2004 (4) TMI 538 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Interpretation of sub-section (4) of section 28-A of the U.P. Sales Tax Act, 1948.
2. Applicability of mens rea in the context of penalties under the Act.
3. Quantum of penalty imposed.

Issue-wise Detailed Analysis:

1. Interpretation of sub-section (4) of section 28-A of the U.P. Sales Tax Act, 1948:
The crux of the dispute centers on the interpretation of sub-section (4) of section 28-A of the Act, which mandates that goods brought into the State as personal luggage must be accompanied by a declaration in the prescribed form (Form XXXI) and that the importer must submit this form for endorsement by the next working day. The applicant argued that the endorsement should be obtained by the next working day from the date the goods reached their final destination (i.e., the place of business). However, the Tribunal and the High Court held that the endorsement should be obtained by the next working day from the date the goods entered the State at Mughalsarai. The High Court emphasized that the language of sub-section (4) is plain and unambiguous, and the requirement is to submit the form for endorsement as soon as the goods are received within the State. The court underscored the principle that taxing statutes must be strictly construed and that the intention of the Legislature must be found in the words used by the Legislature itself.

2. Applicability of mens rea in the context of penalties under the Act:
The applicant contended that mens rea (criminal intent) should be considered when imposing penalties under section 28-A(4) of the Act. However, the High Court rejected this argument, citing the Supreme Court's ruling in R.S. Joshi, Sales Tax Officer v. Ajit Mills Limited, which established that the classical view of "no mens rea, no crime" has been eroded in the context of economic crimes and departmental penalties. The court noted that penalties for tax delinquencies are civil obligations, remedial and coercive in nature, and do not necessarily require mens rea.

3. Quantum of penalty imposed:
The initial penalty imposed by the Sales Tax Officer was Rs. 4,80,000, which was subsequently reduced by the first appellate authority to Rs. 72,600 and further reduced by the Tribunal to Rs. 48,400. The applicant argued that no penalty should be leviable based on the facts and circumstances of the case. The High Court, considering the facts and circumstances, decided to reduce the penalty to the amount equivalent to the tax, which amounted to Rs. 24,200. The court reasoned that this reduction would serve the interest of justice.

Conclusion:
The High Court partially allowed the revision, reducing the penalty to Rs. 24,200 while upholding the interpretation of sub-section (4) of section 28-A of the Act and rejecting the argument for the inclusion of mens rea in the context of penalties under the Act. The judgment underscores the strict interpretation of taxing statutes and the principle that penalties for tax delinquencies are civil obligations not necessarily requiring mens rea.