# MIS. GULJAG INDUSTRIES v. COMMERCIAL TAXES OFFICER

- **Citation:** [2007] 8 S.C.R. 793
- **Court:** Supreme Court of India
- **Decided:** 2007-08-03
- **Case number:** Civil Appeal No. 5197 of2005
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mis-guljag-industries-v-commercial-taxes-officer-23207
- **Pages:** 41

## Headnote

f.
MIS. GULJAG INDUSTRIES
A
v.
COMMERCIAL TAXES OFFICER
AUGUST 3, 2007
[S.H. KAPADIA AND B. SUDERSHAN REDDY, Jl]
B
Sales Tax:
Rajasthan Sales Tax Act, 1994-s. 78(5), (2)-Rajasthan Sales Tax Rules, C
1995-Rule 53~Goods in movement carried with incomplete/blank
declaration Form ST 18A though signed by the conslgnee~Penalty under
s. 78(5)-Held: Rightly imposed~ince entire forin was left blank, declaration
by consignee was meaningless-Penalty for tax delinquency is civil obligation,
and is different.from penalty for a crime hence existence of mens rea is not
essential for imposition-Rajasthan Sales Tax Act, 1954-s.22A(7)-Rajasthan D
Sales Tax Rules, 1955.
Rajasthan Sales Tax Act, 1994-s. 78(5)-0bject of~tated
Rajasthan Sales Tax Act, 1954-s.22A(7)-Rajasthan Sales Tax Rules,
1955-Rule 62A-Requisite documents not accompanying goods in E
movement-Imposition of penalty-Held: Question as to whether penalty is
imposable or not to be decided in the light of decision in D.P. Metals*-
Matter remitted to Commissioner (appeals)-Rajasthan Sales Tax Act, 1994s. 78(5), (2)-Rajasthan Sales Tax Rules, 1995-Rule 53.
In the first batch of appeals filed by assessees, the dispute was that on
checking of the vehicles at the check post, completely blank Form ST ISA
were found with the goods in movement though they were signed by the ·
consignee. The asses.sing officer held that this indicated an intention of
F
· assessee to evade the tax and herice attracted penalty under s. 78(5) of
Rajasthan Sales Tax Act, 1994 (s.22A(7) ofRajasthan Sales Tax Act, 1954). G
The Appellate Authority upheld the order of assessing officer. Tax Board
allowed the appeal of assessee holding that penalty could not be imposed without
establishing guilty mind (mens rea) on the part ofassessee. Aggrieved by the
decision of Board, Department filed revision before the High Court wherein
it was held that presence of mens rea was not a sine qua non for levying penalty H
793
794
SUPREME COURT REPORTS
c20011 s s:c.R.
A in case of contravention of s. 78(2) of the Act. Aggrieved assessee filed these
appeals.
In another batch of appeals filed by department, the dispute was that on
verification of the vehicles, the goods were found to be more than the quantity
shown in the bill. The driver of the vehicle did not produce the documents at
B the time of checking and therefore assessee was held liable to penalty for
breach of Rule 62A of RST Rules, 1955. Appellate authority held that nonproduction of the bill at the check post indicated guilty mind to evade tax.
However, Tribunal was of the view that penalty was automatic once the driver
on demand failed to produce the documents accompanied with the goods under
C s.22A(3) of RST Act, 1954. Assessee challenged the decision of Tribunal
before the High Court. High Court held that levy of penalty was not automatic
in case where goods in movement were found to be unaccompanied by requisite
documents. Aggrieved department filed appeal.s before this Court.
rJ
Disposing of the appeals of assessees and department, the Court
HELD: 1. Existence of mens rea is an essential ingredient of an offence.
However, it is a rule of construction. If there is a conflict between the common
law and the statute law, one has to construe a statute in conformity with the
common law. However, if it is plain from the statute that it intends to alter the
E course of the common law, then that plain meaning should be accepted.
F
Existence of mens rea is an essential ingredient in every offence; but that
presumption is liable to be displaced either by the words of the statute creating
the offence or by the subject matter with which it deals. A penalty imposed
for a tax delinquency is a civil obligation, remedial and coercive in its nature,
and is different from the penalty fot a crime. !Para 9) (802-B-C]
2.1. On the face of it, there was contravention of Section 78(2) of the
RST Act 1994. Under Rule 53 of the RST Rules 1995(Rule 25C of the RST
Rules 1955) every registered deal

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f.
MIS. GULJAG INDUSTRIES
A
v.
COMMERCIAL TAXES OFFICER
AUGUST 3, 2007
[S.H. KAPADIA AND B. SUDERSHAN REDDY, Jl]
B
Sales Tax:
Rajasthan Sales Tax Act, 1994-s. 78(5), (2)-Rajasthan Sales Tax Rules, C
1995-Rule 53~Goods in movement carried with incomplete/blank
declaration Form ST 18A though signed by the conslgnee~Penalty under
s. 78(5)-Held: Rightly imposed~ince entire forin was left blank, declaration
by consignee was meaningless-Penalty for tax delinquency is civil obligation,
and is different.from penalty for a crime hence existence of mens rea is not
essential for imposition-Rajasthan Sales Tax Act, 1954-s.22A(7)-Rajasthan D
Sales Tax Rules, 1955.
