1. Interpretation of Section 78(5) Rajasthan Sales Tax Act, 1994 regarding penalty for carrying goods with incomplete declaration forms. (Para 3 , 4 , 5 , 6 , 7 , 8 )
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2007 Supreme(SC) 1030
Supreme Court Of India
Guljag Industries - Appellant
Versus
Commercial Taxes Officer - Respondent
Decided On : 08/03/2007
Penalty under Section 78(5) of the Rajasthan Sales Tax Act, 1994, for non-compliance with document requirements is a civil liability, not a criminal offence. Consequently, mens rea is not an essential ingredient, and strict liability applies upon contravention of the mandatory statutory obligation.
Headnote:(A) Rajasthan Sales Tax Act, 1994 - Section 78(2) and 78(5) - Rajasthan Sales Tax Act, 1954 - Section 22A(3) and 22A(7) - Rajasthan Sales Tax Rules, 1995 - Rules 53 and 54 - Movement of goods without validly completed declaration forms - Penalty for non-compliance - Whether *mens rea* is a prerequisite for imposing penalty under Section 78(5) - A penalty imposed for tax delinquency is a civil obligation, remedial and coercive in nature, and is different from a penalty for a crime (Para 9) - Contravention of mandatory statutory obligations regarding documents in movement trigger strict liability; the intention of parties is irrelevant (Para 21) - Unless the language of the provision explicitly requires it, *mens rea* is not an essential element for the imposition of penalty for breach of civil obligations (Para 22).
(B) Scope of Declaration Forms - Goods carried with declaration forms that are signed but left blank in material respects (such as description of goods, value, and nature of transaction) are considered to be carried without the required declaration - Such incompleteness makes assessment impossible and facilitates revenue loss (Para 20).
Facts of the case:
Goods were transported with declaration forms that were signed by the consignee but left blank in material respects. The tax authorities imposed a penalty for contravention of the statutory requirement to carry completely filled-in declaration forms. The assessee contended that the error was accidental and there was no intention to evade tax. The matter reached the court after conflicting decisions by the appellate authorities and the High Court regarding the necessity of proving a guilty mind (*mens rea*) for the levy of penalty.
Findings of Court:
The court found that the goods in movement were not supported by duly filled-in declaration forms, constituting a clear contravention of the statutory mandate. The use of blank forms was viewed as a modus operandi to hoodwink officers and likely intended for the reuse of forms, which results in significant revenue loss.
Issues: Whether the presumption that *mens rea* is an essential ingredient of an offence is displaced by the words of Section 78(5) of the Rajasthan Sales Tax Act, 1994, in cases of contravention of Section 78(2).
Ratio Decidendi: The court ruled that the penalty under Section 78(5) is a civil liability aimed at providing a remedy for loss of revenue, rather than punishing an economic offence. As Section 78(2) is a mandatory provision, any default or failure to comply with it is a breach of a statutory civil obligation. Therefore, the penalty is attracted as soon as there is a contravention, and the intention of the parties is wholly irrelevant.
Result: The judgment of the High Court was upheld, and the matters were remitted back to the Commissioner (Appeals) for disposal in accordance with the law enunciated.
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Table of Contents
2. Dispute whether mens rea is necessary for imposing penalty under Section 78(5) for contravention of Section 78(2). (Para 4 , 5 , 7 )
3. Penalty under Section 78(5) is civil liability for breach of statutory obligation; mens rea not required. (Para 9 , 10 , 11 )
4. Is mens rea required for imposition of penalty under Section 78(5) of the Rajasthan Sales Tax Act, 1994?
No, the penalty is a civil liability for breach of statutory obligation; mens rea is not an essential ingredient. (Para 9 , 10 , 11 )
Judgment
KAPADIA, J.
1. Leave granted in special leave petitions.
2. In this batch of civil appeals we are required to consider the scope of Section 78(5) of the Rajasthan Sales Tax Act, 1994 which is in pari materia to Section 22A (7) of the Rajasthan Sales Tax Act, 1954.
3. For the sake of convenience we may mention the facts in Civil Appeal No.5197 of 2005 M/s. Guljag Industries v. Commercial Taxes Officer.
4. On 21.1.95 near the Banar Road Check Post a vehicle was checked in which 47 barrel of chemicals were transported from Vishakapattanam. Along with the goods, outward gate pass No.4331 dated 16.9.95 of Andhra Petro-Chemicals Ltd. and consignment No.920 dated 16.9.95 of M/s. AVR & Co. were found in which the name of the consignor was shown as M/s. Andhra Petro-Chemicals Ltd. Vishakapattanam and the name of the assessee was mentioned as M/s. Guljag Industries (assessee - appellant herein). Along with the goods, Form ST 18A No.236084 was also found in which the goods transported was not declared though the same was duly signed. Under the above circumstances the A.O. came to the conclusion that there was a contravention of the provisions of Section 22A(3) of the Rajasthan Sales Tax Act, 1954 (for short, RST Act 1954) read with Rule 62A(3) of the Rajasthan Sales Tax Rules, 1955 (for short, RST Rules 1955). He accordingly issued notice under Section 22A(7) of the RST Act 1954 calling upon M/s. Guljag Industries to show cause why penalty was not leviable for violation of Section 22A(3) of the RST Act 1954. In response to the said notice M/s. Guljag Industries submitted that there was mistake in filing the declaration form and, therefore, there was no intention of tax evasion. It was further submitted that the said declaration Form ST 18A (Form No.18A) was supposed to be filled in by the consignor but due to lack of knowledge of Hindi language the same could not be filled in by the consignor. The AO did not accept the Explanation given by M/s. Guljag Industries. The AO refused to accept the unfilled form as a declaration. Accordingly, he imposed the penalty under Section 22A(7) of the RST Act 1954. Aggrieved by the decision of the AO, M/s. Guljag Industries preferred Appeal No.77/RST/JUC/95-96. By order dated 10.8.99, Dy. Commissioner (Appeals) came to the conclusion that under Rule 25(3) of RST Rules 1955 the purchasing dealer was required to give the requisite declaration in Form ST 18A to the selling dealer. According to the appellate authority, the responsibility to fill the form was on M/s. Guljag Industries. That, M/s. Guljag Industries carried on business from Rajasthan. It was familiar with Hindi language. Therefore, the unfilled Form No.18A cannot be accepted as a declaration. The appeal was accordingly dismissed. Aggrieved by the decision of Dy. Commissioner (Appeals), M/s. Guljag Industries carried the matter in second appeal to Rajasthan Tax Board, Ajmer being Appeal No.1375/99/Jodhpur. By that time Rajasthan Sales Tax Act 1994 (for short, RST Act 1994) came to replace RST Act 1954. However, Section 78(5) of RST Act 1994 was in pari materia to Section 22A(7) of RST Act 1954. By order dated 27.2.2002 the Board came to the conclusion that penalty could not be imposed without establishing guilty mind (mens rea) on the part of M/s. Guljag Industries (assessee). The appeal was allowed.
5. Aggrieved by the decision of the Board, the Department carried the matter in revision to the Rajasthan High Court. By order dated 14.10.03 the single Judge held that presence of mens rea was not a sine qua non for levying penalty in case of contravention of Section 22A(3) of the RST Act 1954 (Section 78(2) of the RST Act 1994). By the said order the learned single Judge held that in the present case Form No.18A was totally blank though signed by the consignee; that it was the duty of the consignee or his agent to see that the form was returned to the transporter with complete details by the consignor. It was further held that the filling
