1991 (4) TMI 381 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. False Representation and Penalty under Section 10(b) and 10A of the Central Sales Tax Act, 1956
2. Mens Rea Requirement for Penalty Proceedings
3. Bona Fide Belief and Its Impact on Penalty

Summary:

False Representation and Penalty under Section 10(b) and 10A of the Central Sales Tax Act, 1956:
The appellant, M/s. Vijaya Electricals, was found to have purchased goods such as ball-bearings, rubber beltings, buckets, and pipe fittings using C forms, which were not covered by their registration certificate. The assessing authority determined that this constituted a false representation u/s 10(b) of the Act and imposed a penalty u/s 10A. The Appellate Assistant Commissioner initially set aside the penalty for some items, citing a bona fide belief by the assessee. However, the Joint Commissioner, in suo motu revision, reinstated the penalty for ball-bearings, finding the representation to be false and made with mens rea.

Mens Rea Requirement for Penalty Proceedings:
The court addressed whether mens rea is necessary for imposing penalties under section 10(b) and 10A. It concluded that while mens rea is generally required for criminal liability, in the context of tax delinquency, it suffices to establish "blameworthy conduct." The court emphasized that once a false representation is found, it inherently includes the requisite mens rea for civil obligations under tax law. The court referred to precedents, such as Coimbatore District Central Co-operative Supply and Marketing Society Ltd. v. State of Tamil Nadu, to support this interpretation.

Bona Fide Belief and Its Impact on Penalty:
The assessee argued that they acted under a bona fide belief that the goods were covered by their registration certificate. However, the court found this plea unsustainable. The court noted that ball-bearings could not be construed as machinery or electrical goods, and the assessee, being experienced in the trade, should have known this. The subsequent amendment to include ball-bearings in the registration certificate further undermined the bona fide claim. The court concluded that the assessee's representation was knowingly false, justifying the penalty.

Conclusion:
The court upheld the penalty imposed by the Joint Commissioner, finding that the assessee made a false representation with the requisite mens rea, thus committing an offence u/s 10(b) of the Act. The appeal was dismissed with no costs.