The Tax Publishers

GST--Case Study

Taxpayer not having Intention to Evade Tax--Validity of Imposition of Penalty

Akhilesh Kumar Sah

In Commissioner of Sales Tax, UP v. Sanjiv Fabrics (Civil Appeal Nos. 2344-2347 of 2004), the Hon'ble Apex Court has held that in examining whether mens rea is an essential element of an offence created under a taxing statute. The Author discusses this case and comes to a conclusion that Mens rea is a sine qua non for the levy of penalty.

1. Introduction

Mens rea is a sine qua non for the levy of penalty. Mala fide intention is to be seen before initiation of penalty proceedings. In many cases, dealers are getting acquitted as their action was bona fide and unintentional one.

In Commissioner of Sales Tax, UP v. Sanjiv Fabrics (Civil Appeal Nos. 2344-2347 of 2004) decided on 10-9-2010, the Hon'ble Apex Court has held that in examining whether mens rea is an essential element of an offence created under a taxing statute, regard must be had to the following factors;

"(i) the object and scheme of the statute

(ii) the language of the section; and

(iii) the nature of penalty."

It is a settled law that Mens rea is a sine qua non for the levy of penalty.

In Sonal Automation Industries v. State of Uttarakhand and Ors (WP (M/s.) No. 1969 of 2021) decided by the High Court of Uttarakhand at Nainital on 27-4-2022, it has been held that where penalty was imposed on assessee and assessee contended that it was a human error and was not made with the intention to deceive the State with the revenue, the imposition of penalty on account of human error may be considered to be pardonable.

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