1 Assistant Commercial Taxes Officer vs. M/s Chand & Company, Bikaner. SB Civil Sales Tax Revision Petition No.702/1999 Date of Order: 24th May, 2006. PRESENT HON'BLE MR.JUSTICE BHAGWATI PRASAD Mr.Sangeet Lodha for the petitioner. Mr.Suresh Ojha for the respondent. Reportable- This revision petition is filed by the Officers of the Revenue impugning the order of the Rajasthan Tax Board. The facts giving rise to the present case are that on 22.05.97 a truck was intercepted and checked by the Officers of the Commercial Taxes Department which was coming from Delhi to Bikaner. It had a load of 112 slabs of wood. On being intercepted it was demanded that documents of the consignment be given to the Officer concerned. The driver of the truck informed that except Bill No.6508 dated 231.05.97 he had no other document. He also submitted that he has no other document in his possession which he 2 has to show. His statement was recorded which has been filed as Ex.1. On the basis of the aforesaid submissions the truck was detained under section 78 (4) (a) of the Rajasthan Sales Tax Act 1994 (hereinafter referred to as 'the Act of 1994'). On 23.05.97 Shri Vijay Chandak, Manager of the firm M/s Chandak & Company, Rani Bazar, Bikaner appeared. A notice was issued under section 78 of 'the Act of 1994' for appearing on 30.05.97. The manager of the firm Vijay Chandak who appeared on 23.05.97 prayed that the matter be decided today itself. He in his reply submitted that along with the goods bill, bilty and Form No. ST 18 A was also there but it was with another driver who had got down on way and who has arrived at Rajgarh subsequently and he has produced Form No.ST 18A 336675. The assessing officer recorded that he has considered the case of the assessee. At the time when the consignment was checked there was no other driver other than the one whose statement has been recorded . He had not expressed at that time that there was any other driver on the truck. Not only this that presence of other driver was not stated it was also not mentioned that Form No. ST 18A has remained with some one else. Rather it was not even 3 referred. There is no reference of Form No. ST 18A either in the bill or bilty. The driver of the vehicle has also not mentioned the fact that Form No.ST 18 A has remained with another driver. The contemporaneous documents, bill, bilty and the statement of the driver Balkishan do not make a mention of the existence of Form ST 18A. The assessing authority recorded that non submission of Form ST 18A at the time of checking is violation of the provisions of Section 78(2) of the Act of 1994 and Rule 53 of the Rajasthan Sales Tax Rules , 1995 (hereinafter referred to as 'the Rules of 1995') and, therefore, a penalty at the rate of 30% was imposed . The goods being of Rs.1,12,200/- the amount of penalty was quantified as Rs.33,660/- Against the imposition of penalty an appeal was preferred by the assessee. In appeal, certain affidavits were filed. The appellate authority found that there is contradiction in the reply submitted by Shri Vijay Chandak and the affidavits so much so that in one of the affidavit it was stated that Shri Ghanshyam s/o Shri Gumaniram , r/o village Balasar, District Jayal was the other driver. In fact in Rajasthan there is no district as Jayal. Therefore, it was 4 only an afterthought and in retrospect a story was cooked up and, on that issue, the story of the assessee was not accepted to be true, and the appeal was rejected. The assessee filed an appeal before the Rajasthan Tax Board and the learned Tax Board concluded that on the basis of the imposition of penalty it has been found that with a notified article it was necessary that it should have been accompanied by Form ST 18A. . Form ST 18 A was not found with that. But according to the Tax Board Form ST 18A was with the goods but the driver who had the documents had got down in between and on 23.05.97 Form ST 18 A was filed. It was shown in the reply that the form had been taken from th other driver and filed. The tribunal was of the opinion that no enquiry has been held about the intent of avoiding tax and it has not been concluded that the whole story is with the intention of avoiding tax. Since form ST 18A has been filed next day it is not accepted that it was a cooked up story. Simply because the driver Balkishan who was person incharge of the consignment had not disclosed that there was another driver, penalty cannot be imposed because it has not been enquired and found that there was intention to evade tax and , therefore, penalty was set aside. 5 The learned counsel for the revenue urged that the approach of the tax board has been erroneous. As far as the Scheme of the Act goes , requirement under section 78 (2) of the Act of 1994 are that the documents should be accompanied with the consignment. For ready reference Section 78 is quoted herein below:- “78. Establishment of check-post and inspection of goods while in movement:- (1) .......................................... (2) The driver or the person incharge of a vehicle or carrier or of goods in movement shall - (a) carry with him a goods vehicle record including “challans” and “bilties”, bills of sale or despatch memos and prescribed declaration forms ; (b) stop the vehicle or carrier at every check-post set up under sub-section (1) ; (c)produce all the documents including prescribed declaration forms relating to the goods before the Incharge of the check-post ; (d) give all the information in his possession relating to the goods ; and (e) allow the inspection of the goods by the Incharge of the check-post or any other person authorized by such Incharge. Explanation : For the purposes of this chapter - (i) “vehicle