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TMI Blog1997 (8) TMI 478X X X X Extracts X X X X X X X X Extracts X X X X ..... terials for use in manufacture against the issue of "C" forms. But, later on, they purchased "machinery goods" for a sum of Rs. 12,194.40 in the year 1977-78, besides purchasing such goods for a sum of Rs. 36,436.37 in the year 1980-81 from outside the State by use of "C" forms, which were not included in the certificate of registration. 3.. It is they, it is said, committed an offence under section 10(b) of the CST Act, punishable under section 10-A thereof. It appears that in the meantime, Purasawalkam Assessment Circle had been bifurcated as "Purasawalkam" and "Vepery" assessment circles. Consequent on such bifurcation, the assessee-dealers fell within the jurisdiction of Vepery assessment circle. 4.. The Deputy Commercial Tax Officer, Vepery Assessment Circle, therefore proposed to levy a penalty of Rs. 1,829 and Rs. 5,465, being one and a half times the tax due under the relevant provisions of the CST Act respectively for the assessment years 1977-78 and 1980-81. 5.. To the two separate notices issued for those two assessment years inviting objections, if any, to the proposals as above, they replied, by their letters of even date, February 7, 1983, inter alia, stating that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, Vepery Assessment Circle, not being the officer or authority, who actually and factually issued the certificate of registration to the assessee-dealers, is not competent to levy penalty under section 10-A of the CST Act in lieu of prosecution. (2) The mens rea being an essential element for levying penalty under section 10(b) of the CST Act was not established by the department. (3) If the authorities below had correctly and properly understood the perception and connotation of the rule of contemporanea expositio or contemporaneous exposition-a well-recognised rule of interpretation of statute, they would not have fallen into error in levying penalty as had been done by them. 11.. As against the common order of the Tribunal, as above, the Revenue resorted to the present actions-Tax Case (Revision) Nos. 601 and 608 of 1985. 12.. The questions of law that crop up for consideration bristle to these: (1) Whether the Deputy Commercial Tax Officer, Vepery Assessment Circle, not being the officer or authority, who actually or factually issued the certificate of registration to the assessee-dealers, is not the authority to levy penalty under section 10-A of the CST Act? (2) Whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 58-59 and 1959-60, and he was the authority, who had assessed it to sales tax for those years, he had competence under section 10-A to levy the penalties, even though after March 28, 1960, he ceased to be the authority to grant registration. The levy of penalty was one form of levying tax and if that Sales Tax Officer was competent to levy sales tax on the respondent in respect of those assessment years he was equally competent to levy penalty on the respondent in respect of the offences committed during those years. It was further held that the proceedings initiated on January 8, 1960, did not stand terminated as a result of the subsequent notices; that the notices issued by him were not statutory notices and under section 10-A, the Sales Tax Officer at Ghaziabad was only required to give a reasonable opportunity to the assessee to show cause why penalty should not be imposed. (c) The Supreme Court, however, declined to go into the question whether the registration of the respondent as a dealer before the Sales Tax Officer at Ghaziabad was invalid as its head office was at Lucknow, since it involved questions of fact and there was no material on record. The Supreme Court, remande ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority, who is competent to grant him a certificate of registration. The authority competent to grant him a certificate of registration under the CST Act may be an authority to assess/reassess the assessee, who fell within his jurisdiction. 17.. This aspect of the matter may be explained by referring to the relevant statutory provisions and the Rules framed under the CST Act. (a) Rule 2(cc) of the Central Sales Tax (Registration and Turnover) Rules, 1957 defines "prescribed authority" and it reads as under: "2. In these Rules, unless the context otherwise requires- (cc) 'prescribed authority' means the authority empowered by the Central Government under sub-section (2) of section 9, or the authority prescribed by a State Government under clause (e) of sub-section (4) of section 13, as the case may be." (b) Sub-section (2) of section 9 of the CST Act reads as under: "9. Levy and collection of tax and penalties.-(1)................... (2) Subject to the other provisions of this Act and the Rules made thereunder, the authorities for the time being empowered to assess, reassess, collect and enforce payment of any tax under the general sales tax law of the appropriate State sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the appropriate State, as the Central Government may, by general or special order, specify, and every such application shall contain such particulars, as may be prescribed. 18.. Reverting to the factual matrix of the instant case, the Deputy Commercial Tax Officer, Purasawalkam assessment circle, within whose jurisdiction the assessee-dealers fell for the purpose of assessment, assessed the dealers for the relevant assessment years in question and before the commencement of the proceedings for imposition of penalty, Purasawalkam assessment circle, came to be bifurcated, as Purasawalkam and Vepery assessment circles. Admittedly, the assessee-dealers fell within the jurisdiction of Vepery assessment circle subsequent to bifurcation. The resultant position is that the Deputy Commercial Tax Officer, Purasawalkam assessment circle was the authority, who originally granted the certificate of registration to the assessee-dealers and also assessed the dealers for the relevant years in question. The Deputy Commercial Tax Officer, Vepery assessment circle, actually imposed penalty upon the assessee-dealers under section 10-A, in lieu of prosecution for certain refractions or violations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dum". (b) The Bench did not stop there and went further in considering the question of "bona fides", as opposed to "mala fides", by referring to the relevant provisions in Indian Penal Code as well as the Madras General Clauses Act relatable to the meaning and connotation of "good faith", an essential ingredient of "bona fide". (c) Ultimately, the Bench said that there is nothing in section 10-A of the CST Act which requires that mens rea must be proved before penalty can be levied under that provision if on facts, it is found that the assessee has made a "false representation". Once a finding is recorded by the competent authority that the assessee has made a "false representation", that would clearly attract the provisions of section 10(b) of the CST Act and no further finding is required that the assessee had also the mens rea. (d) Under the criminal law, mens rea is considered as the "guilty intention", but when it is relatable to tax delinquency, which is a civil obligation, it implies a "blameworthy conduct". The recording of a finding that the assessee had made a false representation by itself shows the establishment of the blameworthy conduct, which would be the establis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, before ever imposition of penalty was resorted to deserves to be set aside and the same is accordingly set aside and this point is answered accordingly. 25.. Point No. 3: No doubt true it is, the rule of contemporanea expositio or contemporaneous exposition is a well-recognised rule of interpretation of statute by the taxing authorities in their day-to-day activity of implementation of the relevant provisions of the taxing statutes. The Tribunal, of course, mentioned by way of reference, the instructions alleged to have been issued by the Board of Revenue in L. Dis. No. A2/2312/17 dated February 26, 1980. But the instructions so issued by the Board of Revenue had not been extracted in its order. Before us also, the instructions so issued, as stated above, by the Board of Revenue, have not been placed for our perusal and consideration. By the showing of the Tribunal, in its own order, we are able to infer that the Board of Revenue issued instructions to consider the purchases not included in the certificate of registration, by issue of C forms, at the time of purchases, either for resale or user, manufacture is a technical defect and therefore, the department has to take a le ..... X X X X Extracts X X X X X X X X Extracts X X X X
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