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TMI Blog1993 (2) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... n certificate No. DIC-62-II (Central). Articles like machinery, spares and accessories had been purchased on the basis of the said certificate of registration for being used in mining at concessional rate of tax on the strength of "C" forms. The South Eastern Coalfields Ltd. which is petitioner No. 2 was a subsidiary of Coal (India) Limited with effect from April 1, 1986. As the South Eastern Coalfields Limited had number of collieries at Talcher, different registration certificates were issued under the Act giving a sub-number, but all the collieries for which separate certificates had been issued are part of the South Eastern Coalfields Limited. According to the petitioners' case petitioner No. 1 being a regular assessee under the Central Sales Tax Act as well as under the Orissa Sales Tax Act, 1947, had duly filed the returns and paid all the taxes for the period in question. He had also filled in all the "C" forms through which materials had been purchased from outside for use in the mines. Though the materials are purchased by the South Eastern Coalfields Limited and are received in the regional store situated at South Balanda, but those materials are supplied to the other col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing contentions in challenging the order of levy of penalty: (i) In view of rule 3(2) of the Central Sales Tax (Registration and Turnover) Rules, 1957 (hereinafter referred to as "the Turnover Rules") a dealer having more than one place of business within a State being required to make a single application in respect of all such places naming one such place as the principal place of business and under rule 5(1) of the said Rules, the authority being required to register the dealer and grant him a certificate of registration in form 8 and a copy of such certificate for other place of business within the State other than the principal place of business mentioned therein, in the eye of law, there would be one dealer within the State and, therefore, by merely issuing different registration numbers, the different places of business cannot be construed to be different dealers. In this view of the matter, transfer of goods from one place to the other must be held to be a transfer of goods by a registered dealer from his principal place of business to another place covered by the certificate of registration and consequently, there has been no infraction of the provisions of the Act so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther urges that the expression "mining" in section 8(3)(b) of the Act cannot be construed disjunctively and the only construction that is possible is that the mining must be of the registered dealer who has purchased the goods on production of "C" forms and consequently, user of purchased goods for the purposes of mining by other registered dealers would contravene the provisions of section 8(3)(b) of the Act and accordingly, there has been no infirmity with the conclusion of the sales tax authorities. The learned Standing Counsel for the department further urges that the assessing officer having found that the dealer has wilfully and consciously issued some of the goods purchased by him to other collieries who are also dealers having different registration numbers, knowing fully well that the goods can be used only by him for the purpose of mining, there has been deliberate contravention of section 10(d) of the Central Sales Tax Act and thus the mens rea is established and in that view of the matter, the levy of penalty cannot be said to be illegal. The learned Standing Counsel, however, concedes to the position that even if it is held to be a contravention of the provisions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicates that initially only one registration certificate had been issued in the name of National Coal Development Corporation Private Limited indicating therein the additional places of business at Deulbeda and South Balanda, under registration number 87(11)-CU-II. That registration certificate was amended on December 16, 1975, and the name of the registered dealer was inserted as "Deputy Chief Mining Engineer, Central Coalfields Limited, South Balanda". But later, on the application by the dealer, the different collieries obtained different registration numbers and each of those collieries was issued with "C" forms in individual capacity for purchase of goods from outside the State at a concessional rate to be used in mining. In this view of the matter, the different collieries having obtained individual registration certificates under the Turnover Rules, by making individual applications even though they might have been entitled to have only one certificate of registration, and having taken the advantage of being individual registered dealers, they cannot be construed to be a single unit or a single registered dealer with one principal place of business and other subsidiary pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchasing the goods as being intended for resale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power." A plain reading of the aforesaid provision would make it clear that the goods in question must be one specified in the certificate of registration of the registered dealer and must be intended for use by him either in the manufacture or processing of goods or in mining or in generation or distribution of electricity or any other form of power. The expression "in mining" cannot be construed disjunctively and is controlled by the expression "by him". Mr. Mohanti contends that the expression "by him" applies only when the goods are used in the manufacture or processing of goods and not to other part of the same sub-section. But in view of the scheme of the Act and the plain meaning of section 8(3)(b) it is difficult for us to accept the contention of Mr. Mohanti appearing for the petitioner. In that view of the matter, when goods are purchased by a registered dealer and the goods are mentioned in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Hindustan Steel Ltd. v. State of Orissa [1970] 25 STC 211 (a case from this Court), their Lordships of-the Supreme Court came to the conclusion that the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. It was observed by their Lordships that 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 consideration of all the relevant circumstances. It was further held that when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief then the authority competent to impose the penalty will be justified in refusing to impose the same. In the case of Morvi Cotton Merchants' Industrial Corporation Ltd. v. State of Gujarat [1975] 36 STC 347, a Bench of the Gujarat High Court came to hold that the expression "without reasonable excuse" in section 10(d) of the Central Sales Tax Act is a necessary ingredient of the offence mentioned therein and that ingredient has to be alleged and proved by the department and the authority imposing the penalty has to give a finding on that score. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to Deputy Chief Mining Engineer, Central Coalfields Limited, South Balanda, but the additional places of business in the certificate of registration remained the same. Subsequently, different registration numbers were allotted, the main registration number DIC-62 being in favour of the Project Officer, Talcher colliery and other places were allotted with by-numbers like 62-II, 62-III and so on. This being the factual position, even though in the eye of law, on being issued with separate certificate of registration bearing a registration number, each constitutes a dealer, yet transfer of goods from one place to other cannot ipso facto be held to constitute a mens rea so as to attract the provisions of section 10(d) and section 10-A of the Act. The explanation offered by the dealer on this score has not been properly scrutinised. We would accordingly hold that the penalty has been levied under section 10-A of the Act without considering the explanation offered by the dealer and without bearing in mind all the relevant facts and circumstances and, therefore, such levy must be held to be not in accordance with law. We, therefore, quash the impugned order and levy of penalty and remi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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