or carrier” shall include any means of 6 transportation including an animal to carry goods from one point to another point ; (ii) “goods” shall include animals also; and (iii) “goods in movement” shall mean - (a) the goods which are in the possession or control of a transporting agency or person or other such bailee ; (b) the goods which are being carried in a vehcle or carrier belonging to the owner of such goods ; and (c) the goods which are being carried by a person. ” (3) ........................................... (4) ........................................... (5) The Incharge of the check-post or the officer empowered under sub-section (3), after having given the person incharge of the goods a reasonable opportunity of being heard and after having held such enquiry as he may deem fit, shall impose on him for possession or movement of goods, whether seized or not, in violation of the provisions of clause (a) of sub- section (2) or for submission of false or forged documents or declaration, [a penalty equal to thirty percent of the value of such goods]. (6). ............................................ (7) ............................................. (8) ............................................. '' The learned counsel for the revenue has urged that check 7 post was established by the State of Rajasthan for checking the evasion of tax under Section 78 of the Act of 1994. Driver or the person incharge of the vehicle or carrier of the goods in movement is required to carry with him all the records pertaining to the consignment, i.e. Bills, bilties bills of sale or dispatch memo and prescribed declaration forms. These requirements are mandatory. An officer empowered under section 78 (3) of the Act of 1994 can detain or seize the goods in movement if they are found without documents. Violation of provisions of Section 78(2) of the Act of 1994 entails a penalty under section 78 (5) of the Act of 1994. The learned counsel for the revenue further urged that a Division Bench of this Court in the case of M/s Lalji Mulji Transport Company vs. State of Rajasthan reported in [ (2002) 127 STC 365 ] has held :- “13. From the above discussion, it clearly emerges that section 78 of the Act has been enacted with a view to check evasion of tax by transporters who are found carrying goods with fake bilties, in-complete documents and under suspicious names. The constitutional validity of such provisions has been upheld by the various decisions of the apex Court. It is now realised that unless an element of fear is introduced in so far as is necessary and unless the consequence of breach turns into penalty of sufficiently effective measures, there shall be no real 8 method of ensuring compliance. It will not be correct to protect a tax evader saying that there is absence of mens rea. The apex Court in D.P. Metals case [2001] 124 STC 611, has rejected the submissions regarding absence of mens rea by observing that the submission of false or forged documents or declaration at the check-post or even thereafter can safely be presumed to have been motivated by desire to mislead the authorities. The court further observed that hiding the truth and tendering falsehood would per se show existence of mens rea , even if required. On the question of mens rea , our view that it has no application in fiscal statute is fortified by decision of the Supreme Court in R.S. Joshi, Sales Tax Officer v. Ajit Mills reported in [1977] 40 497; AIR 1977 SC 2279. It is settled law that provisions to check evasion of sales tax are within the legislative competence of the State Legislature under entry 54 of List II of the Seventh Schedule to the Constitution of India. Thus, the provisions to make imposition of tax efficacious or to prevent evasion thereof, are within the legislative competence of the State Legislature. Thus, the plain and simple scheme of Section 78 is that the vehicle passing through the State of Rajasthan carrying goods to be delivered in another State and carries the documents as referred in section 78(2) and produces at the check post or anywhere else where a person authorized ask him to do so, if it is done honestly and faithfully, there is absolutely no problem. However, if a transporter or a trader is entering into an adventurism with a view to 9 evade tax, he must be ready to face the consequence of penalty at the rate of 30 per cent, seizure of vehicle and in aggravated case, the confiscation of the vehicle. The provisions cannot be said to be arbitrary, as they provide full opportunity of hearing to the parties affected. The Sales Tax Act also provides provisions of appeal and review. The requirement of the laws is meant to be strictly construed particularly in the areas of evasion of tax. We cannot lose sight of the fact that often there are attempts to avoid statutory obligation or requirement for oblique reason. An undue indulgence and leniency in favour of the tax evaders on technical or misplaced sympathetic ground leads to serious consequences affecting the revenue and, as such, development and security of the State. We are not oblivious of the fact that the penalty provisions cannot be used as a revenue yielding provision. The object of the penalty provisions is to ensure compliance in the larger public interest. We are also conscious of the fact that in such a situation, a trader or the transporter is also not unnecessarily harassed. If, in a given case, it is found that the provision has been misused by the authority, sufficient safeguards are provided under the statute and the Constitution. But a statutory provision cannot be struck down only on apprehensions or hypothetical grounds. Thus, we hold the entire provisions of Section 7 of the Act intra vires of the Constitution.” 