Rajasthan Sales Tax Act, 1994-s. 78(5)-0bject of~tated
Rajasthan Sales Tax Act, 1954-s.22A(7)-Rajasthan Sales Tax Rules,
1955-Rule 62A-Requisite documents not accompanying goods in E
movement-Imposition of penalty-Held: Question as to whether penalty is
imposable or not to be decided in the light of decision in D.P. Metals*-
Matter remitted to Commissioner (appeals)-Rajasthan Sales Tax Act, 1994s. 78(5), (2)-Rajasthan Sales Tax Rules, 1995-Rule 53.
In the first batch of appeals filed by assessees, the dispute was that on
checking of the vehicles at the check post, completely blank Form ST ISA
were found with the goods in movement though they were signed by the ·
consignee. The asses.sing officer held that this indicated an intention of
F
· assessee to evade the tax and herice attracted penalty under s. 78(5) of
Rajasthan Sales Tax Act, 1994 (s.22A(7) ofRajasthan Sales Tax Act, 1954). G
The Appellate Authority upheld the order of assessing officer. Tax Board
allowed the appeal of assessee holding that penalty could not be imposed without
establishing guilty mind (mens rea) on the part ofassessee. Aggrieved by the
decision of Board, Department filed revision before the High Court wherein
it was held that presence of mens rea was not a sine qua non for levying penalty H
793
794
SUPREME COURT REPORTS
c20011 s s:c.R.
A in case of contravention of s. 78(2) of the Act. Aggrieved assessee filed these
appeals.
In another batch of appeals filed by department, the dispute was that on
verification of the vehicles, the goods were found to be more than the quantity
shown in the bill. The driver of the vehicle did not produce the documents at
B the time of checking and therefore assessee was held liable to penalty for
breach of Rule 62A of RST Rules, 1955. Appellate authority held that nonproduction of the bill at the check post indicated guilty mind to evade tax.
However, Tribunal was of the view that penalty was automatic once the driver
on demand failed to produce the documents accompanied with the goods under
C s.22A(3) of RST Act, 1954. Assessee challenged the decision of Tribunal
before the High Court. High Court held that levy of penalty was not automatic
in case where goods in movement were found to be unaccompanied by requisite
documents. Aggrieved department filed appeal.s before this Court.
rJ
Disposing of the appeals of assessees and department, the Court
HELD: 1. Existence of mens rea is an essential ingredient of an offence.
However, it is a rule of construction. If there is a conflict between the common
law and the statute law, one has to construe a statute in conformity with the
common law. However, if it is plain from the statute that it intends to alter the
E course of the common law, then that plain meaning should be accepted.
F
Existence of mens rea is an essential ingredient in every offence; but that
presumption is liable to be displaced either by the words of the statute creating
the offence or by the subject matter with which it deals. A penalty imposed
for a tax delinquency is a civil obligation, remedial and coercive in its nature,
and is different from the penalty fot a crime. !Para 9) (802-B-C]
2.1. On the face of it, there was contravention of Section 78(2) of the
RST Act 1994. Under Rule 53 of the RST Rules 1995(Rule 25C of the RST
Rules 1955) every registered dealer who imports taxable goods, for sale within
the State, is required to furnish declaration Form 18A completely filled in,
G in all respects. Under Rule 53 of the said Rules the counterfoils of the
declaration has to be retained by such consignee and its portions marked as
'original' and 'duplicate' have to be carried with the goods in movement. Under
the said Rule 53(1)(c) the driver is required to produce the declaration form,
suo motu at the check-post at the time of inspection when the competent officer
is requil'ed to retain the original of the declaration form and return the
H duplicate portion to the driver. The competent officer shall thereafter forward
J
...
i
'
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GUUAG INDUSTRIES v. COMMERCIAL TAXES OFFICER
795
the original portion of the declaration to the A.O. of the registered dealer or A
to the authority which has issued the declaration form to the consignee.
{Para 20] (826-G-H; 827-A-CJ
2.2. Under Rule 53(2) the registered dealer is required to submit a
statement of import of goods in Form ISA to the A.O. every quarter. Under
Rule 53(4) where a registered dealer fails to furnish such statement the A.O. B
or the authority who issued the declaration forms may impose penalty under
. Section 68 of the said Act. Form 18A, is in two parts. Part-A has to be filled
in by the consignee. Part-B has to be filled in by the consignor. The nature of
the transaction as to whether it is by consignment or by depot transfer or by
interstate sale has to be indicated by the consignee. Similarly, the consignee C
has to indicate the description of the goods. Part-B has to be filled in by the
consignor. Part-B requires the consignor to give the estimated value of goods.
He has also to give invoice number and the date. The declaration form is
collected by the consignee from his A.O. in the State of Rajasthan. The
consignee gives an undertaking to get Part-B filled by the consignor.
