ASSISTANT COMMERCIAL TAXES OFFICERversusM/S. KANSAI NEROLAC PAINTS LTD.

                       [2010] 4 S.C.R. 654

A         ASSISTANT COMMERCIAL TAXES OFFICER
                                 v.
              M/S. KANSAI NEROLAC PAINTS LTD.
                 (Civil Appeal No. 3288 of 2010)
                          APRIL 15, 2010
B
        [S.H. KAPADIA AND SWATANTER KUMAR, JJ.]

        Rajasthan Sales Tax Act, 1994 - s. 78(2) and (5) - Issue
  as regard imposition of penalty in terms of s. 78(5) on account
C of not giving material particulars in form ST 18 A - Penalty
  set aside by appellate authority as also Tax Board - Revision
  petition - Dismissed by High Court without recording any
  reasons - On appeal, held: Records and facts clearly show
  that High Court erred in law in not recording any reasons -
D Thus, order of High Court is unreasoned and suffers from the
  infirmity of non-application of mind - Order of High Court set
  aside and the case remitted back to High Court.

       Certain goods were transported from one place to
E another. The Customs Enforcement Department
  intercepted the vehicle and found that the goods were
  transferred by stock transfer but the declaration form ST
  18A was completely blank. The Department treating the
  consignment under the category of incomplete
  documents in terms of s. 78(2) of the Rajasthan Sales Tax
F Act, 1994 imposed penalty in terms of s. 78(5) of the Act.
  The appellate authority as also the State Tax Board set
  aside the penalty imposed upon the owner of goods. The
  Department filed revision petition. The High Court
  disposed of the revision petition without giving reasons.
G Hence, the present appeal.
        Partly allowing the appeal, the Court

        HELD: 1.1. The High Court has not recorded its own
H                               654
ASSISTANT COMMERCIAL TAXES OFFICER v. KANSAI          655
            NEROLAC PAINTS LTD.
reasoning· for dismissing the revision petition in           A
accordance with law. It would have certainly been more
appropriate for the High Court to examine the matter at
some length and deal with the arguments/grounds raised
in the petition before it. [Para 9) [659-C]
                                                            B
     1.2. In the case of *Gu/jag Industries, this Court had
held that the object of s. 78(5) of the Rajasthan Sales Tax
Act, 1994 was to remedy the loss of revenue and where
Form ST 18A/18C was duly signed but without giving
material particulars, would automatically attract levy of C
penalty for breach of Section 78 (2) of the Act. The modus
operandi of the owner of goods did indicate mens rea.
In *Bajaj Electricals Ltd's case, this Court explained the
expression 'person in charge of the goods' with reference
to the declaration Form ST 18A prescribed under Rule 53
of the Rajasthan Sales Tax Rules, 1995 and substitution D
of this expression by 'the owner of the goods or person
in charge of the goods' by amending Act 7 of 2002. The
modus operandi adopted by the consignee of not giving
material particulars in Form ST 18-A would by itself meet
the object of mens rea. [Para 9) [659-D-G]                  E

    1.3. The records and the facts clearly show that the
High Court erred in law in not recording any reasons for
rejecting the respective contentions raised before the
Court. Thus, the order of the High Court is unreasoned       F
and suffers from the infirmity of non-application of mind.
The order of High Court is set aside and the case is
remitted to the High Court with a request to hear the case
de novo and pass appropriate order in accordance with
law. [Paras 9 and 10] [660-A-B]
                                                             G
     *Gu/jag Industries v. Commercial Tax Officer (2007) 7
SCC 269; *Assistant Commercial Taxes Officer v. Bajaj
Electricals Ltd. (2009) 1 SCC 308, Referred to.

                                                             H
    656      SUPREME COURT REPORTS                 [2010] 4 S.C.R.

A                         Case Law Reference:
          c2001) 1 sec 269         Referred to.          Paras 6,9
          (2009) 1 sec 308         Referred to.          Para 9

B       CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    3288 of 2010.

