TMI Blog1985 (1) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... found that the question of mens rea was irrelevant where there is a failure to get the registration done. The learned counsel for the assessee has referred me to certain decisions where it has been held that no penalty should be imposed for a technical default on the part of the assessee when the proceedings under section 15-A(1)(g) of the Act are taken. The decisions are of a learned single Judge in the case of Commissioner of Sales Tax v. Sadhu Singh Mahendra Singh (printed at page 335 infra) 1981 UPTC 887, and another learned single Judge in the case of Commissioner of Sales Tax v., Goyal Bandhu (printed at page 335 infra) 1982 UPTC 596. On the other hand, the learned Standing Counsel has referred me to a decision of R. R. Rastogi, J., in the case of Ram Lakhan Ved Prakash v. Commissioner of Sales Tax [1982] 51 STC 347 (App); 1981 UPTC 280 wherein the view taken is that mens rea or anything equivalent to mens rea is not required when the penalty proceedings are undertaken under section 15-A(1)(g) of the Act. The decision of the Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa [1970] 25 STC 211 (SC) has been referred to in the cases relied upon by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso the Tribunal held that the requirement of mens rea was "impliedly ruled out as an ingredient of the offence and the penalty becomes leviable irrespective of the intention". So the order of the A.C. (J) was reversed by the Tribunal and the order of the S.T.O. imposing the penalty was restored. Aggrieved by the order of the Tribunal, the assessee filed a revision before this Court, which came up for hearing before a learned single judge of this Court, who noticed conflicting decisions of this Court in the cases of Commissioner of Sales Tax v. Sadhu Singh (printed at page 335 infra) 1981 UPTC 887 and Commissioner of Sales Tax v. Goyal Bandhu (printed at page 335 infra) 1982 UPTC 596 relied on by the counsel for the assessee and Ram Lakhan Ved Prakash v. Commissioner of Sales Tax [1982] 51 STC 347 (App); 1981 UPTC 280 relied on by the Standing Counsel. Concluding his order the learned single Judge observed: "As there are conflicting decisions on the question whether means rea is an essential ingredient of section 15-A(l)(g) of the U.P. Sales Tax Act, I direct that the papers of this case should be laid before the Honourable the Chief justice to constitute a larger Bench." It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended, whereas section 8-A(1)(d) refers to registration, clause (b) to sub-section (1-A) of section 8 refers to renewal of registration. Then he drew our attention to rule 55 and rule 58 of the U.P. Sales Tax Rules, 1948. According to him, whereas rule 55 refers to grant of registration certificate, rule 58 refers to renewal of certificate. Different provisions having been made for grant of registration and renewal of registration, the contention of Sri Sharma is that the two concepts are different and if the Legislature had intended to include the concept of renewal of registration also in clause (g), when it would have made its intention clear by including the word "renewal" in clause (g). He submitted that the scheme of the Act is clear enough that grant of registration is different from renewal of registration and the omission of the word "renewal" in clause (g) has afforded sufficient clue that clause (g) does not refer to renewal of registration. The question is why different provisions have been made for grant of initial registration and for the registration that would be operative in the succeeding years. The registration once granted would be operative in the succeeding y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... marked difference in the language of the said clauses. In short, his submission is: whereas in clauses (a) and (e), the Legislature has used the expression "Without reasonable cause" and in clauses (b) and (d) the word "false" and in clause (c), the words "concealed" or "deliberately" have been used by the Legislature, clauge (g) has been worded altogether differently. For better appreciation we reproduce clauses (a) to (e) and (g) below: (a) has, without reasonable cause, failed to furnish the return of his turnover or to furnish it 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) has submitted a false return of turnover under this Act; or (c) has concealed the particulars of his turnover or has deliberately furnished inaccurate particulars of such turnover; or (d) has maintained or produced false accounts, registers or documents; or (e) has without reasonable cause, failed to pay, within the time allowed the tax assessed on him; or (g) being liable for registration under this Act, carries on or continues to ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n clause (g). The argument of Sri Sharma proceeds on the principle "no mens rea-no penalty". In the case of Additional Commissioner of Income-tax v. Durga Pandarinath Tuljayya Co. 1977 Tax LIR 258 (FB), a Full Bench of the Andhra Pradesh High Court has observed: "The doctrine of mens rea is of common law origin developed by judgemade law. It has no place in the legislator's law where offences are defined with sufficient accuracy." In para 11 of the said authority, the High Court observed as under: "Mens rea is an essential ingredient of an offence. However, it is a rule of construction. If there is a conflict between the common law and the statute law, it has always been held that it is a sound rule to construe a statute in conformity with the common law. But it cannot be postulated that a statute cannot alter the course of the common law. The Parliament, in exercise of its constitutional powers makes statutes and in exercise of that power it can affirm, alter or take away the common law altogether. Therefore, if it is plain from the statute that it intends to alter the course of the common law, then the plain meaning should be accepted. The existence of mens rea as an esse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, especially regarding economic crimes and departmental penalties, have created severe punishments even where the offences have been defined to exclude mens rea." From the authorities aforesaid a clear principle of law that emerges is that though mens rea is a necessary ingredient of an offence but the Legislature can free any provision relating to an offence in a statute from this fetter. Clause (g), in our view, is free from the bondage of mens rea. The