Similarly, the consignee gives a declaration that facts stated in Part-A are D
true to his knowledge. In the present case, the entire form was left blank
though it had been signed by the consignee. Therefore, the declaration given
by the consignee is meaningless. There are no facts given in Part-A. There
is no identity of the goods transported. There is no description of the goods
in movement. [Para 20) [827-C-G)
2.3. Under Rule 53, the vriginal has to be placed before the A.O. by the
officer at the check-post. If the form which ultimately goes to the A.O. is blank
E
in all material respects then it is impossible for the A.O. to assess the dealer
and it is this practice which has resulted in loss of revenue in crores to the
State. Without description of the goods imported, it is easy to manipulate the
value. If material particulars are not submitted, one fails to understand how F
assessment could be finalized. Moreover, it has become a common practice to
circulate the same form again and again resulting in loss of revenue to the
State. It is for this reason that Rule 53 of the RST Rules 1995 contemplates
the form to be submitted duly filled in and duly completed. Since the goods in
movement were not supported by duly filled in Form No.18A/18C, there was G
contravention of Section 78(2) of the RST Act 1994.
(Para 20] (827-G-H; 827-A-BJ
3.1. There is dichotomy between contravention of Section 78(2) of the
said Act which invites strict civil liability on the assessee and the evasion of
tax. When a statement of import/export is not filed before the A.O., it results H
I
\___
796
SUPREME COURT REPORTS
[2007] 8 S.C.R.
A in evasion of tax, however, when the goods in movement are carried without
the declaration Form No.18A/18C then strict liability comes in, in the form
of Section 78(5) of the said Act. Breach of Section 78(2) imposes strict liability
.....
under Section 78(5) because goods in movement cannot be carried without
Form No.18A/18C. (Para 21) (828-C-D]
B
3.2. The object behind enactment of Section 78(5) is to emphasise loss
of revenue and to provide a remedy for such loss. It is not the object of the
said Section to punish the offender for having committed an economic offence
and to deter him from committing such offem:es. The penalty imposed under
the said Section 78(5) is a civil liability. Section 78(2) is a mandatory
c
provision. If the declaration Form 18A/18C does not support the goods in
movement because it is left blank then in that event Section 78(5) provides
for imposition of monetary penalty for non-compliance. Default or failure to
t
comply with Section 78(2) is the failure/default of statutory civil obligation
'=
and proceedings under Section 78(5) is neither criminal nor quasi-criminal
in nature. The penalty is for statutory offence. Therefore, there is no question
D of proving of intention or of mens rea as 'the same is excluded from the
category of essential element for imposing penalty. Penalty under Section
78(5) is attracted as soon as there is contravention of statutory obligations.
Intention of parties committing such violation is wholly irrelevant.
'
,,.-
(Para 21) (828-D-ll)
E
3.3 .. The modusoperandi adopted by the assessees itself indicates mens
rea. This is not the case where goods in movement are carried without the
declaration forms. The goods in movement were carried with the declaration
forms. These forms were duly signed, however, material particulars were not
filled in. The explanation given by the assessees in most of the cases is that
F
they are not responsible for the misdeeds of the consignors. The other
explanation given by the assessees is regarding the language. problem. There
is no merit in these defences. They are excuses. The declaration forms were
·"
unfilled so that they could be used again and again. The forms were collected
by the consignee from the said Department. The consignee undertakes to see
that the value of the goods is supplied by the consignor. It is not open to the
G consignee to keep the column in respect of the description of goods as bhmk.·
Even the column dealing with nature Of transaction is left blank. The consignee
is the buyer of the goods. He knows the descriptions of the go~ds which he is
supposed to buy. There is no reason for leaving that column blank. Therefore,
. there are no special circumstances in any case for waiver of penalty for
contravention of Section 78(2). The assessees were fully aware that the goods
>-
H in movement had to be supported by Form ST 18A/18C. Therefore, they made
-A
_J
I
GUUAG INDUSTRIES v. COMMERCIAL TAXES OFFICER
797
~
the goods travelled with the forms. However, the said forms are left blank in A
...
all material respects. Therefore, A.O. was right in drawing inference of mens
rea against the assessees. (Para 21) (829-A-E)
3.4. Section 78(2) requires the goods in movement to travel with the
declaration in Form 18A/18C duly filled in. It is Section 78(2)(a) which has
been contravened in the present case by the assessee.s by carrying the goods B
with blank forms though signed by the consignee. In fact, the assessees
resorted to the above modus operandi to hoodwink the competent officer at
the check-post. If the form is left incomplete and ifthe description of the goods
is not given then it is impossible for the assessing officer to assess the taxable
goods. The declaration Form 18A/18C is like a return under the Income-Tax c
Act, 1961. The Assessing Officer completes the assessment on the basis of
Form 18A/18C. Jf that form is left blank in all material respects then it is
impossible for the A.O. to arrive at the taxable turnover of the assessee.
(Paras 21 and 25) (829-F~G; 832-C-D)
Chairman, SEBI v. Shriram Mutual Fund and Anr., (2006) 5 SCC 361, D
referred to.
~
3.5. The-Court has to go by the words used in the section to ascertain
whether the legislature has excluded the element of mens rea. Jt is the
statutory law enacted by\the competent legislature which can exclude the
presumption under common law. Section 78(5) excludes the presumption of E
· mens rea which is normally preva;ling in common law.
