue. The judgment highlighted the importance of the Larger Bench's ruling on mens rea and its application to cases involving discrepancies in documentation, ultimately upholding the penalty imposition in the specific matter at hand.