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Sales Tax - Whether if there is movement of goods sans complete papers, penalty is only recourse to recoup loss of Revenue and there is no need to prove mens rea in such cases - YES: Supreme Court

By TIOL News Service

NEW DELHI, AUG 26, 2016: THE issue before the Apex Court is - Whether if there is a movement of goods with incomplete transit documents and forms, penalty is the only course of action to recoup loss of Revenue and there is no need for the Department to prove mens rea in such a case. YES is the verdict.

Facts of the case

The Commercial Tax Officer (CTO) conducted inspection of a vehicle at a check post and it was discovered that the said vehicle was transporting plywood from Delhi to Bikaner. The Driver produced incomplete ST-18A Form on the seller/consignor's side. Therefore, the goods were seized and a notice was sent to the assessee. The CTO found that there was a violation of Section 78(2) read with Rule 53 of the Rajasthan Sales Tax Rules and therefore, imposed a penalty under the Act. On appeal, the appellate authority allowed the appeal and held that the seller/trader had sent the blank form for which the assessee cannot be made accountable and the CTO failed to prove that the assessee had the intention to evade the tax, hence, the penalty was wrongly imposed.

On further appeal, the Rajasthan Tax Board upheld the order of the appellate authority and held that the assessee had completed all the formalities at his end and filled the columns in the form but the consignor did not complete the form at his part. This apart, documents like bills, vouchers and authorization letter, etc., were available with the driver at the time of checking. Thus, it was held that the penalty was wrongly imposed.

The Apex Court held that,

++ vide the impugned order, the High Court dismissed the revision petition of the appellant and upheld the findings of the lower authorities and held that there was no malafide intention of the respondent for evading tax or defraud the Revenue and the respondent cannot be penalised for the lapse on the part of the seller. Challenging the aforesaid order, the present appeal is preferred. We find that the issue involved is no more res integra and is covered in favour of the Revenue by the judgment of this Court in 'M/s. Guljag Industries v. Commercial Taxes Officer' 2007-TIOL-142-SC-CT. This appeal is, accordingly, allowed and the order of the High Court is set aside.

(See 2016-TIOL-134-SC-CT)


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