[Para 231 (831-C)
Sodhi Transport Co. & Anr. Etc. Etc.· v. State of UP. & Anr. Etc. Etc.,
(1986) 1SCR939 and State of Rajpsthan and Anr. v. D.P. Metals, (2002) 1
F
sec 279, held inapplicable.
4. Appeals filed by the State (Department) are those cases where the
documents did not accompany the goods in movement, like, the bills of sale,
bills of transport etc. These appeals stand on a different footing. They have
nothing to do with incomplete forms travelling along with the goods in G
movement. These civil appeals filed by the State (Department) shall be decided
in the light of the judgment of this Court in D.P. Metals*.
!Para 26) (832-F-Gl
"'
State of Rajasthan and Anr. v. D.P. Metals* (2002) 1 SCC 279, referred
to.
H
~
798
SUPREME COURT REPORTS
[2007) 8 S.C.R.
A
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5197 of2005.
B
c
From the Judgment & Order dated 14. I 0.2003 of the High Court of
Judicature for Rajasthan at Jodhpur in SB Sales Tax Revision No. I 023/2002.
WITH
Civil Appeal Nos. 5210-5224, 5226-5240, 5243-5250, 5260-5267, 5269, 52555259, 4412, 5283, 5723, 4413-4423, 4425-4426, 4429-4437, 4439-4442, 5252 and
5253 of2005.
Civil Appeal Nos. 3419 & 3420 of2007.
Civil Appeal Nos. 1927, 2243, 2392, 2393, 2952, 2953, 3195, 5273 of2006
& 1422, 1769, 2291 of2007.
Pallav Shishodia, D.N. Mishra, B.D. Sharma, Narottam Vyas, Deep Shikha
Bharati, Vikramjeet Sikand, Subhash Chandra Birla, Subrat Birla, Dr. Manish
D Singhvi, P.V. Yogeswaran, Sunil Kumar Jain, Arvind Kr. Sharma, Naresh Kumar,
Praveen Chaturvedi, H.K. Puri, N. Ganpathy, Satyendra Kumar, Gopal
·· Sankaranarayan, Vikas Mehta, Pun it Jain, Sushi I Kumar Jain, Christi Jain, H.D.
Thanvi and Sarad Singhania for the Appearing parties.
The Judgment of the Court was delivered by
KAPADIA, J. l. Leave granted in special leave petitions.
2. In this batch of civil appeals we are required to consider the scope
· of Section 78(5) of the Rajasthan Sales Tax Act, 1994 which is in pari materia
to Section 22A (7) of the Rajasthan Sales Tax Act, 1954.
L
3. For the sake of convenience we may mention the facts in Civil Appeal
7
No.5197 of 2005 - Mis. Gu/jag Industries v. Commercial Taxes Officer.
4. On 21.1.95 near the Bahar Road Check Post a vehicle was checked
·in which 47 barrel of chemicals were transported from Vishakapattanam. Along
. G whh the goods, outward gate pass No.4331 dated 16.9.95 of Andhra PetroChemicals Ltd. and consignment No.920 dated 16.9.95 of M/s. A VR & Co.
were found in which the name of the consignor was shown as M/s. Andhra
Petro-Chemicals Ltd. Vishakapattanam and the name of the assessee was
mentioned as M/s. Guljag Industries (assessee - appellant herein). Along
H with the goods, Form ST I 8A No.236084 was also found in which the goods
_J
_ ....
GUUAG INDUSTRIES,._ COMMERCIAL TAXES OFFICER [KAPADIA, J.]
799
transported was not declared though the same was duly signed. Under the A
above circumstances the A.O. came to the conclusion that there was a
contravention of the provisions of Section 22A(3) of the Rajasthan Sales Tai
Act, 1954 (for short, 'RST Act 1954') read with Rule 62A(3) of the Rajasthiln.
Sales Tax Rules, 1955 (for short, 'RST Rules 1955'). He accordingly issued
notice under Section 22A(7) of.the RST Act 1954 calling upon Mis. Guljag
Industries to show cause why penalty was not leviable for violation of. B
Section 22A(3) of the RST Act 1954. In response to the said notice Mis ..
Guljag Industries submitted that there was mistake in filing the declaration .
form and, therefore, there was no intention of tax evasion. It was further
submitted that the said declaration Form ST '1 sA (Form No. I SA) was supposed
_to be filled in by. the consignor but. due to lack of knowledge of Hindi C
language the same could not be filled in by the consignor. The AO did not
accept the Explanation given by Mis. Guljag Ind.ustries. The AO refused to
accept the unfilled forni as a dec.laration.
Accordingly, he imposed the
penalty under Section 22A(7) of the RST Act 1954.
Aggrieved by the
decision of the AO, Mis. Guljag Industries preferred Appeal No.771RSTIJUC/
95-96. By order dated 10.8.99, Dy. Commissioner (Appeals) came to the D ·
conclusion that under Rule 25(3) ofRST Rules 1955 the purchasing dealer was
required to give the reqqisite declaration in Form ST I SA to the selling dealer.