        From the Judgment & Order dated 17 .12.2007 of the High
    Court of Judicature for Rajasthan at Jodhpur in S.B. Civil Sales
    Tax Revision No. 282 of 2007.
c
          A.P. Sahay and Jatinder Kumar Bhatia for the Appellant.

          The Judgment of the Court was delivered by

          SWATANTER KUMAR, J. 1. Delay condoned.
D
          2. Leave granted.

       3. We may notice necessary facts giving rise to the present
  appeal. Vehicle No. RJ-19G-3661 was carrying 'parchun'
E materials and in addition 377 pieces of drum bucket paints.
  These goods were transported from Ughna (Surat) to Jodhpur
  under Silty No. 014951 dated 17.06.1997 issued by Mis.
  Deshbandhu Transport Company and the goods were
  consigned to M/s. Goodlass Nerolac Paints Limited. This
  vehicle was intercepted and checked by the Customs
F Enforcement Department (for short 'the Department'). The
  competent authority during the course of the enquiry found that
  the nerolac paint buckets were transferred by stock transfer but
  the declaration form ST 18A was completely blank. Treating the
  consignment under the category of incomplete documents in
G terms of Section 78(2) of the Rajasthan Sales Tax Act, 1994
  (for short 'the Act') and forming an opinion that there was an
  intention to commit evasion of tax, a notice to show cause was
  issued that why penalty be not imposed. Reply thereto was filed
  by the owner of goods. Finding the reply without any merit and
H
 ASSISTANT COMMERCIAL TAXES OFFICER v. KANSAI 657
   NEROLAC PAINTS LTD. [SWATANTER KUMAR, J.]

rejecting the same, the competent authority vide its order dated      A
23.06.1997 imposed a penalty of Rs.1, 24, 920/- in terms of
Section 78(5) of the Act. This order of the competent authority
was challenged in appeal by the owner of goods before the
Deputy Commissioner (Appeals), Commercial Taxes-II, Jaipur
which, vide order dated 03.11.2003, allowed the appeal and            B
held that the penalty against the owner of the goods could not
be imposed as there was no intention to commit evasion of tax
and thus set aside the order of the lower authority. The
Department challenged this order before the Rajasthan Tax
Board, Ajmer Bench (for short 'the Board'), on different grounds.     c
     4. The appeal preferred by the Department came to be
dismissed by the order of the Board dated 04.04.2005. The
Board, while setting aside the order, expressed the view that
prior to 22.03.2002 penalty could not be imposed on the owner
of the goods under Section 78(5) of the Act besides that there        D
was no intention to commit any evasion of tax.

     5. Aggrieved by the order of the Board, the Department
preferred revision petition under Section 86 of the Act before
the High Court of Judicature for Rajasthan at Jodhpur, and after      E
stating the facts, the Department raised, inter alia, the following
important questions of law:-

     "(i) Whether mens rea to evade the tax on the part of the
     dealer is a necessary ingredient for imposition of penalty       F
     u/s 78(5) of the Act of 1994, for violation of provisions of
     Section 78(2) of the Act of 1994?

     (ii) Whether the blank declaration form ST-18A with the
     goods in transit by itself attracts the provisions of penalty
     under Section 78(5) of the Act of 1994 for violation of the      G
     provisions of Section 78(2) of the Act of 1994?

     (iii) Whether the learned Tax Board has erred in law in
     holding that prior to 22.3.2002 the penalty u/s 78(5) of the
     Act of 1994 for violation of Section 78(2) of the Act of 1994    H
    658       SUPREME COURT REPORTS                    [2010) 4 S.C.R.


A         could not have been imposed against the owner of the
          goods?

          (iv) Whether the findings arrived at by the learned Tax
          Board are contrary to law and facts and perverse?
B         (v) Any other question of law which this Hon'ble Court
          considers just and proper in the facts and circumstances
          of the case may also be decided."

