1991 (10) TMI 276 - HC - VAT and Sales Tax

Summary

Issues:
- Interpretation of provisions of section 10A of the Central Sales Tax Act regarding penalty for false representation.
- Determination of whether the issuance of "C" forms for purchase of "oil engine spares" by the dealers was based on false representation.
- Examination of whether mens rea is a necessary element for levying penalty under section 10(b) of the Act.
- Analysis of the Tribunal's decision to set aside the penalty imposed on the dealers.

Analysis:
The judgment of the Madras High Court addressed the issue of penalty under section 10A of the Central Sales Tax Act concerning a case where dealers in rice mill spare parts and accessories issued "C" forms to purchase oil engine spares from outside the State at a concessional rate of tax. The assessing authority found that the dealers had made a false representation by issuing "C" forms for goods not covered by their registration certificate. The appellate authority confirmed the penalty, which was later reduced and refixed. The Tribunal, however, set aside the penalty, stating that the dealers acted under a bona fide impression. The High Court held that the Tribunal erred in accepting the dealers' plea, emphasizing that the registration certificate specifically authorized the purchase of rice mill spare parts and accessories, not oil engine spares. The Court rejected the argument that mens rea was necessary for penalty under section 10(b), stating that a false representation suffices. The judgment referenced the case of Vijaya Electricals v. State of Tamil Nadu, highlighting that blameworthy conduct, not mens rea, is crucial in tax default cases.

The Court further elaborated on the legal principles outlined in the Vijaya Electricals case, emphasizing that the existence of blameworthy conduct, such as making a false representation, triggers the penalty provisions without the need for additional proof of mens rea. The judgment concluded that the Tribunal's decision to set aside the penalty based on the dealers' alleged bona fide belief was erroneous. The Court reinstated the penalty, stating that the representation made by the dealers for purchasing oil engine spares through "C" forms was indeed a false representation, rendering the plea of bona fide action unsustainable. Consequently, the High Court allowed the Revenue's revision petition, setting aside the Tribunal's order and restoring the decision of the Appellate Assistant Commissioner. No costs were awarded in the matter.