TMI Blog2007 (7) TMI 589X X X X Extracts X X X X X X X X Extracts X X X X ..... KOTHARI DR. , J. DR. VINEET KOTHARI J. These three revision petitions filed by the petitioner-assessee are directed against the impugned order of the Tax Board, Ajmer, whereby the Tax Board, Ajmer, allowed the Revenue's appeals and restored the penalty under section 65 of the Rajasthan Sales Tax Act, 1994 (for short, the Act ) for assessment years 1997-98, 1998-99 and 19992000. Therefore, the same are being disposed of by this common order. The petitioner-assessee was running a canteen for serving foods and drinks in the factory premises of M/s. Electrolux Maharaja International Limited, Shahajahanpur for the employees of the said company and it received 75 per cent of the subsidy from the employee welfare fund and the employees were paying only 25 per cent of the cost of food or breakfast served in the said canteen. The said petitioner-assessee did not obtain any registration under the sales tax law nor it collected any sales tax from the employees of the said company. On a survey made by the assessing authority on December 28, 1999, it was found by the assessing authority that the assessee was liable to get itself registered and pay the tax on the sale of such food ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following three judgments, the different High Courts held that sale of food in a canteen maintained in the factory premises, as per the provisions of Factories Act, did not amount to business and such service of food, drink etc., was not liable to sales tax: (i) Commissioner of Sales Tax, M.P. v. Hukumchand Mills Ltd. [1988] 68 STC 378 (MP), (ii) Tata Iron Steel Company Ltd. v. State of Bihar [1985] 58 STC 302 (Patna) [FB] and (iii) Fort Gloster Industries Ltd. v. Member, Board of Revenue, West Bengal [1970] 26 STC 141 (Cal). He, however, frankly submitted that after the 46th Amendment of the Constitution of India adding article 366(29A) in the Constitution of India and consequential amendment in Rajasthan Sales Tax Act, 1954 with effect from April 1, 1987 and thereafter in RST Act, 1994 such service of food and drink is undoubtedly a sale taxable under these enactments and, therefore, as far as tax and interest is concerned, he has not raised any grievance about that. He, however, submitted that it was not at all a fit case for imposition of a penalty under section 65 of the Act for avoidance and evasion of tax. He also urged that since the assessee was under a bona fide belief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner, Sales Tax, U.P., Lucknow [1985] 59 STC 323 (All), Commissioner of Sales Tax v. Prakash Trading Co. [1982] 51 STC 342 (All), Commissioner of Income-tax (Additional) v. I.M. Patel and Co. [1992] 196 ITR 297 (SC), Director of Enforcement v. MCTM Corporation Pvt. Ltd. AIR 1996 SC 1100, 251 ITR 199 ST (sic) and Chairman, S.E.B.I. v. Shriram Mutual Fund AIR 2006 SC 2287. He urged that there was no need to establish mens rea on the part of the assessee for imposition of the penalty under section 65 of the Act in view of the clear fact that the assessee was liable to pay tax on sale of such food items and, therefore, he submitted that the present revision petitions deserve to be dismissed. Having considered the rival submissions and case laws cited at the bar by both the parties and after careful consideration of the record of the case, this court is of the opinion that the present revision petitions deserve to be allowed and the penalty imposed and restored by the assessing authority and the Tax Board, respectively, deserves to be set aside. It is true that the sale of food items in a canteen in factory premises even as per requirement of Factories Act and other labour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. It is also noteworthy that the assessing authority while giving the registration to the assessee-petitioner chose not to impose any penalty in addition to the fees payable for registration despite a provision in this regard contained in section 59 of the Act. Section 65 of the Act empowering imposition of the penalty for avoidance or evasion of the tax can be invoked only if there is a deliberateness or guilty animus on the part of the petitioner-assessee to conceal his taxable turnover from any return furnished (no such return showing nil taxable turnover was furnished by the assessee in the present case) or he has deliberately furnished inaccurate particulars or has concealed any transaction of sale or purchase from his accounts, registers and documents. It is not even a case of the Revenue that these transactions were not recorded in the books of account maintained by the assessee. It is also not the case of the revenue that he filed a return claiming the said turnover to be exempt from the sale and contested this position. In view of this, the question of the assessee having a guilty animus or mens rea as they call it does not arise in the present case. An assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue to establish that the disputed amount represents income and that the assessee has consciously concealed the particulars of his income or has deliberately furnished inaccurate particulars: Commissioner of Income-tax v. Anwar Ali [1970] 76 ITR 696 (SC). It is for the Revenue to prove those ingredients before a penalty can be imposed. Since the burden of proof in a penalty proceeding varies from that involved in an assessment proceeding, a finding in an assessment proceeding that a particular receipt is income cannot automatically be adopted as a finding to that effect in the penalty proceeding. In the penalty proceeding the taxing authority is bound to consider the matter afresh on the material before it and, in the light of the burden to prove resting on the Revenue, to ascertain whether a particular amount is a revenue receipt. No doubt, the fact that the assessment order contains a finding that the disputed amount represents income constitutes good evidence in the penalty proceeding but the finding in the assessment proceeding cannot be regarded as conclusive for the purposes of the penalty proceeding. That is how the law has been understood by this court in Anwar Ali's c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the return since the dealer contended that the transaction was not exigible to sales tax. There is thus no infirmity in the Tribunal's order setting aside the penalty imposed by the assessing authority under section 16(1)(e) of the Rajasthan Sales Tax Act. In fact, there are series of such judgments and one need not multiply authorities on this issue and the position of law is settled that penalty under section 65 of the Act cannot be imposed on the assessee unless the Revenue establishes that there is deliberateness on the part of the assessee or conscious concealment of taxable turnover with the purpose to avoid or evade the tax and such penalty cannot be imposed merely because the contention of the assessee that particular sale is not taxable is rejected or explanation furnished by him is not found to be acceptable by the Revenue. Something more is required to be done by the Revenue to bring on record such material which after being confronted to the assessee and his explanation with regard to the same being decided, clearly points out that he carried a mala fide intention of not paying the tax in question and concealed such taxable turnover and sale from the Revenue an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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