1997 (2) TMI 526 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the penalty levied under Section 10(d) read with Section 10-A of the Central Sales Tax Act, 1956.
2. Interpretation of "resale" under Section 8(3)(b) of the Act.
3. Applicability of Section 10(a) for false declarations in "C" forms.

Issue-wise Detailed Analysis:

1. Legality of the penalty levied under Section 10(d) read with Section 10-A of the Central Sales Tax Act, 1956:

The case revolves around the legality of the penalty imposed by the assessing officer under Section 10(d) read with Section 10-A of the Central Sales Tax Act, 1956. The assessee had issued "C" forms for the purchase of computers and spares, declaring them for resale but subsequently leased them out. The assessing officer levied a penalty for this action, which was initially reduced by the Appellate Assistant Commissioner but later completely deleted by the Sales Tax Appellate Tribunal. The Tribunal relied on the Patna High Court's observations in Bihar State Agro-Industries Development Corporation Ltd. v. State of Bihar, stating that the goods were purchased with the intention of resale, and there was no violation of the registration certificate conditions.

2. Interpretation of "resale" under Section 8(3)(b) of the Act:

The court examined whether the transactions entered into by the assessee constituted resale as per Section 8(3)(b). The Tribunal's reliance on Bihar State Agro-Industries Development Corporation Ltd. v. State of Bihar was deemed erroneous because the facts of that case involved a clear-cut hire purchase transaction, unlike the present case. The court noted that the lease agreements executed by the assessee did not constitute a resale or an agreement to resell. The term "sale" under Section 2(g) of the Act, which includes transfer of goods on hire-purchase or other systems of payment by installments, was discussed. However, the court clarified that this does not extend to an "agreement of sale."

3. Applicability of Section 10(a) for false declarations in "C" forms:

The court highlighted that Section 10(d) requires three ingredients: purchasing goods for purposes specified in Section 8(3)(b), failure to use the goods for those purposes, and absence of reasonable excuse for such failure. Since the assessee's intention to resell was not established at the time of purchase, Section 10(d) was not applicable. However, the court noted that Section 10(a) could be invoked if the assessee knew or had reason to believe that the "C" form declaration was false. Section 10(a) pertains to false declarations but does not provide for a penalty under Section 10-A, which only covers specific offenses under Section 10(1)(b), (c), or (d).

Conclusion:

The court concluded that the Tribunal erred in its reasoning but ultimately upheld the decision to delete the penalty. The assessing officer may consider prosecuting the assessee under Section 10(a) if the conditions are met, but the current penalty could not be sustained. The revision petition was dismissed, and no costs were awarded.

Petition dismissed.