LexM/S. BHARJATIYA STEEL INDUSTRIES versus COMMISSIONER, SALES TAX, U.P.
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(2008] 3 S.C.R. 1165 • MIS. BHARJATIYA STEEL INDUSTRIES A f.c- \/. COMMISSIONER, SALES TAX, U.P. (Civil Appeal No. 1768 of 2008) MARCH 5, 2008 B ·I- [S.B. SINHA AND V.S. SIRPURKAR, JJ.] ~ Uttar Pradesh Trade Tax Act: s.48(6) - Penalty - Imposition of, when assessee sold raw material purchased by it to other manufacturers - Iron scrap purchased by assessee c in P.Ublic auction on "as is where is basis" for manufacturing steel ingots at concessional rate of duty - Undertaking to the effect furnished that entire scrap would be utilized for manufacturing purposes - 10% of such scrap sold by assessee to other dealers at concessional rate of duty, on the D ..._. ground that it was not fit for use - Imposition of penalty by • authorities - Correctness of - Held: Penalty rightly imposed - Existence of mens rea on part of assessee was evident - No information furnished by assessee as to when it sold the goods and what was consumption during relevant period - It was E obligatory on the part of assessee to furnish proof in regard to its inability to use it for manufacturing purposes as it had special knowledge in regard thereto - Find~ng of fact also arrived at by authorities that assessee sold goods knowingly - In facts + and circumstances, no case made out for interfering with the order of imposition of penalty. F Penalty- Existence of mens rea - Relevancy of- When discretion is conferred upon adjudicatory authority and when discretion is not conferred thereupon - Distinction between. Appellant-assessee had been purchasing iron scrap G in pubic auction for the purpose of manufacture of steel I- ingots. It was accorded recognition under s.4-8(2) of U.P. Trade Tax Act, in terms thereof it became entitled to purchase raw material at concessional rate of duty. In 1165 H 1166 SUPREME COURT REPORTS [2008] 3 S.C.R. A 1985-86, it purchased lots of iron scrap on "as is where is 4 basis". Assessee sold 10% of the scrap to other dealers -< at a concessional rate of duty on the pretext that it was not fit for use. The Assessing Officer imposed penalty on assessee on the ground of breach of the undertakings B given by assessee to utilize the entire material for manufacturing purposes. Deputy Commissioner upheld ... the order of assessing Officer. On appeal, the tribunal held that there was no mala fide on the part of assessee, hence ~ no penalty was imposable under s.48(6) of the Act. c Department filed revision petition before the High Court which was alloW;ed. Hence the present appeal. Dismissing the appeal, the Court HELD: 1.1. Sub-section (a-1) of s.4-B of the U.P. Trade Tax Act would not be attracted. In a case of this nature D where a tax benefit had already been granted to a dealer, f.. a further tax benefit cannot be granted in case he violates .. the condition of certificate. [Para 13] [1176-G; 1177-A] 1.2. Sub-section (5) of s. 4-B of the U.P. Trade Tax Act E is in two parts. Penalty is levied if the goods have been utilized for the purpose other than that for which the recognition certificate was granted or the dealer otherwise had disposed of the said goods. The statutory provision speaks of penalty and not duty. The stage of F realization of the duty was over. Only penalty could be levied. Levy of penalty, ordinarily, unless there exists any statutory interdict, requires proof of mens rea. [Para 14] [1177-B, C, D] Hindustan Steel Ltd. v. State of Orissa (1969) 2 SCC 627; G R.S. Joshi, S. TO., Gujarat v. Ajit Mills Ltd. and Anr. (1977) 4 sec 98 - held inapplicable. 1.3. The question as to whether mens rea is an 1 essential ingredient or not will depend upon the nature of the right of the parties and the purpose for which penalty H is sought to be imposed. A distinction must also be borne MIS. BHARJATIYA STEEL INDUSTRIES v. 1167 COMMISSIONER, SALES TAX, U.P . • in mind between a statute where no discretio_n is A k conferred upon the adjudicatory authority and where such a discretion is conferred. Whereas in the former case the principle of mens rea will be held to be imperative, in the latter, having regard to the purport and object thereof, it may not be held to be so. Lt, therefore, cannot be B ,,_ contended that under no circumstances, absence of mens rea would not be a plea for levy of penalty. An assessing ~ authority has been conferred with a discretionary jurisdiction to levy penalty. By necessary implication, the auth
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