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2015 (5) TMI 1052 - HC - VAT and Sales Tax
Levy of penalty u/s 78(5) of the Rajasthan Sales Tax Act 1994 - Whether the mens rea is required to be proved as a necessary ingredient for imposition of penalty - Held that - As held by the Hon ble Larger Bench of this Court though mens rea is not essential but in the present case the penalty is not leviable for the reason that it is an admitted fact that the assessee is not a dealer of telephone cables but is a manufacturer of cement and the telephone cable of a value of Rs. 1, 08, 349.28 were purchased for its own use and for the use in factory for diverse purposes. The declaration form ST-18A need not be furnished if the goods of the class or classes are specified in the registration certificate would mean that the goods which were being purchased by the assessee once having been recorded in the registration certificate requirement of carrying declaration form ST-18A was not there. - No penalty - Decided in favor of assessee.
Issues:
1. Interpretation of Section 78(5) of the Rajasthan Sales Tax Act, 1994 regarding the liability for penalty.
2. Requirement of mens rea for imposition of penalty under Section 78(5) on proven violation of Section 78(2).
3. Impact of the amendment to Rule 55 of the Rajasthan Sales Tax Rules, 1995 on penalty imposition.
4. Application of Rule 53 of the Rajasthan Sales Tax Rules, 1995 in the case of penalty imposition.
Analysis:
1. The High Court addressed the interpretation of Section 78(5) of the Rajasthan Sales Tax Act, 1994 concerning the liability for penalty. The Larger Bench clarified that mens rea is not a relevant factor in determining the penalty liability under this section.
2. The Court also discussed the necessity of proving mens rea for the imposition of penalties under Section 78(5) based on the violation of Section 78(2). It was established that mens rea is not a mandatory element for penalty imposition in such cases.
3. Regarding the amendment to Rule 55 of the Rajasthan Sales Tax Rules, 1995, the Court highlighted that the amendment, following a Supreme Court decision, authorizes empowered authorities to inquire into violations of Section 78(2) without requiring proof of mens rea for penalty imposition under Section 78(5).
4. The Court examined the application of Rule 53 of the Rajasthan Sales Tax Rules, 1995 in the penalty imposition scenario. It was emphasized that if goods are recorded in the registration certificate, as in the case of telephone cables purchased for own use by a cement manufacturer, the requirement of carrying declaration form ST-18A is not necessary, as per the rule.
5. In the specific case discussed, where penalty was imposed on the respondent-assessee for not carrying declaration form ST-18AA while transporting telephone cables, the Court found that the penalty was unjustified. The assessee was a cement manufacturer, and the telephone cables were purchased for internal use, as recorded in the registration certificate, thus exempting the need for the declaration form.
6. Consequently, the Court ruled in favor of the assessee, affirming the deletion of the penalty by the appellate authorities. The decision was based on the factual findings that the goods were purchased for internal use and were duly recorded in the registration certificate, aligning with the provisions of Rule 53 of the Rajasthan Sales Tax Rules, 1995.