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2020 (8) TMI 783 - HC - VAT and Sales TaxLevy of penalty - misuse of form-C issued to the applicant-assessee - violation of Section 10A read with Section 10(b) of the Central Sales Tax Act - HELD THAT - The show cause notice issued by the department indicated various items that did not form part of form-C. A reply was furnished by the assessee for each one of those items. It was narrated that the said items were used for the purposes of manufacturing of the goods in question. The various items that were referred to were explained by the assessee through his reply to the show cause notice. Once the appellate authority comes to the conclusion that there was a bona fide belief of the assessee then an absolute relief should have been granted. Granting a limited relief only in relation to certain articles, in our considered view, was not appropriate. Therefore, non consideration of the request of the assessee to completely waive the penalty in our considered view is inappropriate. The question is answered, against the revenue and in favour of the assessee.
Issues:
1. Penalty imposition for alleged misuse of form-C under Central Sales Tax Act. 2. Appeal against penalty imposition and reduction. 3. Consideration of bona fide belief of the assessee. 4. Interpretation of Section 10(b) of the Central Sales Tax Act. 5. Application of the judgment in Commissioner of Sales Tax, Uttar Pradesh vs. Sanjiv Fabrics. 6. Relief granted by the court. Issue 1: Penalty Imposition for Misuse of form-C under Central Sales Tax Act The assessee, an industrial concern, faced penalty imposition for alleged misuse of form-C under the Central Sales Tax Act. The penalty was initially set at ?64,14,250, which was later reduced to ?29,07,760 by the First Appellate Authority. Subsequently, the matter was taken to the Commercial Tax Tribunal, leading to the filing of CTR No. 39 of 2009 by the assessee and CTR No. 16 of 2010 by the revenue. Issue 2: Appeal Against Penalty Imposition and Reduction The appeal process involved the contention of the assessee that there was no false representation in issuing form-C related to the purchase of goods, thus challenging the penalty imposition. The revenue, on the other hand, argued that the penalty should be enhanced as the goods imported without form-C coverage attract penalty. The court considered these arguments in light of the provisions of the Central Sales Tax Act. Issue 3: Consideration of Bona Fide Belief The First Appellate Authority accepted the assessee's bona fide belief that the imported articles were used for manufacturing purposes and hence covered under form-C. The court emphasized that if a bona fide belief exists, no penalty should be imposed. It cited the judgment in Commissioner of Sales Tax, Uttar Pradesh vs. Sanjiv Fabrics to support this interpretation. Issue 4: Interpretation of Section 10(b) of the Central Sales Tax Act The court analyzed Section 10(b) of the Central Sales Tax Act, emphasizing that the term "falsely represents" implies a deliberate act done knowingly. It held that if it is proven that the representation was not deliberate, then it cannot be considered as false representation, aligning with the judgment cited. Issue 5: Application of Judgment in Commissioner of Sales Tax, Uttar Pradesh vs. Sanjiv Fabrics The court applied the principles established in the judgment mentioned, highlighting that the burden lies on the Revenue to prove deliberate defiance of law or dishonest conduct for penalty imposition under Section 10(b) of the Act. It stressed that an absolute relief should be granted if no deliberate false representation is proven. Issue 6: Relief Granted by the Court Ultimately, the court allowed CTR No. 39 of 2009 filed by the assessee, setting aside the penalty orders imposed previously. The orders of the Assessing Officer, First Appellate Authority, and Commercial Tax Tribunal were overturned. The court granted relief to the assessee and directed the adjustment of the deposited amount against future taxes, while dismissing CTR No. 16 of 2010 filed by the revenue. This detailed analysis of the judgment showcases the legal intricacies involved in the case, including the interpretation of statutory provisions, application of relevant judgments, and the ultimate relief granted by the court.
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