2015 (12) TMI 716 - HC - VAT and Sales Tax

Imposition of penalty under Section 78 (5) - mens rea - Held 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 - Present case is covered by the decision of this Court in various similar cases and one of such order passed in Assistant Comercial Taxes Officer, Ward-II, Circle-D, Jodhpur Vs. M/s.Nahar Granite P. Ltd., Jodhpur 2015 (11) TMI 1141 - RAJASTHAN HIGH COURT - Petition disposed of.

Summary

Issues:
1. Revision petition against order of Rajasthan Tax Board.
2. Imposition of penalty under Section 78 (5) of the Act.
3. Requirement of mens rea in penalty proceedings.
4. Remand of the matter to the Assessing Authority.

Analysis:
1. The revision petition was filed against the order of the Rajasthan Tax Board, which partly allowed an appeal against the appellate order passed by the Deputy Commissioner. Both counsels agreed that the case is similar to previous decisions of the Court, including one dated 25.05.2015. The Court highlighted that there is no requirement in law for the Revenue to establish mens rea in penalty proceedings under Section 78 (5) of the Act. The Full Bench clarified that suspicion or doubt on documents being false or forged does not automatically attract a penalty. The penalty may only be imposed if, after giving an opportunity to produce required documents, they are not provided or found to be false or forged. The Court emphasized that mens rea is not an essential element for imposing a penalty under Section 78 (5).

2. The Court, based on the legal position discussed, remanded the matter back to the Assessing Authority. All impugned orders were set aside, and the Assessing Authority was directed to pass fresh orders in accordance with the law. The respondent- Assessee was to be provided with an opportunity for a hearing as per the relevant judgments. The revision petition filed by the Revenue was disposed of accordingly, with no costs imposed. The Court ordered a copy of the order to be sent to the concerned parties promptly.

3. The judgment emphasized that the requirement of mens rea is not relevant for determining the liability for a penalty under Section 78 (5) of the Act. The Court referred to previous decisions and reiterated that mens rea is not a necessary ingredient for imposing a penalty under this section. The Court clarified that the Assessing Authority should make an inquiry into the violation of Section 78 (2) without needing to adjudicate on the presence of mens rea for imposing a penalty under Section 78 (5).

4. The Court's decision to remand the matter back to the Assessing Authority was based on the legal position established regarding the imposition of penalties under Section 78 (5) of the Act. The Assessing Authority was instructed to pass fresh orders in compliance with the law and provide the respondent- Assessee with a hearing opportunity in line with the relevant judgments. The revision petition was disposed of accordingly, with no costs imposed, and the order was to be promptly sent to the concerned parties.