TMI Blog1981 (7) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... within the time allowed and in the manner prescribed, or to deposit the tax due under this Act before furnishing the return or along with the return, as required under the provisions of this Act; or (b) ................... (c) ................... (d) ................... (e) ................... (f) ................... (g) being liable for registration under this Act, carries on or continues to carry on business without obtaining registration or without furnishing the security demanded under section 8-C; it may, after such inquiry, if any, as it may deem necessary, direct that such dealer or person shall pay, by way of penalty, in addition to the tax, if any, payable by him,- (i) in a case referred to in clause (a), clause (b) or clause (e), a sum not less than ten per cent, but not exceeding twenty-five per cent of the tax due if the tax due is up to ten thousand rupees and fifty per cent of the tax due if the tax due is above ten thousand rupees; (ii) ..................... (iii) ..................... (iv) in a case referred to in clause (g), a sum of rupees one hundred for each month or part thereof for the default during the first three months and rupees f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in nature. It may at times be more than the tax itself. The anxiety of the department to deter the dishonest assessee can be appreciated but interpretation of the provision in a manner so as to work unjustly and harshly even against an honest and bona fide assessee cannot be accepted. A comparison of clauses (i) and (iv) shall indicate that penalty for non-filing of return, late filing of return or non-payment of tax, which must be without reasonable cause, i.e., there must be mens rea, is between 10 to 50 per cent of the tax assessed or due whereas penalty for non-registration is between Rs. 100 to Rs. 500 per month. If the argument of the learned standing counsel is accepted then even deliberate act of the assessee entails the lesser penalty than innocent and inadvertent omission. The argument of automatic levy of penalty or its imposition on mere proof of non-registration irrespective of the fact and circumstances has to be rejected. Admittedly, the assessee carried on business in bristles with its purchasing centre at Deoria and head office at Bombay since 1964. In the assessment years 1965-66, 1966-67, etc., no liability was held as it was held that the assessee only transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Ved Prakash v. Commissioner of Sales Tax [1982] 51 STC 347; 1981 UPTC 280. It urged that in view of this decision it is clear that an assessee is liable to be penalised for failure of registration. The case is distinguishable on facts. In that case the assessee got itself registered in earlier years but in the assessment year in dispute it did not get itself registered. The question was whether the default was technical in nature and whether the assessee could be absolved of his liability under this sub-clause. It was held by brother Rastogi, J.: "This shows that the assessee was conscious of its statutory obligation of getting the registration certificate renewed year after year. For the year under consideration the assessee deposited the renewal fee on 22nd March, 1977, i.e., within time, but did not submit any application for renewal. In other words, the assessee carried on business without any registration as required by the statute." This decision, therefore, cannot be an authority where the dealer inadvertently or under a bona fide belief does not obtain registration. It is no doubt true that brother Rastogi, J., observed thus: "In the present case as well, in my o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sales Tax Act (hereafter "the Act"). The assessee, a registered firm, carried on business in foodgrains and oil-seeds. It was duly registered with the department under the Act. For the assessment year 1977-78, the assessee did deposit a sum of Rs. 25, being the fee for renewal of the registration certificate but did not submit an application in form XIV for the renewal of this certificate. Rule 58(1) of the U.P. Sales Tax Rules, requires that every registered dealer who continues to be liable to registration shall submit an application in form XIV for the renewal of his certificate before the date of its expiry. The application would be accompanied by the certificate to be renewed and satisfactory proof of deposit of fee. Sub-rule (2) says that if the Sales Tax Officer is satisfied that the application has been duly made and the fee deposited, he shall renew the certificate and return it to the dealer. For non-compliance of this provision penalty is exigible under section 15-A(1)(g), which reads: "15-A. Penalties in certain cases.-(1) If the assessing authority is satisfied that any dealer or other person............. (g) being liable for registration under this Act, carrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before the assessing authority during the preceding year had been lying with the assessing authority, no application in form XIV was given for the year under consideration. According to the assessee it was the duty of the assessing authority to return the registration certificate so as to enable the assessee to file it again with the application for renewal. The learned Additional Judge (Revisions) has not accepted this contention and has held that the act of the assessee in not getting the certificate of registration renewed "is an intentional act and he is to suffer for it". The penalty order has thus been confirmed, hence this further revision. It was submitted before me on behalf of the assessee that the omission on the part of the assessee to file the application for renewal in form XIV was only a technical default at the most. It could not be treated as wilful as the renewal fee was deposited by the assessee well within time and reliance has been placed on Hindustan Steel Limited v. State of Orissa [1970] 25 STC 211 (SC), Cement Marketing Company of India Ltd. v. Assistant Commissioner of Sales Tax, Indore [1980] 45 STC 197 (SC) and an unreported decision of a learned J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doubted even for a moment that the assessee was conscious of its statutory obligations in this behalf because it deposited the renewal fee in time. It was for the assessee to explain the circumstances in which it could not move an application for renewal of registration and then alone it could be seen as to whether the default on the part of the assessee was wilful or not. I am prepared to agree even for a moment that it was only a technical default (sic). A default may be technical when there is only some formal omission on the part of the party charged with a default. The statute requires the assessee in certain circumstances to obtain registration certificate from the department and to have it renewed year after year. The failure on the part of a dealer to get a registration certificate renewed means that in that year the assessee has carried on business without obtaining any registration and that is a clear breach of the statutory provisions and not only a technical default. The excuse of the assessee that since the registration certificate had not been returned by the assessing authority, it was under no obligation to file an application for renewal has no merit either because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary powers of the legislature competent to exact a sales tax levy. The fact that there is arithmetical identity between figures of the illegal collections made by the dealers and the amounts forfeited to the State cannot create a conceptual confusion that what is provided is not punishment but a transference of funds. The notion that a penalty or a punishment cannot be cast in the form of an absolute or no-fault liability but must be preceded by mens rea is not correct. Therefore the contention that section 37(1) fastened a heavy liability regardless of fault has no force in depriving the forfeiture of the character of penalty. The fact that in section 37(1) mens rea is excluded and the penal forfeiture can be enormous are germane to the legislative policy, not for judicial compassion. In the present case as well, in my opinion, mens rea is excluded from clause (g) of section 15-A(1) and for default on the part of a dealer liable for registration to carry on or continue to carry on business without obtaining registration, a heavy penalty is levied, may be germane to legislative policy but not for judicial compassion. Now I come to the case of Hindustan Steel Limited [1970] 25 STC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligations. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Those in-charge of the affairs of the company in failing to register the company as a dealer acted in the honest and genuine belief that the company was not a dealer." (emphasis supplied). Now, benefit can be taken of these observations if it is found that there was no conscious disregard of the statutory obligation on the part of the dealer or there were relevant circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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