According ·to the appellate authority, the responsibility to fill the form was on
Mis. Guljag Industries. That,'Mls. Guljag Industries carried on business from
Rajasthan: It was familiar with Hindi ·language. Therefore, tbe unfilled Form E
No. I SA cannot be accepted as a declaration. The appeal was accordingly
dismissed. Aggrieved by the decision of Dy. Commissioner (Appeals), Mis.
Guljag Industries carried the matter in second appeal to Rajasthan Tax Board,
Ajmer beii1g Appeal No.13751991Jodhpur. By that time Rajasthan Sales Tax
Act 1994 (for short, 'RST Act 1994 ')came to replace RST Act 1954. However,
Section 7S(5) of RST Act 1994 was in pari niateria to Section 22A(7) of RST F
Act 1954. By order dated 27.2.2002 the Board came to the conclusion that
penalty could not be imposed_ without establishiqg guilty mind (mens rea) on
the part of Mis. Guljag Industries (assessee). The appeal was allowed.
5. Aggrieved by the decision of the- Board, the Department carried the
matter in revision to the RajasthanHigh Court, By order dated 14.10.03 the G
.single Judge held that presence of mens ren was not a siiie qua non for
levying penalty io case of contravention of Section 22A(3) or' th~ RST Act.
"
1954 (Section 7S(2) of the RST Actl994). By the said order the learned single .
Judge held that in the present case Form No. I SA was totally blank though
signed by the consignee; that it was the duty of the consignee or his agent -H
800
SUPREME COURT REPORTS
[2007] 8 S.C.R ..
A to see that the fonn was returned to the transporter with complete details by
the consignor. It was further held that the filling up of the form was the duty .· ·
of the consignee/importer.
The learned single Judge held that ·in the
circumstances since the consignee was from Rajasthan and since· the form
was unfilled it cannot be said that_ the error was accidental. That, moreover
B
c
in both the States, namely, Andhra Pradesh (Vishakapattanam) and Rajasthan,
there are Hindi-speaking persons. In the circumstances, the learned single
Judge held that the fonn was deliberately not filled in which indicated an
intention of the assessee Mis. Guljag Industries to evade the tax. Accordingly,
the order of the Board was set aside. Aggrieved by the order passed in
revision by the single Judge the assessee (M/s. Guljag Industr'ies) has come
to this Court by way of Civil Appeal No.5197 of 2005.
6. In Civil Appeal No.5240 of2005 -Assistant Commercial Taxes Officer
v. Mis. Gu/jag Industries ltd. preferred by the Department the facts are as
follows.
D
7. On 1.11.90 at Abu Road Check-Post, a vehicle was checked which
was carrying goods. On search the driver furnished GR No. I dated 31.J 0. 90
issued by Mis. Delhi Bombay Road Lines. The consignment was shown to
be Mis. Sumit--Marbles, Abu Road. There was Bill No.122 dated 31.10.90.
That Bill referred to 50.31 sq. meters of granite priced at Rs.34,494 and the
name of the recipient was shown Mis. Sri Parashwanath Granites.
On
E . verification of the vehicle, the goods were found to be more than the quantity
shown in the bill. On searching the vehicle two envelopes were found one
of which was of Mis. Sri Parashwanath Granites and other was of Mis.
Hindustan Granites. Being suspicious of the evasion of tax, notice under Rule
54 of RST Rules 1995 was issued on 16.11.90. The representative of the
F assessee appeared.
He deposited the disputed penalty amount and goods
were released.
In reply to the show cause notice given to the assessee
proposing levy of penalty under Section 22A(7) of the RST Act 1954, it was
submitted by the assessee that he had delivered the relevant documents to
the transporter which were found to be in the vehicle at the time of the seizure
of the goods and, therefore, the assessee was not Hable to be penalized under
G the said Section. According to the assessee (M/s. Sri Parashwanath Granites),
the driver of the vehicle had made a mistake in not producing the documents
which were with him at the time of checking and, therefore, the assessee was
not liable to be penalized for breach of Rule 62A RST Rules 1955. This
explanation was not accepted.
H
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GULJAG INDUSTRIES\'_ COMMERCIAL TAXES OFFICER (KAPADIA, J_J
80}
8. On appeal, the Dy. Commissioner (Appeals) confirmed the levy of A
_ penalty. The appellate authority held that non-production of the Bill at the
check-post indicated guilty mind of the assessee to evade tax. On further
appeal, the Rajasthan Sales Tax Tribunal vide order dated 31.3.93 took the
view that mere non-production of document by the driver at the check-post
cannot result in levy of penalty. Against the order of the Tribunal, a revision 'B
was filed before the single Judge of the High Court, however, on constitution
of Rajasthan Taxation Tribunal, It stood transferred. The Tribunal took the
view that it was obligatory on the part of tfie consignee or his agent to carry
with him the requisite documents and also to produce the documents at the
check-post on demand by the officer.
The Tribunal took the view that
contravention of Section 22A of the RST Act 1954 cannot be obliterated by ~
producing subsequently the documents at_ the time of assessment.
