2019 (1) TMI 958 - HC - VAT and Sales Tax

Penalty u/s 10(A) of the Central Sales Tax Act, 1956 - absence of the registration certificate being proven - burden to establish mens rea on the revenue - import of generator set and non-woven fabric - Held that - There was no plea set up by the assessee to doubt the correctness of the allegation made by the revenue that it had imported generator set and non-woven fabric against Form-C without being authorized or permitted in it s registration certificate - Once the assessee failed to set up a plea either that it was authorized under the registration certificate to purchase generator set or non-woven fabric or that it was engaged in any activity other than sale of two wheelers vehicle, the misutilization of Form-C to import such items had to be tested in that context alone. Therefore the utilization of Form-C to import totally unconnected goods, namely, a single electricity generator set and nonwoven fabric was rightly found to be a case of false declaration - In the instant case, there is no connection between the items for which the assessee was registered and the items that were imported for it s utilization Form-C. Also the items thus imported had no connection with the activity for which the petitioner claims itself to have been registered being trading in two wheelers - Therefore, there does not appear any error in the order passed by the authorities in reaching the conclusion that the petitioner had made false utilization of Form-C to import generator set and non-woven fabrics. Consequently, the demand of penalty was rightly imposed against the assessee. Revision dismissed.

Summary

Issues:
Challenge to penalty under Section 10(A) of the Central Sales Tax Act for importing generator set and non-woven fabric without registration certificate.

Analysis:
1. The revision was filed against the order of the Commissioner Tax Tribunal regarding penalty under Section 10(A) of the Act for importing goods without a registration certificate.
2. The main question was whether the burden to establish mens rea rested on the revenue for imposing and sustaining the penalty.
3. The assessee, engaged in trading two-wheelers, imported a generator set and non-woven fabric against Form-C.
4. The assessee claimed to use the generator set for electricity and the fabric for seat covers, but authorities found no connection to their business.
5. The assessee argued that mens rea must be proven by the revenue, citing previous court decisions.
6. The revenue contended that the assessee's business did not involve dealing in the imported goods, hence no registration for them.
7. The court observed that the assessee's business was solely trading two-wheelers, with no authorization for dealing in the imported items.
8. The authorities found the explanation for using the imported goods in the business to be false based on evidence.
9. The court concluded that the utilization of Form-C for importing unrelated goods was a false declaration, establishing mens rea.
10. Previous court decisions cited were distinguished as they involved different circumstances and connections between registered activities and imported goods.
11. The court upheld the penalty, as the imported goods were not connected to the assessee's registered business activities.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the reasoning behind the decision to dismiss the revision and uphold the penalty imposed on the assessee for importing goods without the required registration certificate.