2008 (4) TMI 702 - HC - VAT and Sales Tax

Summary

Issues involved: Penalty imposed under the Central Sales Tax Act for purchase of Effluent Treatment Plant and stitching thread against Form C.

Effluent Treatment Plant: The applicant, a registered dealer under the Central Sales Tax Act, purchased an Effluent Treatment Plant for urea manufacturing. The Tribunal imposed a penalty, stating the plant was not integral to urea manufacturing. The Court held the plant was covered under "plant equipment" in the registration certificate, essential for manufacturing urea, and the penalty was unjustified.

Stitching Thread: The Tribunal penalized the purchase of stitching thread against Form C, claiming it was illegal before a certain date. The Court found the thread was included in the registration certificate earlier, and the penalty was unlawful. The Court emphasized the need for false representation for penalty imposition, citing relevant case laws.

Penalty Imposition: Sections 10 and 10A of the Act allow penalties for false representation by registered dealers. The Court clarified that penalty requires a false representation with mens rea, which was absent in this case. The penalty imposed on the applicant was deemed erroneous and quashed.

Conclusion: The Court partly allowed the revision, quashing the penalties on the stitching thread and Effluent Treatment Plant due to lack of false representation and mens rea.