        6. The High Court vide its order dated 17.12.2007
c dismissed the revision petition. This order is impugned by the
  Assistant Commercial Taxes Officer in the present appeal
  under Article 136 of the Constitution of India. The primary
  challenge before us is that the High Court has not recorded any
  reason for rejecting the revision petition of the appellant despite
0 the  fact that the matter was argued at length and various
  questions of law were raised before the High Court. We may
  also notice that in the grounds taken before us, various
  questions of fact and law have been raised and it is specifically
  urged that the impugned judgment of the High Court is contrary
E to the principles stated by this Court in the case of Guljag
  Industries v. Commercial Tax Officer [(2007) 7 SCC 269),
  where the Court has held that the form should be complete in
  all respects and sh.ould be supported by requisite declaration/
  documents.

F       7. It will be more appropriate to reproduce the order
    impugned in the present appeal at this stage itself:-

          "Heard learned counsel for the petitioner.

                 The Tax Board set aside the penalty imposed upon
G         the owner of the goods in a transaction which took place
          prior to 22.3.2002.

               After going through the reasons given by the Tax
          Board, I do not find any illegality in the impugned order
H         passed by the Tax Board.
ASSISTANT COMMERCIAL TAXES OF~l~ER v. KANSAI                  659
  NEROLAC PAINTS LTD. [SWATANTl=R KUMAR, J.]

     Consequently, this revision petition, having no merits, is       A
     hereby dismissed."

     8. As already noticed, the principal challenge raised before
us is that the High Court has disposed of the matter by a cryptic
order and has not given any reason for rejecting the revision         B
petition preferred by the Department. It is urged that the
questions raised in the revision petition were likely to arise in
a number of cases and as such it was expected of the High
Court to deal with the contentions raised in some elaboration.

      9. We have noticed that the High Court has not recorded         C
its own reasoning for dismissing the revision petition in
accordance with law. It would have certainly been more
appropriate for the High Court to examine the matter at some
length and deal with the arguments/grounds raised in the
petition before it. Be that as it may, another aspect of the matter   D
which this Court has to take note of is that, in the case of Guljag
Industries (supra) to which one of us (Kapadia J.) was a party,
this Court had held that the object of Section 78(5) of the Act
was to remedy the loss of revenue and where Form ST 18A/
18C was duly signed but without giving material particulars,          E
would automatically attract levy of penalty for breach of Section
78 (2) of the Act. It was also stated in the judgment that this
modus operandi of the owner of goods in that case did indicate
mens rea. This principle was further explained and was finally
settled in a subsequent judgment of this Court in Assistant           F
Commercial Taxes Officer v. Bajaj Electricals Ltd. [(2009) 1
sec 308] to which again one of us (Kapadia J.) was a party.
In this case the Court explained the expression "person in
charge of the goods" with reference to the declaration Form ST
18A prescribed under Rule 53 of the Rajasthan Sales Tax               G
Rules, 1995 and substitution of this expression by "the owner
of the goods or person in charge of the goods" by amending
Act 7 of 2002. The Court also reiterated with approval the dictum
in relation to the presence of mens rea in such cases holding
that modus operandi adopted by the consignee of not giving
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   660      SUPREME COURT REPORTS                [2010) 4 S.C.R.

A material particulars in Form ST 18-A would by itself meet the
  object of mens rea.
       The records and the above noticed facts clearly show that
  the High Court erred in law in not recording any reasons for
8 rejecting the respective contentions raised before the Court. We
  have also noticed that some of the judgments of this Court
  referred by the Department and/or by the owner of goods have
  not been referred to, much less, commented upon in
  accordance with law. Thus, we have no option except to say
C that the order of the High Court is unreasoned and suffers from
  the infirmity of non-application of mind.

       10. For the reasons afore-recorded, we set aside the order
  dated 17.12.2007 and remit the case to the High Court with a
  request to hear the case de novo and pass appropriate order
D in accordance with law. To that extent the appeal is allowed.
  There shall be no order as to costs.

   N.J.                                    Appeal partly allowed.