1972 (8) TMI 110 - SC - VAT and Sales Tax

Whether on the facts and circumstances of the case, the bull- dozers, dumpers and tipping wagons were chargeable with sales tax at the full rate or at the preferential rate under section 8(3)(b) of the Act? Whether in the circumstances of the case penalty under section 10A of the Act can be imposed upon the dealer for non-payment of the tax at the full rate on the above goods? Held that - Appeal dismissed. Unless it is shown that he had made such a false representation, section 10A is not attracted. Two Judges of the High Court and one Member of the Board of Revenue have come to the conclusion that the respondent was entitled to the preferential rate which he claimed. That is the view of the law taken by them. Assuming, without deciding, that the view taken by them is incorrect, even then it is impossible to say under the circumstances of the case that the respondent was guilty of making any false representation. The view of the law, which he is contending for is supported by the view taken by two Judges of the High Court and one Member of the Board of Revenue. Hence, we fail to see how such a view of the law can be taken as false representation.

Summary

Issues:
1. Interpretation of preferential tax rate under the Central Sales Tax Act, 1956.
2. Imposition of penalty under section 10A for non-payment of full tax rate.
3. Determination of false representation by the respondent in purchasing goods covered by the certificate of registration.

The Supreme Court examined an appeal where the respondent, a cement manufacturer, claimed the preferential tax rate of 1% under the Central Sales Tax Act, 1956 for purchasing earth-moving machinery. The assessing authority denied the benefit and imposed a penalty under section 10A. The Deputy Commissioner reduced the penalty, leading to a review petition before the Board of Revenue. The Division Bench of the Board disagreed on whether the purchases were covered by the certificate, prompting a reference to the Chairman. The Chairman concurred that the purchases were not covered. Subsequently, the High Court was asked two questions regarding tax rate and penalty imposition. Both High Court judges favored the respondent, leading to a favorable outcome on penalty imposition based on the tax rate decision.

The Court analyzed section 10A(1) of the Act, which allows penalties for certain offenses, including falsely representing goods covered by the registration certificate. The respondent was accused of this offense under section 10(b). The key issue was whether the respondent falsely represented the purchased goods as covered by the certificate. The Court highlighted that two High Court judges and one Board Member supported the respondent's claim for the preferential rate, indicating a valid legal interpretation. Even if this interpretation was incorrect, there was no evidence of false representation by the respondent in purchasing the goods.

Ultimately, the Court concluded that since the respondent was not proven to have made a false representation, section 10A penalties were not applicable. The appeal was dismissed, emphasizing the lack of necessity to decide the first question referred by the High Court due to the favorable outcome for the respondent.