2018 (9) TMI 1112 - HC - VAT and Sales Tax

Levy of tax at a higher rate - penalty under Section 28 (1) of the Madhya Pradesh Commercial Tax Act, 1994 - invalid C-Forms - Held that - The transaction should be made with the registered dealer and who has submitted C-Form, but in the case in hand, C-Forms submitted by the purchaser have been found forged, which clearly shows that the purchasers are not registered dealer, therefore, the petitioner is liable to pay tax and penalty as imposed by the Competent Authority and the same has been affirmed by the Appellate Board, therefore, order dated 24.09.2016 passed by the Appellate Board is just and legal. Penalty - Held that - Mere failure to carry the prescribed declaration form duly filled in is liable for penalty as per provisions of Section 78 (5) of the RST Act, and there is no need to prove mens rea on the part of the assessee - penalty upheld. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Refusal to refer questions to the High Court under Section 70 (2) (b) of the Madhya Pradesh Commercial Tax Act, 1994.
2. Reopening of assessment under Section 28 (1) of the Madhya Pradesh Commercial Tax Act, 1994.
3. Imposition of penalty under Section 28 (1) of the Madhya Pradesh Commercial Tax Act, 1994.
4. Validity of C-Forms submitted by the petitioner.
5. Interpretation of mens rea in the context of penalty under Section 78 (2) of the RST Act.

Analysis:
1. The petitioner sought reference of Questions No.1 and 2 to the High Court under Section 70 (2) (b) of the Madhya Pradesh Commercial Tax Act, 1994, challenging the penalty imposed under Section 28 (1). The Appellate Board declined to refer these questions, citing precedents and legal provisions. The petitioner's counsel argued that the penalty should consider the condition of "omission leading to re-assessment attributable to the dealer." The reference to M/s. Guljag Industries v. Commissioner of Commercial Tax highlighted the issue of mens rea in penalty imposition.

2. The assessment under the Central Sales Tax Act, 1956 was reopened under Section 28 (1) of the Madhya Pradesh Commercial Tax Act, 1994, based on information from the Delhi Sales Tax Department. This led to the treatment of 2 C-Forms as invalid, resulting in higher tax rate and penalty imposition. The petitioner's appeal against this reassessment was rejected by the Appellate Authority, leading to further appeals.

3. The imposition of penalty under Section 28 (1) of the Madhya Pradesh Commercial Tax Act, 1994 was upheld by the Appellate Board, emphasizing the importance of valid documentation and compliance. The Competent Authority's decision to impose tax and penalty was deemed justified due to the forged C-Forms submitted by the purchaser, indicating non-compliance by the petitioner.

4. The validity of C-Forms submitted by the petitioner was a crucial aspect of the case. The forged C-Forms raised doubts about the authenticity of transactions with unregistered dealers. The Competent Authority's decision to levy tax and penalty based on this discrepancy was supported by the Appellate Board, highlighting the importance of genuine documentation in tax assessments.

5. The interpretation of mens rea in penalty imposition under Section 78 (2) of the RST Act was discussed, referencing the need for establishing contravention rather than guilty intention. The case law emphasized that mens rea is not a prerequisite for penalty imposition under certain civil acts. In this context, the imposition of penalty on the petitioner without proving mens rea was deemed legally sound by the Appellate Board, leading to the dismissal of the petitioner's reference.

This detailed analysis of the judgment highlights the key legal issues, arguments presented, relevant case laws, and the reasoning behind the decision of the Madhya Pradesh Commercial Tax Appellate Board.