2016 (7) TMI 1487 - HC - VAT and Sales Tax

Penalty - purchase and import of electrical generator under the cover of a Form-C - applicability of provisions of Section 10(b) of the 1956 Act - Held that - It was possible that the assessee did not deliberately issue Form C for import of the generator and that the same could possibly be attributed to a mistaken opinion formed by it. It however recorded that since Form C could not have been issued for the purposes of import of the generator, it was apparent that an attempt had been made to evade payment of tax. This view taken by the first appellate authority was affirmed by the Tribunal. Once the first appellate authority came to a conclusion that it was possible to take the view that Form C was erroneously issued and that the same could be characterized as a mistake, the charge of a false representation could not have been sustained. In the absence of the authorities having formed the opinion that the assessee had falsely represented the import to be one covered by his certificate of registration, the imposition of penalty is clearly rendered unsustainable - This Court even otherwise finds no material circumstance which would justify a conclusion that the assessee had made a false representation while importing the article in question. Revision allowed - decided in favor of assessee.

Summary

Issues:
Proceedings under Section 10A of the Central Sales Tax Act, 1956 - Penalty for false representation in import of electrical generator under Form C - Interpretation of "false representation" - Imposition of penalty by assessing authority and appellate authorities.

Analysis:
The revisionist faced proceedings under Section 10A of the Central Sales Tax Act, 1956 for allegedly falsely representing the import of an electrical generator under Form C. The assessing authority imposed a penalty, which was partially reduced by the first appellate authority. The Tribunal upheld the first appellate authority's decision. The revisionist argued that for falling under Section 10(b), a false representation must be proven, citing the distinction between "wrong representation" and "false representation" from a previous judgment.

The Standing Counsel contended that the assessing authority correctly imposed the penalty as the imported electrical generator did not fall under the category of "other electrical items" as claimed by the revisionist, constituting a false representation. The Court noted that the revisionist believed the generator fell under "other electrical items" in good faith, without intent to evade tax. The first appellate authority acknowledged a possible mistaken opinion but upheld the penalty for attempting to evade tax.

The Court found that both the first appellate authority and the Tribunal failed to consider the essence of "false representation." Referring to a previous judgment, the Court clarified that a false representation requires the assessee to knowingly claim benefits under false pretenses, which was not proven in this case. As there was no evidence of intentional false representation by the revisionist, the imposition of the penalty was deemed unjustified. Consequently, the Court allowed the revision, setting aside the orders of the Tribunal, assessing authority, and first appellate authority.