The
Tribunal took the view that Rules 62A and 63 of the RST Rules 1955 have
no application. The said rules applied at the stage of assessment Accordingly,
the Tribunal held that penalty was automatic once the driver on demand failed
to produce the document lying with him or ifhe fails to produce the documents
accompanied the goods under Section 22A(3) of the RST Act 1954. According D
to the Tribunal, once the offence is complete subsequent furnishing of the
documents even -if bona fide will not relieve the owner of the goods from
liability of penalty. This decision of the Tribunal was challenged by Mis. Sri
Parashwanath Granites. By judgment dated 2.6.2004, the High Court held that
the levy of penalty was not automatic in the case where the goods in E
movement are found to be unaccompanied by the required ·documents.
According to the High Court, the question of levy of penalty would arise only
before the goods are delivered to consignee and if it is found that the goods
are in movement unaccompanied with documents. On facts the High Court
found that if for some reason the driver failed to produce these documents
at the check-post which were subsequently produced and which were not f
-false or forged, it could not be said that there was intention to evade the tax.
The High Court held that merely because the driver had not shown the
documents given to him by the assessee, could not make the assessee guilty
of contravention. Cbnsequently, the High Court held that notwithstanding
the failure on the pait of the driver to show the bill accompanying the goods G
at the time of checking but in fact recovered from its possession later on ruled
out the possibility of the docur..ent being subsequently prepared, accordingly,
the order imposing penalty Was set aside. At this stage, we may state that
even in this ruling of the High Court in the case of Sri Parashwanath Granites,'
the High Court has clarified that the case of Sri Parashwanath Granites was ,
·not the case of the documents being incorrect. On the contrary, the High H
802
SUPREME COURT REPORTS
(2007] 8 S.C.R.
A Court found that the document, namely, the bill accompanying the goods was
correct in all respects and, therefore, there was no tax evasion. Consequently,
the order imposing penalty was set aside. This decision ofthe High Court
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· in Sri Parashwanath Granites has been followed by the High Court in the case
of Mis. Guljag Industries.
Hence, aggrieved by the said decision, the
Department has come to this Court by way of Civil Appeal No.5240 of 2005.
9. Existence of mens rea is an essential ingredient of an offence.
However, it is a rule of construction. If there is a conflict between the
common law and the statute law, one has to construe a statute in conformity
with the common law. However, if it is plain from the statue that it intends
C to alter the course of the common law, then that plain meaning should be
accepted. Existence of mens rea is an essential. ingredient in every offence;
but that presumption is liable to be displaced either by the words of the
statute creating the offence or by the subject matter with which it deals. A
penalty imposed for a tax delinquency is a civil obligation, remedial and
coercive in its nature, and is different from the penalty for a crime.
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10. Therefore, the short point which arises for determinati_ori in this
batch of civil appeals is : whether the above presumption, namely, that mens.
rea is an essential ingredient in every offence is displaced by the words of
Section 78(5) RST Act 1994.
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11. To decide the above question we quote hereinbelow Section 22A of
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the RST Act 1954 which reads as under:
'"22A Establishment of check-post or barrier and inspection of goods
while in transit. - (I) If the State Government or the Commissioner
considers it necessary that with a view to prevent or check evasion
of tax under this Act in any place or places within the State it is
necessary so to do, it may; by notification in the Official Gazette,
direct the setting up of a check-post or the erection of a barrier or
both at such place or places as may be spedfied in the notification;
Provided that the Commissioner may not direct the setting up of
a check-post or the erection of a barrier. for a "period exceeding six
months.
(2) At every check-post or barrier set up or erected under-sub-section
(I) or at any other place when so required by·any officer empowred
by the State Government in this behalf, the driver or any other person
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GUUAG INDUSTRIES l". COMMERCIAL TAXES OFFICER [KAPADIA, J.]
803
in-charge of a vehicle, boat or animal shall stop the same and keep A
it stationary so long as may reasonably be necessary and allow the
officer-in-charge of the check-post or barrier or the officer empowered
as aforesaid to examine the goods carried in or on such vehicle, boat
or a.nimal and inspect all records relating to. the goods carried which
. """
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"" ... ,.-.(!:'are in the possession .of such driver or other person incharge, who
shall, if so required, give his name and address and the name and B
address of the owner of the vehicle, boat or anial and also the names
and addresses of the consignors and consignees, if any, and in case
the consignor or the consignee is a registered dealer, whether in this
State or in any other State, the number within the name of the district
of issue of the registration certificate, if any, of such consignor or the C
consignee, as the case may be.
(3) The owner or person in-charge of a vehicle, boat or animal shall
carry with him a goods vehicle record, a tripsheet or a log book, as
the case may be, and such other document, as may be prescribed in
respect of the goods carried in or on the vehicle, boat or animal, as D
'the case may be, and produce the same before any officer-in-charge
of check-post or barrier or any other officer as may be empowered by
Government in· that behalf. The owner or person in-charge of a
vehicle, boat or animal entering the State limits or leaving the State
limits shall also give a declaration containing such particulars as may
be prescribed of the goods carried in or on the vehicle, boat or animal, E
as the case may be, before the officer-in-charge of the check-post or
barrier or the officer empowered as aforesaid and give one copy of the
declaration to such officer, and keep one copy with him.
