1982 (3) TMI 248 - HC - VAT and Sales Tax

Summary

Issues involved: Interpretation of registration certificate, applicability of penalty under section 10A of the Central Sales Tax Act.

In the present case, the Sales Tax Appellate Tribunal referred a question of law regarding whether the expression 'electric motors, refrigerators and allied machines' in the registration certificate would include air coolers, and if the Tribunal was justified in setting aside the penalty under section 10A of the Central Sales Tax Act.

The assessee's registration certificate listed various articles including "Petrol, motor parts, refrigerators and allied machines" and later included items like "Lubricants, greases, tyres, diesel engines, new cars and trucks, buses, electric motors, frigidaire parts." The assessee imported air coolers and issued declarations, leading to a penalty imposition under section 10A for not being covered by the registration certificate.

The Tribunal found that the assessee genuinely believed that air coolers fell under the description "electric motors, refrigerators and allied machines" in the registration certificate, thus canceling the penalty. Section 10(b) requires a false representation by a registered dealer, indicating mens rea as a crucial element. If the dealer honestly believes goods are covered by the registration, no penalty can be imposed.

The Court held that the Tribunal was correct in canceling the penalty as the assessee genuinely believed air coolers were included in the registration certificate. Therefore, the penalty was rightfully set aside based on the factual finding of the assessee's honest belief.

In conclusion, the Court upheld the Tribunal's decision to cancel the penalty, emphasizing the importance of the dealer's honest belief in determining liability under section 10A. No costs were awarded for the reference.