1994 (10) TMI 322 - HC - VAT and Sales Tax

Summary

Issues:
Levy of penalty under Section 10 (b) of the Central Sales Tax Act for assessment year 1986-87 based on the purchase of a generator for production of electricity.

Analysis:
The revisionist, a manufacturer of fruit products, purchased a generator for generating electricity from a dealer outside U.P. at a concessional rate of tax. The assessing officer contended that the generator did not qualify as plant or machinery required for use in the manufacture or processing of goods for sale, leading to the imposition of a penalty under Section 10 (b) of the Central Sales Tax Act. Both the Assistant Commissioner (Judicial) and the Tribunal upheld the penalty.

The revisionist argued that the generator was essential for running machinery in the fruit preservation industry, and although electricity was crucial for production and processing of goods, the generator's classification as plant or machinery was the key issue. The Tribunal relied on a previous judgment regarding a sugarcane crusher case but acknowledged the specific nature of the industry and the need for a rotating machine in sugar production. The revisionist's business involved continuous refrigeration, making electricity indispensable.

The State's counsel highlighted the specific mention of machines for electricity generation or distribution in the registration form, suggesting the revisionist should have amended the certificate to include the generator. Conversely, the revisionist's counsel emphasized the bona fide belief in the generator's eligibility as plant and machinery, citing precedents where penalties were not levied when the dealer genuinely believed the goods were covered by the registration.

Ultimately, the Court found the revisionist's purchase of the generator under Form-C and the representation under the registration certificate as not false, indicating a lack of knowledge of any misrepresentation. Consequently, the Court allowed the revision petition, overturned the Tribunal's decision, and canceled the penalty under Section 10 (b) of the Central Sales Tax Act.