(4) xxx
xxx
xxx
(5) The officer-in-charge of a check-post or barrier or the officer
empowered under sub-section (2) may seize or pass order to retain
under sub-section (9). [xxx] any goods which are under transport by
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a vehicle, boat or animal and are not covered by a goods vehicle
record, a trip sheet or log book as te came bay be, and other G
documents prescribed under sub-sectitn (3) and when the goods
vehicle, i,oafor animal.carrying any goods enters or leaves the State
limits, Hie declaration referred to in sub-section (3) also.
(6) The officer-in-charge of the check-post or barrier or any other
officer empowered in that behalf may seize. or pass order to retain H
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SUPREME COURT REPORTS
[2007) 8 S.C.R.
under sub-section (9) any goods (other than exempted goods) which
are under transport by a vehicle, boad or animal in respect ofwhich
the declaration is false or which are not covered by the documents
prescribed under sub-section (3):
Provided that before seizing any goods, the officer-in-charge of
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the check-post or barrier or any other officer empowered in that behalf
shall record his reasons for doing so and shall give a receipt for the
goods to the person from whose possession or control they are
seized.
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Explanation 1.- For the purpose of this sub-section, "exempted goods"
includes goods the sale or purchase of which by dealers in general
is exempt from tax without any condition or on the sole condition that
an exemption certificate, with or without payment of fee, is obtained
or the goods are recorded in the registration certificate of the dealer
claiming the exemption.
Explanation II.- For the purpose of this section the goods under ·
transport means goods which have been handed over to a carrier and
complete delivery thereof has not been taken from such carrier.
Explanaation-111. - Carrier means any person or agency who undertakes
to carry or transport goods from one destination to another.
(7)-(a) The officer-in-charge of the check post or barrier or any other
Officer not below the rank of an Assistant' Commercial Taxes Officer,
empowered in this behalf may, after giving the owner or person incharge
of the goods a reasonable opportu,nity of being heard and after
holding such further enquiry as he may be deem fit, impose on him
for possession of goods not covered by goods vehicle record, and
other documents prescribed under sub-section (3) or for submission
of false declaration or. documents; a penalty equal to five times of the
rate oftax notified under section 5 of the Act, for such goods or 30%
of the value of such goods, as may be determined by such officer
[whichever is less].
Provided that where the goods are being carried without proper
documents as required by sub-section (3) or with any false declaration
or statements and the owner or the incharge or the driver of the
vehicle, boat, or animal carrying such goods is found in collusion for
such carrying of goods, the vehicle, boat or animal shail also be
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GUUAGINDUSTRIESv. COMMER.CIAL TAXESOFFIGER[KAPADIA,J.]
805
seized by the Officer empowered under sub-section (7), and such A
officer', after affording an opportunity of being heard to such owner,
incharge or driver may impose a penalty [equal to five times of the rate
of tax notified under section 5 of the Act, for such goods or] (30%]
of the value of the goods being carried and shall release the vehicle,
boat or animal on the payment of the said penalty, or on furnishing B
such security in such fonn as prescribed under clause (b) of sub·S.
(7):
Provided further that when an owner, incharge or driver of a
vehicle, boat or animal is found guilty second time of the offence
mentioned in the preceding proviso, he shall be liable to a maximum C
penalty as men.tioned in the preceding proviso and the- vehicle, boat
or animal carrying the goods may be kept, seized and detained for a
period not exceeding 30 days after the date of the payment of the
penalty or furnishing of the security.
Provided also that where a transporter is found to be in collusion D
with a trader to avoid or evade tax during the course of movement of
the goods through his vehicle; such vehicle may, after an opportunity
of being heard has been afforded be confiscated by the Commercial
Taxes Officer of the area in whose jurisdiction the case was detected,
with the prior approval in writing of the Deputy Commissioner
(Administration) having jurisdiction and in case of confiscation of the E
vehicle, no penalty shall be imposed in the preceding first proviso.
(b) Such Officer may release a~y or the goods seized under subsection
(5) or sub-section (6) on payment of the penalty under clause (a) on
furnishing such security in such fonn as may be prescribed for the F
payment thereof, as he may consider necessary.
(c) such officer may, for sufficient reasons release any of the goods
seized as aforesaid even before proceeding under clause (a) or during
the course of proceedings under that clause, on furnishing of security
of an amount equal to the estimated value of the goods to be released G
if he considers it necessary so to release the goods.
(8) All provisions of this section shall apply mutatis mut<..11dis to
goods and animals liable to tax under this Act which may be carried
by any means of transportation other those specified in sub-section
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SUPREME COURT REPORTS
(2007) 8 S.C.R.
(9) An officer empowered under this section shall have the power to.
inspect goods under transport including the documents and records
relating thereto, and may direct a carrier not to part with the goods
including re-transporting or re~booking till such verification is done or
such enquiry is made as is deemed necessary by such authority.
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(10) No order of penalty under this section shall be quashed or
deemed to be void or voidable for want of seizure or mistake, defect
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or omission in seizure."
12 We also quote hereinbelow Rule 62A of the RST Rules 1955 which
reads as under:
'"(62A) Documents prescribed under section 22A(3) -
(I) The owner or person incharge of a vehicle, boat or animal shall
carry with him a bill of sale or dispatch memo, and declarations as
provided under the Act and Rules.