10 The learned counsel for the revenue further stressed that under section 78(2) of the Act of 1994 it is the obligation of the person incharge of the vehicle to carry the prescribed declaration form with the goods in transit. Section 81 of the Act of 1994 provides that any registered dealer or any other person who intends to import or bring or otherwise receives any goods from outside the State for sale, use, consumption or for other disposal in the State, shall unless otherwise prescribed, obtain a prescribed declaration form from the prescribed authority and shall cause it to be carried with the goods as part of the documents specified in sub-section (2) of Section 78 and produce along with other documents before the Incharge of the entry check-post of the State. According to the learned counsel for the revenue, provisions of Section 81 of the Act of 1994 , read with Section 78 (2) of the Act of 1994 unequivocally prescribe that declaration forms should be accompanied with the goods in transit and such requirement is mandatory. The State Government has framed rules in this regard and rule 53 and 54 of the Rules of 1995 also require that goods in movement for import within the State should carry along with it the required declaration. The declaration ST.18A is required to be kept completely filled in all respect in ink, that is not even 11 prescribed with it that it can be filled with any other writing instrument . There is a counter foil of the form which is required to be retained by the dealer on portion marked as ' original ' ' Duplicate' which is required to be carried with the goods in movement during their movement from a particular premise to the place of business. As and when such goods are checked in the possession of the agent of the dealer or dealer himself the requirement of carrying the declaration ST 18 A is imperative. This is an obligation cast on the driver or the person incharge of a vehicle or carrier or of goods in movement to carry the forms. As and when an incident takes place under sub-section (3) of Section 78 of the Act of 1994 the original form of the declaration form is retained by the inspecting authority and the duplicate portion after certain verification is returned to the person producing the same. The returned original portion of the declaration form is sent to the assessing authority of the registered dealer or to the authority who issued the declaration form. Dealer would file form ST 18A duplicate portion along with the tax return. Thus in the scheme of the Act of 1994 the declaration ST 18A is a guarantee to see that the dealer concerned pays the tax on the import of the goods which have been brought within the territory of the State of Rajasthan. Requirement of carrying Form ST 18A is 12 to provide a mechanism to the State Government authorities to put a check on the transaction which takes place. Absence of such declaration raises a presumption of the attempt of evasion . The presence of ST 18A along with the consignment is the process by virtue of which State keeps a track on the taxable items and its absence has been made culpable under sub-section (2) of Section 78 and sub-section (5) of the Act of 1994. The learned counsel , assailing the finding of the Tax Board has submitted that the concept of guilty intent to be enquired into has been wrongly imported by the Tax Board. Mens rea is a concept of criminal law which has since long lost its importance. Even certain statutes of criminal liability do not require mens rea being the essential ingredients. The learned counsel for the revenue emphasised that under the Motor Vehicles Act and Rules a driver is required to carry all the papers along with him. If the documents are not found at the time of checking the vehicle is challaned though there may not be a mens rea in not keeping the documents. A wrong parking which is punishable in the 'no parking zone' is not always associated with any guilty intent . A marriage in violation of the Child Marriage Restraint Act cannot be brought within the mischief of mens rea but still has been made punishable. Smoking at public 13 places has been made an offence without there being any mens rea. Thus, with the development of law such acts which are punishable are without the requirement of mens rea being there. Thus, mens rea in present day scenario is not an essential ingredient of all culpabilities. Learned counsel for the revenue further submitted that mens rea is a concept which inheres into it a guilty intent and guilty mind which translates into an intent of committing crime forming motive or crime. Proof of motive is not considered an essential ingredient in criminal jurisprudence. It has not been considered mandatory because the courts have been holding that motive lies hidden in the mind of culprit. Therefore, presence and establishment of the fact of motive by prosecution has not been insisted upon by the criminal courts. It is not an easy exercise to establish an act of criminal intent for the prosecution. This has to be seen from the circumvening circumstances and it is often said that intention is what the intention does. The ultimate act is to be viewed in over all circumstances and then necessary inference is drawn. The Hon'ble Supreme Court in a recent decision in the matter of India Agencies (Regd.) vs. Addl.Commissioner of 14 Commercial Taxes, Bangalore ( 2005 (2) SCC 129) has held that provision for furnishing original Form C to claim concessional rate of tax is the requirement of the provisions of Central Sales Tax Act 1956 and has observed as follows:- “We also realize that the section and the rules as they stand may conceivably cause hardship to an honest dealer. He