1998 (1) TMI 506 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge to order demanding penalty under section 10-A of the Central Sales Tax Act for purchasing steel and cement without "C" form.
2. Contention regarding the section under which penalty was imposed.
3. Examination of the petitioner's plea of bona fide error in purchasing items not included in the registration.
4. Assessment of the authority's application of mind in imposing penalty under section 10-A.

Analysis:
The petitioner challenged the order demanding penalty under section 10-A of the Central Sales Tax Act for purchasing steel and cement without the required "C" form. The petitioner had applied for registration under the Act for various items, including steel and cement. However, the registration granted did not include these items. Despite this, the petitioner purchased the steel and cement from outside the State, leading to the penalty notice under section 10-A. The petitioner contended that the penalty should have been imposed under section 10(b) instead of section 10(c) of the Act, emphasizing a typographical error in the notice.

Regarding the contention on the section under which the penalty was imposed, the court noted the respondent's statement that the mention of section 10(c) in the notice was a typographical error and not a substantial mistake. Consequently, the court did not find merit in pursuing the petitioner's argument based on this error, as it did not affect the core issue at hand.

The petitioner pleaded a bona fide error in purchasing the items not included in the registration, claiming unawareness of the omission. However, the court reasoned that a prudent individual applying for registration for specific items would be aware of the granted items and any rejections. In this case, as only six out of eight items were permitted, the petitioner should have been aware of the omission of steel and cement. Therefore, the court found the plea of bona fide mistake unconvincing.

In assessing the authority's application of mind in imposing the penalty under section 10-A, the court highlighted the requirement for a thoughtful consideration of the penalty amount to be levied. The court observed a lack of such deliberation by the authority, noting that the penalty was imposed merely based on the statutory provision without a proper assessment. Consequently, the court quashed the penalty notice and directed the assessing authority to re-evaluate the issue under section 10(b) read with section 10-A, emphasizing the need for a fresh decision with due consideration. The court also waived the necessity for further payment before a hearing and instructed the petitioner to appear before the authority for a new decision within a specified timeframe.