argument of Sri Sharma that "no mens rea-no penalty", therefore, does not hold good. Then we come to the authorities relied on by Sri Sharma. As already pointed out, Sri Sharma has drawn main support from the decision of the Supreme Court: Hindustan Steel Ltd. [1970] 25 STC 211 (SC). The observations of the Supreme Court on which reliance has been placed, are on page 214 and they are reproduced below: "Under the Act penalty may be imposed for failure to register as a dealer: section 9(1) read with section 25(1)(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory obligation is the result of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt the Act, 1961) considered the true import of the decision in the case of Hindustan Steel Ltd. [1970] 25 STC 211 (SC) and observed as under: "This decision is no authority for the proposition that under section 12(5) of the Orissa Sales Tax Act the expression 'without sufficient cause' carries an import of mens rea or that the burden of proof is on the Revenue to establish absence of sufficient cause." At this stage we would like to make it clear as to how section 12(5) of the Orissa Sales Tax Act, 1947 (for short the Act, 1947) has been mentioned by the Orissa High Court, when it does not find place in the observations of the Supreme Court in Hindustan Steel Ltd.'s case [1970] 25 STC 211 (SC). The question referred to by the Tribunal for the opinion of the High Court, that ultimately reached the Supreme Court for decision in the case of Hindustan Steel Ltd. [1970] 25 STC 211 (SC) was as follows: "Whether the Tribunal is right in holding that penalties under section 12(5) of the Act had been rightly levied and whether in view of the serious dispute of liability it cannot be said that there was sufficient cause for not applying for registration?" Section 12(5) of the Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of the Supreme Court is, therefore, of no assistance to the learned counsel. We are, therefore, of the view that wilful non-disclosure is not essential for invoking the powers under section 12(3) of the Tamil Nadu General Sales Tax Act." We rely on the above reproduced observations of the Madras High Court and hold that mens rea is not necessary everywhere for imposition of penalty. Similar view was taken by a Full Bench of the Andhra Pradesh High Court in the case of Additional Commissioner of Income-tax, A.P. v. Durga Pandarinath Tuljayya Co. 1977 Tax LR 258 (FB), wherein it was held that mens rea was not necessary for imposition of penalty under section 271(1)(a) of the Act, 1961. Then Sri Sharma argued that the rule laid down by the Supreme Court in Hindustan Steel Ltd.'s case [1970] 25 STC 211 (SC) that penalty will 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 obligation, was followed by the Supreme Court in the case of. Cement Marketing Company of India Ltd. v. Assistant Commissioner of Sales Tax [1980] 45 STC 197 (SC); 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith section 25(1)(a), read with section 9J) of the Act, 1947. We, therefore, reject the contention of Sri Sharma that mens rea is sine qua non for imposing penalty under clause (g) of section 15-A(1). Then it was argued by Sri Sharma that the construction of clause (g) of section 15-A(1) as sought to be put by Sri Upadhya, would amount to a rule of automatic penalty. He submits that clause (g) cannot be read to mean that as and when a dealer fails to obtain registration or renewal of registration, he becomes liable for penalty. We straightaway agree with Sri Sharma that there is no automatic penalty under section 15-A(1)(g) of the Act, 1948. Section 15-A says that if the assessing authority is satisfied that any dealer or other person has committed any default covered by clauses (a) to (r) 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. Our stress is on the word "may" occurring in section 15-A(1) after clause (r). It clearly indicates that penalty under section 15-A(1) is not automatic and would be levied only when a dealer fails to show any satisfactory ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lahabad High Court in Commissioner of Sales Tax v. Goyal Bandhu (Sales Tax Revision No. 402 of 1981 decided on 23rd March, 1982) is printed below: ] COMMISSIONER OF SALES TAX v. GOYAL BANDHU MEHROTRA, J.-M/s. Goyal Bandhu was carrying on business at Kanpur and for the year 1973-74 it made an application for registration as a dealer under the U.P. Sales Tax Act on 17th December, 1973, instead of having made it prior to 1st April, 1973. The dealer had obtained registration in earlier years. For the breach aforesaid, proceedings for imposing penalty upon the dealer were initiated and the Sales Tax Officer, after taking into consideration the explanation offered by the dealer, imposed a penalty of Rs. 3,300 upon it in view of section 15-A(1)(g). This order was upheld by the Assistant Commissioner (judicial), Sales Tax, but in a second appeal by the dealer, the Sales Tax Tribunal, Kanpur, held that it is not liable to pay any amount by way of penalty. It is this order which has been assailed by the Commissioner of Sales Tax in the present revision under section 11(1) of the Act before this Court. Section 15-A envisages that where an assessing authority is satisfied that any deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability to penalty did not arise merely upon the proof of default in registering as a dealer, and that an order imposing penalty for failure to carry out a statutory obligation is a result of quasicriminal proceedings and penalty will not ordinarily be imposed unless the party obliged to do that acted deliberately in defiance of law or was guilty of conduct, contumacious or dishonest or acted in conscious disregard of its obligation. Also, that the decision whether penalty should be imposed for failure to perform a statutory obligation was a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if minimum penalty is prescribed, the authority competent to impose the penalty could be justified in refusing to impose it when there is a technical or venial breach of the provisions of the Act. The decision in this case continues to be good law, as noticed by brother Rastogi, J., too in Ram Lakhan Ved Prakash's case [1982] 51 STC 347 (App); 1981 ATJ 49. The fact that the dealer, in the instant case, did not deliberately fail to get registration within time and that the circumstances found by the Tribunal were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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