2015 (9) TMI 1641 - HC - VAT and Sales Tax

Waiver of penalty u/s 10A of Central Sales Tax Act - misuse of form-C - violation of terms and conditions of central registration certificate - penalty was deleted by taking a view that the generator sets, which were being exported was the part of the machine and the assessee was not liable to pay any tax on it being an item under its registration certificate - Held that - This view has been settled by this Court in the case of Majhola Distillery & Chemical Works Pilibhit vs. C.S.T. reported in 2005 UPTC 318 wherein this Court has held that the generator set was purchased by the assessee for the purpose of running the plant and machinery under the bonafide belief that it would be included in the registration certificate. The question of law is answered in favour of the assessee and against the department.

Summary

Issues:
Whether the Tribunal was justified in affirming the order setting aside the penalty under Section 10A of Central Sales Tax Act for misuse of form-C and violation of terms and conditions of central registration certificate.

Analysis:
The revision filed by the State pertained to the assessment year 1999-2000 against the Tribunal's order dated 16.12.2010. The question of law raised was whether the Tribunal was legally justified in affirming the order passed by the first appellate authority setting aside the penalty order under Section 10A of the Central Sales Tax Act, despite clear establishment of misuse of form-C and violation of terms and conditions of the central registration certificate. The Tribunal had deleted the penalty imposed on the assessee under Section 10A, reasoning that the generator sets exported were part of the machine and not liable for tax, as they fell under the registration certificate. This interpretation was supported by a previous judgment in the case of Majhola Distillery & Chemical Works Pilibhit vs. C.S.T., where it was held that the generator set was purchased for running the plant and machinery under a bonafide belief that it would be covered by the registration certificate.

The Court, considering the precedents and the facts of the case, answered the question of law in favor of the assessee and against the department. Consequently, the Court found no merit in the revision filed by the State and dismissed it, without imposing any costs. The decision was based on the interpretation of the law and the specific circumstances surrounding the case, leading to the conclusion that the penalty under Section 10A was not applicable in this scenario due to the nature of the exported generator sets and their relation to the registration certificate.