1994 (11) TMI 396 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether penalty under section 10(b) of the CST Act is justified for issuing C forms for goods not covered by the registration certificate.
2. Whether mens rea or guilty mind is necessary to levy penalty under section 10A of the CST Act.

Detailed Analysis:
1. The case involved the State of Tamil Nadu as the petitioner and M/s. Amurutanjan Limited as the respondent. The respondent issued "C" forms for goods not intended for resale or use in the manufacture of other goods for resale, but were actually used for other purposes. The Commercial Tax Officer proposed a penalty under section 10A(1) of the CST Act for issuing false declarations. The Appellate Assistant Commissioner confirmed the penalty but reduced the quantum. The Tribunal later deleted the penalty, leading to the State filing a revision before the High Court.

2. The Additional Government Pleader argued that the Tribunal erred in deleting the penalty under section 10A of the CST Act. It was contended that the respondent knowingly issued C forms for computer parts not covered by the registration certificate, constituting a false declaration under section 10(b) of the Act. The Revenue asserted that mens rea was established by the respondent's actions, justifying the penalty.

3. On the other hand, the respondent's counsel argued that penalty under section 10(b) cannot be imposed without proving a false statement made knowingly. It was contended that the computer parts were essential for the respondent's manufacturing and testing processes, falling under the category of goods for use in manufacture. The counsel emphasized that there was no conscious disregard of the law by the respondent in issuing the C forms.

4. The High Court deliberated on whether the computer components purchased by the respondent, not covered by the registration certificate, were essential for their manufacturing processes. It was argued that for penalty under section 10(b) to apply, there must be a conscious disregard of the law by the respondent in issuing C forms for goods not listed in the certificate.

5. Citing legal precedents, the Court emphasized the need for a false representation to invoke penalties under section 10(b) of the CST Act. The Court noted that the respondent's use of C forms for purchasing spare parts not listed in the registration certificate demonstrated a conscious disregard of the law, justifying the penalty. The Court concluded that the Tribunal erred in canceling the penalty, restoring the penalty imposed by the Appellate Assistant Commissioner under section 10(b) of the Act.

In conclusion, the High Court allowed the petition, setting aside the Tribunal's decision to cancel the penalty and restoring the penalty imposed by the Appellate Assistant Commissioner under section 10(b) of the CST Act.