1976 (2) TMI 61 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the dealer is liable for penalty under s. 10(A) of the Central Sales Tax Act for importing machinery parts not specified in the registration certificate.
2. Whether the dealer's issuance of 'C' forms for machinery parts without specification in the registration certificate constitutes an offence.
3. Whether the dealer's negligence in not checking the registration certificate for specified goods warrants penalty under s. 10(A).
4. Whether the dealer's application for retrospective inclusion of machinery parts in the registration certificate absolves them from penalty.

Analysis:
1. The appellant, a registered dealer under the Central Sales Tax Act, imported machinery parts not specified in the registration certificate, leading to an offence under s. 10(b) of the Act. The assessing authority imposed a penalty of Rs. 3,000 under s. 10(A) due to revenue loss. The dealer's knowledge of the omission and continued issuance of 'C' forms for the parts supported the penalty imposition upheld by the Appellate Assistant Commissioner and challenged in the Tribunal.

2. The appellant argued no dishonest intent in issuing 'C' forms, citing an application for registration specifying machinery parts. However, the registration certificate only listed 'chura, geera, and khaka,' with the machinery parts specified later from 1971. The Department contended the dealer misrepresented the use of machinery for mining, leading to the continued issuance of 'C' forms without specification, supported by a previous High Court case.

3. In contrast to a similar case, the appellant applied for machinery parts inclusion in the certificate, assuming it was done upon application approval. The negligence in not verifying the certificate contents was acknowledged, but it was argued the dealer did not knowingly issue 'C' forms without specification. The delay in penal proceedings and the Department's acceptance of the goods' specification later were highlighted to question the fairness of penalizing the dealer after eight years.

4. Referring to precedents, it was argued that without mens rea, penalizing the dealer for s. 10(b) contravention is unwarranted. The dealer's subsequent application for retrospective inclusion of the goods upon realizing the omission was presented as evidence of lack of false representation. Precedent cases were cited to support the argument that the circumstances did not indicate mens rea, thereby justifying the setting aside of the penalty under s. 10(A).

5. The appeal was allowed, setting aside the penalty imposed under s. 10(A) of the Central Sales Tax Act, absolving the dealer from liability in this case.