TMI Blog2019 (7) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion that mens rea on the part of the assessee is not an essential element to be proved for imposing penalty under that provision. The scheme of the Act in imposing penalty is very clear. The defaults and failures which attract penalty are nothing but violations or failures or defaults of statutory civil obligations provided under the Act. The proceedings for imposing penalty under the Act are neither criminal nor quasi-criminal - The penalty is leviable in cases of default or failure of obligations under the Act which are civil in nature. There is nothing in the provisions contained in Section 17A of the Act which indicates that guilty intention of the assessee is required to be established before imposing penalty. Thus there is no question of proof of guilty intention or mens rea by the assessee and it is not an essential element for imposing penalty under Section 17A of the Act. However, we take note of the fact that, for evasion of payment of luxury tax, penalty cannot be imposed under Section 17A of the Act. This is for the reason that the provision contained in Section 17(2)(b)of the Act takes care of that situation by providing punishment for such act. Evasion of lux ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o ₹ 3,09,370/-. Further appeal filed by the petitioner before the Kerala Agricultural Income Tax and Sale Tax Appellate Tribunal was dismissed. This revision petition is filed challenging the order of the Tribunal. 5. We have heard Sri.Julian Xavier, learned counsel for the petitioner and Sri.V.K.Shamsudheen, learned Senior Government Pleader. 6. Learned counsel for the petitioner has submitted that the assessee was not aware of the amendment made to the Act in the year 2008 bringing hospitals within the purview of the Act. He would submit that non-registration of the hospital under the Act and non-payment of the luxury tax by the petitioner was not intentional. Learned counsel would contend that mens rea on the part of the assessee is an essential element to impose penalty under the Act. 7. Per contra, learned Senior Government Pleader would contend that mere violation of the provisions of the Act would attract imposition of penalty on the assessee. He has contended that it is not necessary to establish mens rea to impose penalty under Section 17A of the Act. 8. Section 2(fb) of the Act states that 'luxury p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax payable under the Act. Rule 3 of the Kerala Tax on Luxuries Rules, 1976 provides for the manner in which returns have to be filed by the proprietor. Rule 3(4) states that every proprietor registered under the Act and every proprietor liable to get himself registered under the Act and every proprietor who is required to do so by the assessing authority, irrespective of the quantum of his total income, shall, on or before the tenth day of every month, submit to the assessing authority a return as prescribed, together with a receipt of a treasury chalan, crossed cheque or crossed demand draft in favour of the assessing authority for the amount of tax due. 10. Section 17A of the Act reads as follows: 17A. Imposition of penalties by assessing authority.- If an assessing authority is satisfied that any person,- ( a) liable to pay tax under this Act,- ( i) has failed to keep true and complete account or ( ii) has failed to submit any return as required by the provisions of this Act or the rules made thereunder or has submitted an untrue or incorrect return; or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of mens rea or actus reus to contravene a statutory provision must also be held to be a necessary ingredient to levy of damages and/or the quantum thereof. This decision is rendered by a two-Judge Bench of the Supreme court. However, we are bound to follow the subsequent decision of the three-Judge Bench of the Supreme Court in Dharamendra Textile Processors (supra) which holds that mens rea is not an essential element for imposing penalty for breach of civil obligations. 16. Learned counsel for the petitioner has also relied upon the decision of this Court in Mathew M. Thomas v. Sales Tax Officer : 1990(1) KLT 18 to contend that mens rea is an essential ingredient to be proved for imposing penalty on an assessee. It is a case in which legality of 'fine' imposed under Section 17 of the Kerala Tax on Luxuries in Hotels and Lodging Houses Act, 1976 was considered. It was held that Section 17 of that Act dealt with offences and mens rea is an essential ingredient of those offences and assessing authority cannot impose any fine and only a court can impose fine. This decision has no application to penalties imposed by assessing authority under Section 17A o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sufficient for us to refer to Section 271(1) (a), which provides that a penalty may be imposed if the Income Tax Officer is satisfied that any person has without reasonable cause failed to furnish the return of total income, and to Section 276C which provides that if a person wilfully fails to furnish in due time the return of income required under Section 139(l), he shall be punishable with rigorous imprisonment for a term which may extend to one year or with fine. It is clear that in the former case what is intended is a civil obligation while in the latter what is imposed is a criminal sentence. There can be no dispute that having regard to the provisions of Section 276C, which speaks of wilful failure on the part of the defaulter and taking into consideration the nature of the penalty, which is punitive, no sentence can be imposed under that provision unless the element of mens rea is established. ...... In the case of a proceeding under Section 271(1)(a), however, it seems that the intention of the legislature is to emphasise the fact of loss of revenue and to provide a remedy for such loss, although no doubt an element of coercion is present in the penalty. In this connection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned under Section 17A of the Act. Since punishment is provided under Section 17(2)(b) for evasion of payment of luxury tax, in view of the provision contained in Section 17A(d) of the Act, penalty cannot be levied under Section 17A for committing such act. However, failure to get registration under the Act and failure to file monthly returns under the Act attract levy of penalty. But, we take note of the fact that the assessee has not collected luxury tax from the patients. We also take note of the fact that the assessee immediately paid the luxury tax due pursuant to the order passed by the assessing authority. Considering these circumstances, we find that the amount of penalty payable by the petitioner can be reduced to ₹ 1,00,000/-. 24. Consequently, the revision petition is allowed in part. Annexure-A1 order of the assessing authority, imposing penalty on the petitioner, which stands confirmed by Annexures A2 and A3 orders of the appellate authority and the Tribunal, is confirmed. However, we modify Annexure-A1 order passed by the assessing authority with regard to quantum of penalty and reduce the amount of penalty payable by the petitioner to S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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