V K CHEMICAL Vs. COMMISSIONER OF SALES TAX

JUDGEMENT

(1.) This revision has been filed by the assessee against the order of the Sales Tax Tribunal dismissing the appeal of the assessee. According to the case of the assessee he purchased 400. 650 kgs. mentha oil on June 27, 1985. For this purchase he withdrew Rs. 50,000 from the Punjab National Bank on June 24, 1985, and entered this transaction in his account books. After purchase of this mentha oil the assessee was carrying the same in his car and in the night he was intercepted by the mobile squad. Before the mobile squad the assessee produced 11 vouchers numbered 43 to 53 with the names of the sellers incorporated in these vouchers. One loose paper regarding entry about purchase of this mentha oil was also found with the assessee in which the names of the sellers were not incorporated. The assessee also produced a certificate of arhatia M/s. Jugal Kishore Rajiv Kumar about this purchase. Thereafter, the department enquired from the two sellers as to whether they had sold mentha oil to the assessee. This was done on June 28, 1985. These two sellers disowned of having made any sale of the mentha oil to the assessee. Thereupon, the Sales Tax Officer drew proceedings under section 15-A (1) (d) of the U. P. Sales Tax Act, 1948, and held that the source of purchase had not been correctly disclosed by the assessee. It further held that the certificate of arhatia also did not mention the names of the sellers. It was further of the view that in the papers which were found with the assessee the details of the purchase were not given. On these grounds the Sales Tax Officer imposed a penalty against the assessee. Aggrieved by that order, the assessee went up in appeal before the Assistant Commissioner (Judicial) and he also dismissed the appeal. Thereafter, the Sales Tax Tribunal, Moradabad also dismissed the appeal filed by the assessee. Aggrieved against this order, the assessee has come up in revision and has challenged the correctness of the findings recorded by the Sales Tax Tribunal. Learned counsel for the assessee and the learned Standing Counsel have been heard. Learned counsel for the assessee has challenged the penalty proceedings on several grounds. The first contention of the learned counsel is that under section 15-A (1) (d) the assessee has not furnished any false documents to the mobile squad because for the purchases made by the assessee from the farmers, the names of those persons were mentioned in the 11 vouchers which were produced by the assessee before the mobile squad. According to him the department made secret enquiries from two of the sellers and did not produce them before the assessing for showing that those persons did not sell the mentha oil to the assessee. According to the learned counsel for the assessee the mens rea is an ingredient under clause (d) of section 15-A (1) of the Sales Tax Act. It may be mentioned that the penalty proceedings are quasi-criminal in nature and mens rea is an essential ingredient of an offence and mens rea has to be proved by the department. Unless men rea is shown to have been present, the assessee cannot be made liable to pay the penalty. Learned counsel for the assessee has placed reliance on the case of Kishori Lal Rakesh Kumar Mandi v. Commissioner of Sales Tax [1985] 59 STC 323 (All.); 1985 UPTC 211. A perusal of this case will go to show that in that case it was held that in clause (g) of section 15-A (1) clear omission of an appropriate word giving a clause of mens rea shows that mens rea is not necessary for making default envisaged by clause (g) punishable. It was further observed that "we see no possible reason as to what inhibited the Legislature from using the word 'knowingly', 'deliberately', 'intentionally', or the like in clause (g) if the intention was to import mens rea in clause (g) ". Thus, a perusal of this case will go to show that mens rea is an essential ingredient of clauses which occur before clause (g) of section 15-A (1 ). Therefore, the department has to prove mens rea before a penalty can be imposed against the assessee under the penal provision of section 15-A (1) (d) as mens rea is an ingredient under this clause. If the assessee did not make purchases from the two sellers from whom enquiries were made by the department on June 28, 1985 then, the burden of proof was on the department and it was for the department to show that the purchases disclosed by the assessee were unreliable. Learned Standing Counsel has argued that in the present case the burden of proof that the purchases were made by the assessee was on the assessee. He had placed reliance on the provisions of section 12-A of the Sales Tax Act which deals with the burden of proof. The opening words of this section are "in any assessment proceedings. . . . . . . . . . . . . . . ". Thus, these opening words clearly go to show that the burden of proof which is placed under section 12-A of the Sales Tax Act is during the course of the "assessment proceedings". It does not deal with the penalty proceedings. It cannot be said that the penalty proceedings and the assessment proceedings are one and the same thing. The penalty proceedings are entirely different from assessment proceedings. Therefore, the department cannot get any assistance from the provisions under section 12-A of the Sales Tax Act. In the present case the department has to place material on record to show that the assessee did not make purchases of mentha oil from the two persons out of 11 persons who were mentioned in vouchers at serial Nos. 43 to 53. Section 15-A (1) (d) is a charging section and its penalty is provided in clause (ii) of that section. Under clause (ii) a penalty has to be imposed which will not exceed 1 1/2 times of the amount of tax which would thereby have been avoided. Learned counsel for the assessee has argued that even if the assessee had not made these purchases he was not liable to be penalised because he is a recognition certificate holder under section 4-B of the Sales Tax Act, and as such he is not liable to pay any tax for the purchases made by him. This fact is not disputed by the department that the assessee is a recognised certificate holder and no tax is to be paid by him for the purchases made by him. Therefore, the assessee could not have avoided to pay the amount of tax as no tax was leviable on him and no penalty could have been imposable, is to be determined with reference to the tax which has been avoided by the assessee. In the present case when no tax was avoided by the assessee therefore no penalty could be imposed against the assessee under the provisions of section 15-A (ii) of the Sales Tax Act. Thus in view of what has been stated above, it is apparent that the department has failed to show that the assessee has avoided to pay any tax and he did not make the purchases from 11 persons as disclosed by him in vouchers Nos. 43 to 53. Therefore, the assessee is not liable to be penalised under the provisions of section 15-A of the Sales Tax Act. The order of the Sales Tax Tribunal cannot, therefore, be sustained and has to be set aside. The revision is allowed and the order of the Sales Tax Tribunal is set aside. Petition allowed. .