2015 (11) TMI 1141 - HC - VAT and Sales Tax

Penalty u/s 78 of the RST Act - Upon checking of goods viz. zink ingots on the ground that ST-18A Form was not accompanying the goods in transit - Held that - The position of law with regard to the imposition of penalty under Section 78 (5) of the Act is that there is no requirement in law for Revenue to establish mens rea on the part of assessee in these penalty proceedings under Section 78 (5) of the Act, has been settled by the catena of judgments of the Hon ble Supreme Court and has been reiterated by the Full Bench of this Court in a recent case decided upon a reference in the case of ACTO Vs. Indian Oil Corporation Ltd. (2015 (11) TMI 1078 - RAJASTHAN HIGH COURT) - matter deserves to be remanded back - Decided in favour of Revenue.

Summary

Issues:
1. Imposition of penalty under Section 78 (5) of the RST Act for failure to produce required documents.
2. Requirement of mens rea in penalty proceedings.
3. Applicability of relevant case laws in penalty imposition.

Analysis:

Issue 1: Imposition of penalty under Section 78 (5) of the RST Act
The case involved the imposition of a penalty under Section 78 (5) of the RST Act due to the absence of Form ST 18A accompanying the goods in transit. The Tax Board upheld the deletion of the penalty, leading to the Revenue filing a revision petition in the High Court.

Issue 2: Requirement of mens rea in penalty proceedings
The High Court clarified that in penalty proceedings under Section 78 (5) of the RST Act, there is no requirement for the Revenue to establish mens rea on the part of the assessee. Citing various judgments, including a recent Full Bench decision, the Court emphasized that the imposition of penalty does not necessarily involve proving mens rea and is a civil liability for ensuring tax compliance.

Issue 3: Applicability of relevant case laws in penalty imposition
The Court referred to the Full Bench decision in the case of ACTO Vs. Indian Oil Corporation Ltd., where it was held that the suspicion of false or forged documents alone does not warrant the imposition of penalty under Section 78 (5) of the RST Act. The judgment reiterated that mens rea is not a crucial element in penalty imposition for violation of Section 78 (2) of the Act.

In conclusion, the High Court set aside the previous orders and directed the assessing authority to reconsider the matter in light of the legal position clarified regarding the imposition of penalties under the RST Act. The Court emphasized the importance of providing the assessee with an opportunity to be heard and ordered a fresh assessment in accordance with the law and relevant judgments.