TMI Blog1980 (1) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... (Act No. 13 of 1964), sales tax could be levied by the State of Rajasthan on the goods sold by the petitioner during the period from 14th May, 1964, to 31st December, 1964, by virtue of Notification, Excise and Taxation Department, No. F. 5(40) FD (R T)/63-XIII dated 2nd March, 1963, issued by the Government of Rajasthan and penalty could be imposed on it under section 16(1)(i) of the said Act?" For a correct appreciation of the contentions advanced by the learned counsel for the parties, we may refer to a few facts giving rise to the reference. The petitioner, M/s. Vijai Hosiery Mills, is a registered dealer under the Act. The period for assessment under consideration is from 1st January, 1964, to 31st December, 1964. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vires of the notification dated 26th March, 1962, of the State Government, which deals with the question of exemption by a writ petition before this Court, but the same was dismissed and thereupon the petitioner filed an appeal by certificate before the Supreme Court. The judgment of the Supreme Court is reported as Jaipur Hosiery Mills (P.) Ltd. v. State of Rajasthan[1970] 26 S.T.C. 341 (S.C.). It is submitted that though the Supreme Court in agreement with this Court upheld the validity of the notification dated 26th March, 1962, yet observed that the question whether "banians" were included in the term "hosiery products" should have been left to be decided in each individual case by the assessing authority. It is submitted that the afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, as it stood at the relevant time, reads as under: "16. Offences, penalties and prosecutions, etc.-(1) If any person....... (i) fraudulently evades or avoids the payment of tax or conceals his liability to tax; or........ the assessing authority may direct that such person shall pay by way of penalty........." The learned counsel urges that the petitioner had shown a turnover of Rs. 1,79,214 on account of the sale of banians, which has been found to be correct. It has been further mentioned in the return itself that the sale in question was exempt from payment of sales tax as it was covered by the notification dated 26th March, 1962, whereby the sale of garments, the value of which does not exceed Rs. 4 in single piece, was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides for imposition of penalties and prosecutions and is consequently penal in character and unless the non-payment of the tax is accompanied by a guilty mind, it would not be proper to invoke the provisions of section 16 for imposing penalty. We have, therefore, to see whether, in the present case, it can be said that the petitioner claimed exemption and did not pay the tax under a bona fide belief that it was not liable to do so. In this connection, our attention has been invited to Pareek Hosiery Products v. Deputy Commissioner of Sales Tax (Appeals), Jaipur[1962] 13 S.T.C. 722., wherein a question arose as to what is meant by the word "garment" and the learned Judges observed as follows: "The word 'garment' in Webster's New 20t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities dealing with each individual case. Thus, the question whether banians were included in the term "hosiery products" was not ex facie answered against the assessee, but was left open. Taking all the circumstances into consideration, we are inclined to hold that it cannot be said that there was any mens rea or guilty intention on the part of the petitioner when it claimed exemption on the sale of banians on the ground that banian is a garment and not a hosiery product. It cannot, therefore, be said that the petitioner fraudulently evaded or avoided payment of tax or concealed its liability to tax. Having come to the conclusion that there was no mala fide or mens rea on the part of the petitioner, we must hold that the taxing authori ..... X X X X Extracts X X X X X X X X Extracts X X X X
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