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TMI Blog1995 (3) TMI 449X X X X Extracts X X X X X X X X Extracts X X X X ..... the opinion that the assessee had falsely represented to their sellers while purchasing those goods that they were covered by the registration certificate under the Central Sales Tax Act, 1956. In the penalty proceedings initiated under section 10-A of the Central Sales Tax Act, the assessee explained that he was under the bona fide belief that groundnut kernel will also come under the foodgrains and hence he could get groundnut kernel from outside the State by issue of "C" forms. Therefore, according to the assessee, there is no false representation, attracting penalty under section 10-A of the Central Sales Tax Act. However, the assessing authority came to the conclusion that the purchase of groundnut kernel by issuing "C" forms would am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... belief in purchasing groundnut kernel by using the "C" forms, no penalty is leviable under section 10-A of the Act. The learned counsel also submitted that the department fails to establish that there is mala fide intention on the part of the assessee in purchasing the groundnut kernel by using the "C" forms. According to the learned counsel, unless the mens rea is established, no penalty is leviable under section 10-A of the Act. In order to support his contention, the learned counsel for the assessee relied upon various decisions. 3.. On the other hand the learned Additional Government Pleader (Taxes) while supporting the order passed by the Tribunal contended that groundnut kernel cannot come under the category of foodgrains since gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l-cake. In the relevant assessment year, the assessee purchased groundnut kernel for extracting groundnut oil. The assessee used "C" forms for purchasing the groundnut kernel. In the registration certificate the assessee is entitled to purchase foodgrains. According to the assessee groundnut kernel is also an item which would come under foodgrains and therefore purchase of groundnut kernel by using "C" forms would not amount to any false representation. According to the department, the assessee having known that the assessee is not entitled to purchase groundnut kernel by using "C" forms deliberately purchased the goods by falsely representing that the assessee is entitled to purchase groundnut kernel by issuing "C" forms. 5.. The point f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own corks will amount to misuse of form "C" and attract penalty under section 10-A(1) of the Central Sales Tax Act. According to the facts arising in that case, the assessee was doing business as manufacture of soft drinks (beverages). The assessee is entitled to purchase bottles as per the registration certificate. But the assessee purchased crown corks by using the "C" forms. The department contended that the crown cork is not mentioned in the registration certificate. Therefore, the purchase of crown corks by using the "C" forms would attract penalty under section 10-A of the Central Sales Tax Act. While considering this argument, this Court pointed out that mere purchase of bottles without purchase of crown corks would have been usele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. 9. In the case of State of Tamil Nadu v. Betala Industries [1993] 88 STC 328 this Court held that a finding to the effect that the assessee made a false representation in purchasing the goods by issuing "C" forms while those goods were not enumerated the registration certificate is absolutely necessary and a condition precedent for levy of penalty. 10.. A plain reading of the orders passed by the authorities below as well as the Tribunal in the present case would go to show that a finding was given to the effect that the assessee made false representation while purchasing the groundnut kernel by using "C" forms. But the question of mens rea was not clearly established in the present case by the department by adducing cogent, convi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the nature of business run by the assessee. Since the groundnut happens to be an essential commodity for the purpose of doing business run by the assessee, it cannot be said that purchase of groundnut kernel by using "C " forms would amount to false representation made to his sellers. There cannot also be any guilty mind or mens rea in using the "C" forms to purchase the essential commodity for running his business. It is the only essential commodity which is absolutely essential for the purpose of carrying on the trade run by the assessee. Under such circumstances we consider that purchase of groundnut kernel by the assessee by using the "C" forms would not amount to making any false representation or any mala fide intention on the part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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