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TMI Blog1989 (6) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... lieve that the petitioner had made some unauthorised purchases of goods by issuing C forms and it was reasonably suspected by him that the petitioner had committed an offence under section 10(b) of the Central Act. By the said notice the petitioner was also directed to show cause as to why penalty under section 10-A of the Central Act in lieu of prosecution should not be imposed on him for the said offence. The petitioner showed cause by letter dated September 1, 1980. In the said letter it was stated that the petitioner had already submitted in detail as to how C forms were used by him vide his letter dated August 29, 1980. It was also pointed out that use and utilisation of C forms for purchase of materials used in the construction of factory and workshop had been done with the approval of the competent authority, namely, the Superintendent of Taxes. The utilisation of C forms was checked by authorities from time to time and approved. The petitioner, therefore, denied commission of any offence under section 10(b) of the Central Act and asked the Superintendent of Taxes to furnish to him the details of purchases of goods in respect of which commission of offence under section 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 10 of the Act enumerates certain offences which are punishable by simple imprisonment and fine. Clause (b) of section 10, which is relevant for the present case, makes false representation by registered dealer when purchasing any class of goods that goods of such class are covered by the certificate of registration, an offence under the said section. Section 10 (as amended) is quoted below: "10. Penalties.-If any person- (a) furnishes a certificate or declaration under sub-section (2) of section 6 or sub-section (1) of section 6-A or sub-section (4) of section 8, which he knows or has reason to believe, to be false; or (aa) fails to get himself registered as required by section 7, or fails to comply with an order under sub-section (3-A) or with the requirements of sub-section (3-C) or sub-section (3-E), of that section; (b) being a registered dealer, falsely represents when purchasing any class of goods that goods of such class are covered by his certificate of registration; or (c) not being a registered dealer, falsely represents when purchasing goods in the course of inter-State trade or commerce that he is a registered dealer; or (d) after purchasing any good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e person purchasing the goods should have registered himself if the offence had not been committed." This section thus gives an option to the competent authority to impose penalty in respect of offences under clauses (b), (c) and (d) of section 10 in lieu of prosecution. It also makes it clear that once penalty is imposed, no prosecution under section 10 can be instituted in respect of the same facts. 6.. Let us deal now with the first submission of the learned counsel for the petitioner that the Superintendent of Taxes, Agartala, had no jurisdiction to exercise power under section 10-A in respect of the petitioner inasmuch as he was not the authority who granted him the certificate of registration. It was stated that the original certificate of registration was granted to the petitioner by the Chief Secretary of Tripura in the year 1962 and, as such, it was the Chief Secretary who could levy the penalty and not the Superintendent of Taxes. We have perused the provisions of section 10-A and other relevant provisions of the Act and the Rules in this regard. On consideration of the same it appears that the aforesaid argument of the learned counsel is misconceived and has no force. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, Revenue Department, Government of Tripura, on December 16, 1964 and by the Superintendent of Taxes having territorial jurisdiction with effect from July 1, 1976, the date the general sales tax law, namely, Tripura Sales Tax Act, 1976, came into force. In view of the aforesaid factual position, we hold that the Superintendent of Taxes, Agartala, was the competent authority to exercise power under section 10-A of the Act in respect of the petitioner. The submission of the petitioner on this count, therefore, fails. 7.. Another limb of first contention of the learned counsel for the petitioner is that even if the Superintendent of Taxes was the competent authority to levy penalty under section 10-A of the Central Act the impugned order is without jurisdiction, inasmuch as the same was passed without obtaining previous sanction of the Commissioner. This argument is based on the supposition that the Superintendent of Taxes, Agartala, was empowered to levy penalty in the instant case by virtue of section 9(2) of the Central Act which provides that the authorities empowered to assess, reassess, collect and enforce payment of tax under the State sales tax law shall on behalf of the Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority who granted or, as the case may be, is competent to grant a certificate of registration under the Act, who shall have the power to levy penalty under section 10-A. The Superintendent of Taxes, Agartala, got the power to levy penalty under section 10-A in that capacity, being the authority competent to grant registration to the petitioner and not by virtue of the provisions of section 9(2). The manner of exercise of the power is also laid down in section 10-A including the requirement of giving reasonable opportunity of being heard to the person affected. Thus, for the purpose of levying penalty under section 10-A it is not necessary to take resort to section 9(2). In this connection, we noticed a decision of the Allahabad High Court in Commissioner of Sales Tax, U.P. v. Janta Furniture Mart [1973] 31 STC 392, wherein it was held that while imposing penalty under section 10-A of the Central Sales Tax Act, 1956, by virtue of the operation of section 9 of the Central Act the powers of the authorities shall be subject to the limitations contained in the State sales tax law in regard to levy of penalty. As in that case the State sales tax law required the authority to obtain t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered by his certificate of registration. In course of time it may be found that some of the goods so purchased by him were not really covered by his certificate of registration. That by itself would not be sufficient to attract section 10(b) of the Act. In a particular case, the dealer might be under a bona fide belief that the goods in question were covered by his certificate of registration and might have made the purchases under such belief. He might have been negligent. He might even be ignorant of the fact that in spite of being a registered dealer he is not entitled to make purchases of goods at concessional rate even for permissible purchases without getting the same specified in his certificate of registration. It may be a technical breach but that will not make him liable to punishment under section 10(b). The essential ingredient of an offence under section 10(b) is "false representation". The use of the words "falsely represents" in clause (b) is significant inasmuch as these words have been used only in clauses (b) and (c) of section 10 and in no other clauses. This also indicates intention of the legislature. The legislature was conscious while using these words in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0] 25 STC 211 (SC); [1972] 83 ITR 26 (SC), while deciding the question whether penalty can be imposed on a dealer under the Orissa Sales Tax Act, 1947, for failure to register as a dealer, the Supreme Court observed that liability to pay penalty does not arise merely upon proof of default in registering as a dealer. It was held: "An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14.. From a reading of section 10(b) of the Central Act in the light of the aforesaid decisions of the Supreme Court and the discussions made above, it is clear that in order to impose penalty on a dealer for making unauthorised purchases, the authority concerned must arrive at a definite finding about the "false representation" made by a dealer. The finding must be based on cogent materials on record. In the absence of such a finding any order imposing penalty will not be sustainable. 15.. In the instant case we find from the impugned order that the Superintendent of Taxes levied the penalty simply on the ground that the petitioner purchased goods unauthorisedly even though it was not intentional as according to him it should have been known to him that necessary amendment had to be made for the import of goods not mentioned in the registration certificate. There is no material in the order to indicate any mens rea not to speak of any finding to that effect. On the other hand, the observation and finding of the Superintendent of Taxes clearly indicate absence of mens rea or guilty mind. The officer appears to have equated "false representation" with "wrong representation" and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o supply to the person concerned to enable him to show cause effectively against the proposed action. If any further information is asked for by the dealer for the purpose of showing cause the same should also be supplied. The authority cannot refuse to furnish these informations. The defect in the show cause notice of not furnishing the requisite informations indicated above, cannot be cured by contending that at the time of hearing the dealer was shown the requisite details and he could have explained the same if he so desired. That will not meet the requirement of giving reasonable opportunity of hearing. Besides, the quantum of penalty is also linked up with the value of goods purchased on the basis of false declaration and the amount of tax which would have been levied thereon had the false representation not been made. The dealer can also put forward his grounds for levy of lower penalty. In short, it can be said that opportunity of hearing given to the affected person must be reasonable and real. It should not be a mere formality or ritual or a pretence. It is a valuable right given to the citizens and the same should not be taken lightly. The cause shown or the explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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