2003 (10) TMI 663 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Absence of mens rea in imposing penalty.
2. Applicability of the Hindustan Steel Ltd. case.
3. Validity of the Division Bench judgment in State of Rajasthan v. Jinendra & Company.
4. Interpretation of statutory provisions regarding penalties.
5. Requirement of complete documentation for tax compliance.

Issue-wise Detailed Analysis:

1. Absence of mens rea in imposing penalty:
The primary issue addressed is whether the absence of mens rea (guilty mind) is a valid ground for discharging a respondent from the liability of penalty under tax laws. The court reaffirmed its stance from the case of Mutha Premraj v. Asstt. Commercial Tax Officer, holding that the presence of mens rea is not a sine qua non for levying penalties in cases of statutory violations. The court emphasized that statutory offences, particularly those under fiscal statutes, do not necessarily require mens rea for the imposition of penalties.

2. Applicability of the Hindustan Steel Ltd. case:
The respondents cited Hindustan Steel Ltd. v. State of Orissa, arguing that penalties should not be imposed unless the party acts deliberately in defiance of law. However, the court noted that the Supreme Court in Hindustan Steel Ltd. had remanded the case for additional facts and did not provide a definitive ruling on the necessity of mens rea. Consequently, the court found that Hindustan Steel Ltd. does not offer clear guidance on the issue at hand.

3. Validity of the Division Bench judgment in State of Rajasthan v. Jinendra & Company:
The respondents also relied on a Division Bench judgment in State of Rajasthan v. Jinendra & Company, which was based on an earlier judgment in D.P. Metals v. State of Rajasthan. However, the Supreme Court in State of Rajasthan v. D.P. Metals overturned the Division Bench's decision, affirming the constitutionality of Section 78(5) of the Rajasthan Sales Tax Act, 1994. The Supreme Court observed that submitting false or incomplete documents at check-posts indicates mens rea and that penalties under Section 78(5) are mandatory once statutory violations are established.

4. Interpretation of statutory provisions regarding penalties:
The court discussed the broader principle that in cases of statutory offences, especially under fiscal statutes, the doctrine of mens rea is not applicable unless explicitly required by the statute. The court cited R.S. Joshi v. Ajit Mills Ltd., where the Supreme Court held that mens rea is not necessary for statutory offences, particularly those related to economic crimes and departmental penalties.

5. Requirement of complete documentation for tax compliance:
The court addressed specific instances where Form ST 18-A was either partially filled or left blank. It emphasized that the consignee is responsible for ensuring that the consignor completes the form in its entirety. The court dismissed the argument that the consignee should not be penalized for the consignor's failure to fill the form, stating that the statutory requirement mandates complete documentation. The court also noted that the presence of Hindi-speaking personnel in non-Hindi speaking states could resolve any language-related issues in filling the forms.

Conclusion:
The court concluded that the law laid down in Mutha Premraj, which does not require mens rea for imposing penalties under fiscal statutes, remains valid and does not warrant reconsideration. The judgments of the Tax Board discharging the respondents from penalty liability were set aside, and the original assessing officer's decisions, as upheld by the appellate authority, were restored.