1978 (8) TMI 200 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of section 10(b) of the Central Sales Tax Act, 1956 regarding false representation by a registered dealer while purchasing goods. Determination of whether the petitioner made any false representation with a guilty intention, leading to liability for penalty under section 10A of the Act.

Analysis:
The judgment by the Punjab and Haryana High Court dealt with multiple G.S.T. References where a firm, registered under the Punjab General Sales Tax Act and the Central Sales Tax Act, was found purchasing timber despite not being entitled to do so as per its registration certificate. The Assessing Authority imposed penalties under section 10(b) of the Central Sales Tax Act for the years 1961-62 to 1966-67, leading to appeals and subsequent referrals to the High Court.

The key legal provisions discussed were section 10 and section 10A of the Central Sales Tax Act. Section 10(b) outlines penalties for false representation by a registered dealer, while section 10A allows for the imposition of penalties in lieu of prosecution for such offenses. The crux of the matter was whether the petitioner had the requisite guilty intention and made a false representation while purchasing timber, which was not covered by its registration certificate.

The court examined judicial interpretations of the phrase "falsely represents" from various High Court judgments to establish that mens rea, or guilty intention, is a crucial element for penalizing a dealer under section 10(b). The absence of mens rea could absolve the dealer from liability. The court emphasized that the representation must be knowingly false for an offense to be established.

In analyzing the facts of the case, the court found that the petitioner could not claim a bona fide belief in purchasing timber for inter-State trade as it was not included in the registration certificate. The court rejected arguments based on the firm's history of assessments and the word "timber" appearing in other documents. It highlighted that issuing a form certifying timber's inclusion without verification indicated false representation.

Drawing parallels with a similar case, the court concluded that the petitioner had indeed made false representations to the tax authorities and was liable for penalty under section 10A. The judgment emphasized the importance of verifying the accuracy of representations made while purchasing goods for inter-State trade to avoid penalties under the Act.

In a concurring opinion, the second judge agreed with the decision, and the reference was answered in favor of the revenue, holding the petitioner liable for penalty under section 10A.