Provided that no such bill of sale, despatch memo or declarations
shall be necessary to be carried or furnished at check-post, in respect
of personal effects otherwise than the goods referred to in sub-rule
(2) of any person or exempted goods as defined in the explanation to
sub-section (6) of Section 22A.
(2)(a) If any person other than a registered dealer· within the State
wants to purchase from outside the State .atfy goods, as notified by
the State Government, of the value of rupees one thousand or more
for use, consumption or disposal within the State, he shall make and
furnish cir cause to be furnished declaration in Form S.T.18, the blank
forms of which shall be obtained by him on simple application
alongwith payment of a fee of rupee one for each form, from the
Commercial Taxes Officer concerned of his area where he ordinarily
resides. The counterfoil of the declaration shall be retained by such
person and its portions marked original and duplicate shall be produced
before the officer-in-charge of the check-post, who shall retain such
original po11ion and return such duplicate portion only related in
token of having vP~ified it to the person producing i(
Provided that where any person importing scooters moped and
motor cycles does not avail of the procedure and/or permission fri
form ST 18 as prescribed herein above, he shall given intimation of
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GUUAG INDUSTRIES v. COMMERCIAL TAXES OFFICER [KAPADIA, J.)
S07
particulars as prescribed in Part 'A' ofform·s'f 18AA herein prescribed A
· duly verified and signed by him at least two weeks before the goods
are dispatched from outside the State to the Commercial Taxes Officer
of the area in which he ordinarily resides and shall obtain two
duplicates copies of the said Form duly received or countersigned
from the office of the said Commercial Taxes Officer, .and one copy of B
ST Form I SAA with its Part A duly filled by him shall be produced ·
or caused to be produced by him along with a declaration as prescribed
in Part B of form ST 18AA duly verified and sign~d by the driver or
any other person incharge of the vehicle, boat or animal or of the
goods before the officer-in-charge of the entry check-post of the
state, who shall retain the same.
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(b) Any person obtaining Form S.T. 18 under clause (a) shall not in
any manner transfer it to any other person obtaining Form ST I 8
under clause (a) shall not in any manner· transfer it to any other
. -person for use under the said clause, or shall not authorize any other
· person for such use on his behalf.
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(c) If any Form S.T. 18 obtained under clause (a) is lost, destroyed or
stolen, the person concerned shall immediately report in writing in this
behalf to the officer from whom such form was obtained.
(d) The application to obtain Form S.T.18 under clause (a) shall be E
rejected ifthe Commercial Taxes Officer is satisfied that such form is
not required for bonafide use under the said clause.
(3) A registered dealer, -
(a)
who imports any goods as notified by the State Government for
sale, use in the manufacture of processing of goods for sale or F
in mining or generation or distribution of electricity of any other
form of power or packing of goods for sale, or
(b)
who receives any goods consigned to him from outside the
State for sale,
Shall make and furnish or cause to be furnished declaration in G
form S. T. I 8A. The counterfoil of the dec'1ration shall be retained .
.
.
by such dealer and. its. portion marked original ·and \iuplicate ·
shall be produced before the officer~in-charge ?f the check-post ·
who shall retain such original portion and return such duplicate
portion duly sealed in token of having verified it to the person H
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SUPREME COURT REPORTS
(2007) 8 S.C.R.
producing it. Such duplicate portion of the declaration'shAII be
furnished by tbe dealer along with his quarterly statement, in
form S.T. 6 to the Assessing Authority.
Provided that Form S.T. ISA need not be furnished if the goods
are goods of the class or classes specified in the certificate or
registration under CST Act I 956 of the registered dealer
purchasing the goods as being intended for use bY,, him in the
.manufacture or processing of goods for sale or mining or in the
generation or distribution of electricity or any other form of ·
power.
Provided further that form S.T. ISA need not be furnished ifthe
goods consigned to the State of Rajasthan are High and Light
Speed Diesel Oil, Petrol and Aviation Spirit.
(4) The provisions of sub-rule (2), (4), (5), (6), (8), (9), (10), (I I) and
(12) ofrule 15C shall, in so far as may be, mutatis mutandis apply to
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declaration Form S.T. I 8A."
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13. We also quote hereinbelow Rule 25-C of the RST Rules I955 which
reads as under:
"25-C. Furnishing of declaration.-(1) A dealer who is entitled to and
claims-
(i)
exemption from payment of tax; or
(ii)
payment of tax at a concessional rate.
(a)
on sales made to a registered dealer of goods taxable at the last
point ·for the purpose of-
(i)
resale within the State; or
(ii)
sale in the course of inter-State .trade or commerce; or
(iii) sale in the course of export out of the territory of India, or
(iv) sale outside the State; or
(b) on the sale of any raw material eligible for concessional rate of
tax, under section 5C: or
(c) . on sales of any such goO"ds as may be exempted from tax, on
the condition of furnishing.declaration, shall in respect of each
such sale, obtain declaration from the purchasing dealer in Form
GULJAG INDUSTRIES i-.