may have lost the declaration forms by pure accident and yet he will be penalized for something for which he is not responsible but it is for the legislature or for the rule-making authority to intervene to soften the rigour of the provisions and it is not for this Court to do so where the provisions are clear, categoric and unambiguous.” The contingencies of losing and misplacing were seen by the Hon'ble Supreme Court in this case but then the Hon'ble Supreme Court was pleased to observe that the requirement of law is unambiguous and that requires to be followed. It is for the legislature to take any remedial acts and not for the courts. The learned counsel for the revenue has asserted that here the Tax Board has tried to do what has been left by the Hon'ble Supreme Court to be done by the legislature. The learned counsel has further stressed that emphasis of the Tax Board on looking for the criminal intent is 15 misplaced. Per contra, the learned counsel for the assessee has laid down emphasis on the question of mensrea to a great extent. He has submitted that a Division Bench of this Court in M/s Parasnath Granite India Ltd. vs. State of Rajasthan & Anr. [2004] 18 Sales Tax Today , 145 has discussed all the relevant cases and has held that unless the mens rea is established the penalty is not automatic. I have heard learned counsel for the parties and have given my thoughtful consideration to the arguments advanced. The first and foremost consideration before this Court is that the Division Bench judgment in M/s Parasnath's case (supra) being a Division Bench judgment has been put as the prime defence by the respondents. To meet this argument the respondent has relied on a Division Bench decision of this Court in the matter of Lalji Mulji's case (supra). In this case the Division Bench of this Court has held that the conception of mens rea has no application in the implementation of fiscal statute. This has been held by the Division Bench of this Court on the strength of the decision of the Hon'ble Supreme Court in the matter of R.S.Joshi vs. Ajit Mills (AIR 16 1977 SC 2276). The Division Bench in Parasnath's case (supra) has tried to distinguish with R.S.Joshi's case (supra). With respect to the Division Bench , the explanation given with regard to the case of R.S.Joshi runs contrary to the meaning given by the Division bench in Lalji Mulji's case (supra) and also another Division Bench decision of this Court in the matter of M/s Maharana Talkies , Bhilwara vs. State of Rajasthan & Ors. reported in[ 2004] 19 Sales Tax Today, 237. This court has negated the concept of mens rea being available in the matters when the taxation statutes are in question. It would be relevant here to quote from the Division Bench judgment of this Court in Parasnath's case (supra) that this Court had observed : “However, in the context of penalty for breach of statutory obligations, not amounting to offence, mens rea in the aforesaid technical sense in most cases may not be necessarily recognized before penalty is imposed. But the term has been used to draw distinction between honest and bonafide conduct in breach of statutory obligation on the one hand and dishonest and contumacious conduct on the other. The principle is invoked in cases where before levy of penalty an enquiry into probable defence is to be held by envisaging any 17 opportunity of hearing by issue of show cause notice even in cases where breach is complete. In some cases, penal consequences follow in absolute terms on principle of strict liability, such as penalty is considered compensatory for loss caused to revenue or a token or light penalty is provided commensurating with the nature of breach, where such distinction may not be present. It ultimately depends on the consideration of scheme of relevant Statute, its object and machinery provisions to implement it.” Thus it is clear that the Division Bench in Parasnath's case (supra) was conscious that is not a necessarily recognisable ingredient and the conduct is required to be looked into and this has been so said in the light that unless principles of absolute liability is discernibly clear from the object of the provisions the conduct of the party becomes relevant. It has further been held in Parasnath's case (supra) : “Thus, in our opinion, the decision of Supreme Court in Ajit Mill's case and D.P. Metals case and the Bench decision of this Court in Lalji Mulji case do not militate against the decision rendered by this Court in Mahaveer Conductor's case or the Jitendra's case, or the Voltas case and a host of other cases. On the contrary, these two judgments reaffirm the view expressed in the aforesaid 18 decisions that the levying penalty is not automatic, and there is distinction between honest and dishonest acts.” The purport of the Lalji Mulji's case (supra) has been accepted by the Division Bench. If the aforesaid observations of the of the Division Bench in Parasnath's case (supra) is considered then it appears that the court had approved the Lalji Mulji concept of negating the aspect of mens rea in strictest possible terms when it is not applicable in the fiscal statutes. Thus, this Court feels that Parasnath having followed Lalji Mulji concept, Lalji Mulji's concept has to be given weightage over Parasnath for ultimate conclusion. Apart from the controversy being seen from the aforesaid point of view, it is relevant to take note of the recent Supreme Court decisions. The Hon'ble Supreme Court in State of U.P. & Ors. vs. Sukhpal Singh Bal (2005) 7 SCC , 615 has observed:- “15. In the light of the above judgments as applicable to the provisions of the said 1997 Act, we are of the view that the High Court had erred in striking down