Dr. Vineet Kothari, J. - (1.) THE learned Tax Board by the impugned order dated 14.08.2007 had rejected the appeal of the Revenue and upheld the deletion of the penalty under Section 78(5) of the RST Act, on the ground that the penalty under Section 78(5) of the RST Act could not be sustained on the ground that prior to amendment w.e.f. 22.03.2002, penalty under Section 78(5) of the Act could not be imposed upon the owner of the goods checked in transit and that the value of goods inscribed in the bill was not correct and no enquiry was held by the Assessing Authority in this regard, and thus upheld the order dated 16.05.2005 of the Deputy Commissioner (Appeals) IV, Commercial Taxes, Jaipur setting aside such penalty. The relevant findings of the Tax Board in the order impugned is quoted herein below: -
(2.) BRIEFLY stated, the facts of the case are that on 18.08.1999, a goods vehicle number DL -1G -0594 belonging to respondent/dealer was intercepted and checked by the authorities of the Department, and it was found that value of goods inscribed in the bill was not proper, therefore, on finding violation of Section 78(2) of the RST Act, penalty was imposed vide order dated 18.08.1989. Upon a challenge being laid by the respondent -assessee by filing appeal before the learned Dy. Commissioner (Appeals) the same was allowed vide order dated 16.05.2005 setting aside the penalty order dated 18.08.1989. The second appeal preferred by the petitioner Revenue also came to be dismissed by the learned Tax Board vide order dated 14.08.2007. The petitioner -Revenue has filed the present revision petition in this Court aggrieved by the said order of Tax Board. The position of law with regard to the imposition of penalty under Section 78(5) of the Act is that there is no requirement in law for Revenue to establish mens rea on the part of assessee in these penalty proceedings under Section 78(5) of the Act, has been settled by the catena of judgments of the Hon'ble Supreme Court and has been reiterated by the Full Bench of this Court in a recent case decided upon a reference in the case of ACTO Vs. Indian Oil Corporation Ltd. (S.T.R. No. 92/1999 along connection revisions, decided on 26.02.2015) reported in , in which the Full Bench, headed by Hon'ble the Acting Chief Justice, held as under: - "34. The suspicion or doubt on the documents to be false or forged, per se, does not attract levy of penalty under sub -section (5) of Section 78 of the RST Act, 1994. In such case, an opportunity is to be given under Rule 55(1) of the RST Rules, 1995, to a person, to produce the required documents and/or declaration forms completed in all respects, when the goods enters or leaves the nearest check -post of the State. It is only when a person despite giving such an opportunity, is not able to produce the document and/or declaration forms completed in all respects, when the goods enters or leaves the nearest check -post of the State, or the documents are found to be false or forged, after enquiry, that a penalty may be imposed, which is a civil liability for compliance of the provisions of Act for the purposes of checking the evasion of tax. It is thus not correct to submit that penalty for submission of false or forged document or declaration, necessarily involves adjudication, for which mens rea is relevant, and is a necessary ingredient. Any doubts in this regard have been clarified by the Hon'ble Supreme Court in Guljag Industries v. Commercial Taxes Officer (supra), in which it has been clearly held in para 30, after quoting the provisions of Section 78, that; "In the present case also the statute provides for a hearing. However, that hearing is only to find out whether the assessee has contravened Section 78(2) and not to find out evasion of tax which function is assigned not to the officer at the check -post but to the AO in assessment proceedings. In the circumstances, we are of the view that mens rea is not an essential element in the matter of imposition of penalty under Section 78(5)." 35. In view of the aforesaid discussion, our answers to the questions referred, are as follows: - (i) The requirement of mens rea is not relevant for the purpose of determining the liability for penalty, in terms of Section 78(5) of the RST Act, 1994. (ii) The mens rea is not required to be proved as necessary ingredient for imposition of penalty under sub -section (5) of section 78, on proving violation of sub -section (2) of Section 78 of the RST Act, 1994. (iii) The amendment of Rule 55 of the RST Rules, 1995, in pursuance to the decision of the Hon'ble Supreme Court in State of Rajasthan and Another v. M/s. D.P. Metals (supra), authorises the authority empowered, to make an enquiry of violation of Section 78(2), and not to adjudicate a to whether the mens rea was present in violation of sub -section (2) of Section 78, for imposing penalty under sub -section (5) of Section 78 of the RST Act, 1994. (iv) The mens rea is not required to be proved as necessary ingredient for imposition of penalty under sub -section (5) of Section 78, on proving violation of sub -section (2) of Section 78 of the RST Act, 1994." 36. With the decision on the aforesaid referred questions, let the S.B. Sales Tax Revision No. 92/1999, and other connected Sales Tax Revisions, be sent back and be listed before the Bench having jurisdiction to decide the matters, in accordance with the opinion given by us and the answers provided above on such opinion."
(3.) REGARDING the imposition of penalty on the "owner" of the goods prior to the amendment in Section 78(5) of the RST Act with effect from 22.03.2002, a coordinate bench of this Court earlier in the case of Assistant Commercial Taxes Officers Vs. M/s. Nar Singh Traders reported in, (2008) 20 Tax Up -date 62 had held that no penalty under Section 78(5) of the Act prior to amendment with effect from 22.03.2002 could be imposed on the "owner" of the goods. However, later on, the Hon'ble Supreme Court in the case of Assistant Commercial Taxes Officer Vs. Bajaj Electricals Ltd. reported in : (2009) 1 SCC 308 took a different view and held that the expression "person in charge of goods" under Section 78(5) of the Act was wider expression and included the "owner" of the goods even prior to 22.03.2002 also, however, penalty could be imposed on such owner subject to giving of opportunity of hearing to him. The relevant portion of the from the Head Note of SCC is reproduced herein below for ready reference: - "From Section 78(5) read in its entirety with Rule 53 of the 1995 Rules, it is clear that penalty was liable to be imposed for importation of any taxable goods for sale without furnishing a declaration in Form ST 18 -A completely filled in all respects. The duty to fill and furnish the said form was imposed on the purchasing dealer. Therefore, Section 78(5) as it stood prior to 22.3.2002 imposed penalty if possession or movement of goods took place, inter alia, in breach of Section 78(2)(a) on "the person in charge", which included the owner. Section 78(5) comes after Section 78(4)(c) which talks about release of the goods to "the owner of the goods" on his giving of adequate security. It is the owner (importer) who has to fill in Form ST 18 -A. It is the owner who is entitle to seek release under Section 78(4) on giving security. It is the owner who is entitled to hearing under Section 78(5) and, therefore, the expression "person in charge of the goods" under Section 78(5) would include the owner. Moreover, under Section 78(2) the words used are "person in charge of a vehicle or carrier of goods in movement" whereas the words in Section 78(5) refer to "person in charge of the goods". The words "in movement" do not find place in Section 78(5) and therefore the expression "person in charge of goods" under Section 78(5) was wider than the expression "person in charge of goods in movement" under Section 78(2)(a). Consequently, the expression "person in charge of the goods" under Section 78(5) who is given an opportunity of being heard in the enquiry would include the "owner of the goods". (Para No. 28)".;