2007 (8) TMI 344 - SC - VAT and Sales Tax

Whether mens rea is an essential ingredient in every offence is displaced by the words of section 78(5) of the RST Act, 1994? Held that - Section 78(5) of the RST Act 1994 (section 22A(7)(a) of the RST Act, 1954) is the section enacted to provide remedy for loss of revenue and it is not enacted to punish the offender for committing economic offence and, therefore, mens rea is not an essential ingredient for contravention of section 78(2) of the RST Act 1994. That, the breach of section 78(2) would attract the levy of penalty under section 78(5) in cases where the goods in movement have travelled with an incomplete Form No. 18A/18C. Assessee appeal dismissed.

Summary

Issues Involved:
1. Scope and interpretation of Section 78(5) of the Rajasthan Sales Tax Act, 1994.
2. Requirement of mens rea for imposing penalty under Section 78(5).
3. Validity of penalties imposed for transporting goods with incomplete or blank declaration forms.

Issue-wise Detailed Analysis:

1. Scope and Interpretation of Section 78(5) of the Rajasthan Sales Tax Act, 1994
The Supreme Court was required to consider the scope of Section 78(5) of the Rajasthan Sales Tax Act, 1994, which is similar to Section 22A(7) of the Rajasthan Sales Tax Act, 1954. The court held that Section 78(5) was enacted to provide a remedy for the loss of revenue due to non-compliance with the statutory obligations. The section imposes a strict civil liability on the assessee for contravention of Section 78(2) by transporting goods with incomplete or blank declaration forms (Form ST 18A/18C).

2. Requirement of Mens Rea for Imposing Penalty under Section 78(5)
The court clarified that mens rea, or a guilty mind, is not an essential ingredient for imposing a penalty under Section 78(5). The penalty is for a statutory offence and is a civil liability. The court emphasized that the intention of the parties committing the violation is irrelevant. The breach of Section 78(2) attracts a penalty under Section 78(5) as soon as there is a contravention of the statutory obligations.

3. Validity of Penalties Imposed for Transporting Goods with Incomplete or Blank Declaration Forms
The court found that transporting goods with blank or incomplete declaration forms contravenes Section 78(2). The incomplete forms make it impossible for the Assessing Officer to assess the taxable turnover, leading to potential revenue loss. The court noted that the assessees' explanations, such as language barriers or the consignor's responsibility, were not valid defenses. The practice of using blank forms was seen as an attempt to evade tax. Therefore, the imposition of penalties under Section 78(5) was justified.

Separate Judgments Delivered:
The court distinguished between cases where goods were transported with incomplete forms and those without any accompanying documents. The judgment in Civil Appeal No. 5240 of 2005 (Assistant Commercial Taxes Officer v. Guljag Industries Ltd.) and similar cases, where specified documents did not accompany the goods, were to be decided based on the precedent set in State of Rajasthan v. D.P. Metals [2002] 1 SCC 279. However, cases involving incomplete forms were governed by the law discussed in the current judgment.

Conclusion:
The Supreme Court upheld the judgment of the Rajasthan High Court, confirming that Section 78(5) imposes a penalty for transporting goods with incomplete or blank declaration forms without requiring proof of mens rea. The matters were remitted back to the Commissioner (Appeals) for disposal in accordance with the law as enunciated by the court. The appeals by both the State and the assessees were disposed of without any order as to costs.