1995 (8) TMI 286 - HC - VAT and Sales Tax

Summary

Issues:
1. Levy of penalty under section 15-A(1)(1) of the U.P. Sales Tax Act for the assessment year 1985-86.
2. Interpretation of the term "false" in the context of issuing false certificates or declarations under the Act.

Detailed Analysis:
1. The revision petition challenged the order of the Sales Tax Tribunal, which dismissed the dealer's second appeal against the penalty imposed under section 15-A(1)(1) of the U.P. Sales Tax Act for the assessment year 1985-86. The dealer, a rice manufacturer, issued form III-C(2) to purchasers, declaring liability to pay purchase tax. The assessing officer levied a penalty for issuing a false certificate, as the dealer was not the first purchaser of rice. The Tribunal upheld the penalty, leading to the revision petition.

2. The controversy in the revision petition centered on whether the form III-C(2) issued by the dealer could be deemed false. The dealer argued that it received these forms from the department and issued them to purchasers in good faith. The issue of forms is governed by Rule 12-B, requiring dealers to apply for blank forms and the Sales Tax Officer to ensure their genuine use. The assessing officer previously approved the forms, indicating the dealer's belief in their proper issuance. The term "false" in section 15-A(1)(1) requires an intent to deceive, which was absent in this case. Both the dealer and the assessing officer acted under the mistaken belief of authorization to issue the forms.

3. The judgment emphasized the importance of ensuring the genuine use of prescribed forms under the Act. The dealer's belief in the legality of issuing form III-C(2) was based on the exemption of its sales turnover from tax. The court noted the anomaly in taxing purchases when sales were exempt, nullifying the benefit of the exemption. The term "false" in the context of penalty provisions requires an intent to deceive, which was not present in this case. The Tribunal erred in upholding the penalty as there was no evidence of deliberate deception or fraudulent intent.

4. Consequently, the High Court allowed the revision petition, setting aside the Tribunal's order and quashing the penalty imposed under section 15-A(1)(1) for the assessment year 1985-86. The court held that in the absence of a deliberate intent to deceive, the penalty was not justified. The judgment underscored the importance of considering the circumstances and intent behind the issuance of certificates or declarations when imposing penalties under the Sales Tax Act.