2014 (5) TMI 337 - HC - VAT and Sales Tax

Levy of penalty u/s 78(5) of the Rajasthan Sales Tax Act, 1994 when the declaration form ST 18-A under Rule 53 r/w Section 81 was not completely filled up mens rea - Opportunity of being heard - Held that - Judgment in Guljag Industries Versus COMMERCIAL TAXES OFFICER 2007 (8) TMI 344 - SUPREME Court followed - Object behind enacting Section 78(5) is to emphasise loss of revenue and to provide a remedy for such loss - Section 78(2) is a mandatory provision and goods put in movement under local sales, imports, exports or inter-state transactions have to be supported by requisite declaration - mens rea is not an essential ingredient for contravention of Section 78(2) and breach of Section 78(2) would attract levy of penalty u/s 78(5) in cases where goods in movement have travelled with an incomplete form No. 18-A/18-C - If by mistake some of the documents were not readily available at the time of checking, the principles of natural justice might require opportunity being given to produce the same - The orders passed the Board, DC(A) as well as Assessing Authority quashed and provided opportunity of being heard to the assessee u/s 78(2) Decided in favour of Revenue.

Summary

Issues:
1. Imposition of penalty under Section 78(5) of the Rajasthan Sales Tax Act, 1994 on the respondent-assessee for incomplete declaration form ST 18-A.
2. Interpretation of relevant legal provisions and precedents regarding penalty for incomplete declaration forms.
3. Application of principles of natural justice in penalty proceedings.
4. Remedies available to the respondent-assessee based on legal precedents.

Analysis:

1. The revision petition was filed by the petitioner-department challenging the Tax Board's order, which upheld the decision of the Deputy Commissioner (Appeals) regarding the imposition of penalty under Section 78(5) of the Rajasthan Sales Tax Act, 1994 on the respondent-assessee for having a blank or incomplete declaration form ST 18-A. Both lower appellate authorities held that the penalty could not be imposed if other supporting documents were found in order. The petitioner relied on Supreme Court judgments to support their argument for imposing the penalty.

2. The Supreme Court, in the case of Guljag Industries, emphasized the mandatory nature of Section 78(2) of the Act, requiring goods in movement to be supported by the requisite declaration. The Court highlighted the importance of complete and accurate declaration forms for assessing taxable goods, as incomplete forms hinder the assessment process. The Court clarified that mens rea is not necessary for contravention of Section 78(2), and incomplete forms can lead to the imposition of penalties under Section 78(5).

3. Subsequent judgments by the Rajasthan High Court emphasized the application of principles of natural justice in penalty proceedings. The Court directed assessing authorities to provide fresh opportunities for hearings to ensure procedural fairness. The cases of Commercial Taxes Officer Vs. M/s Jain Tubes, ACTO Vs. Hariom Company, and Assistant Commercial Taxes Officer Vs. M/s. Madhusudan Soap Udyog highlighted the importance of affording the assessee a chance for a fresh hearing based on legal principles established by higher courts.

4. In the final judgment, the High Court partly allowed the revision petition, quashing the orders of the lower authorities and remanding the matter back to the Assessing Authority. The Assessing Authority was instructed to reevaluate the penalty proceedings in light of the legal principles outlined in the Guljag Industries case. The respondent-assessee was granted a fresh opportunity for a hearing, with specific details of defects in compliance provided. The Assessing Authority was given a timeline of six months to pass fresh orders, emphasizing the need for expeditious compliance.

This detailed analysis of the judgment highlights the legal intricacies involved in the imposition of penalties for incomplete declaration forms under the Rajasthan Sales Tax Act, emphasizing the importance of procedural fairness and adherence to established legal principles.