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TMI Blog2006 (11) TMI 588X X X X Extracts X X X X X X X X Extracts X X X X ..... rking issued C forms for the above four years and availed concessional rate of sales tax on inter-State purchase of dish antenna, battery, digitiser, etc., which are used in their cable TV network for transmitting TV signals to customers. The assessing officer found that the items purchased were neither used for manufacture of any goods nor for generation of power or for resale and therefore there was misuse of C form leading to loss of revenue. Since the action of the petitioner amounts to violation of section 10(d) of the Act, he proposed to impose a penalty under section 10A in lieu of prosecution. The petitioner filed objections stating that the items purchased are used for transmitting TV signals which amounts to distribution of power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied. Moreover, it is a matter to be seen whether the equipment purchased by the petitioner answers the description of telecommunications network. In any case since amendment does not apply to the relevant years, I do not go into the question whether the petitioner is entitled to issue C form for the purchase of some equipment after the above amendment has come into force. The next contention raised is that the equipment used for sending television signals through cables is in the form of distribution of another form of power . The electronic TV signals cannot be equated to a form of power and therefore, I am unable to accept petitioner's contention that the use of C form is for an eligible purpose. Besides, the assessing officer has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the Supreme Court in Hindustan Steel Ltd. v. State of Orissa [1970] 25 STC 211 counsel submitted that levy of maximum penalty is not warranted as the violation is only technical. Another decision cited by counsel for the petitioner is that of this court in Palghat Dist. Co-operative Rubber Marketing Society Ltd. v. Assistant Commissioner (Assmt.) II, Sales Tax Office, Special Circle, Palghat [1994] 93 STC 485; [1994] KLJ 58 (TC) whereunder this court held that mens rea is required for imposing penalty under section 10A of the Act. The Government Pleader on the other hand contended that even if mens rea is required, the same is satisfied because the petitioner by declaring that the items purchased are for resale, did not in fact sell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner has not used the items purchased for the declared purpose, i.e., for resale. Therefore, penalty under section 10A is leviable for the violation under section 10(d) of the Act. The levy of penalty by the officer, which is confirmed by the Commissioner, is therefore upheld in principle. The next question raised is whether the penalty levied at nine per cent of the purchase value is justified. The petitioner admittedly purchased the articles by paying tax at four per cent against issue of C forms. Therefore, the loss of revenue is six per cent of the purchase value. The maximum penalty is one-and-a-half times of the tax sought to be evaded by misuse of C form which is nine per cent. Even though counsel contended that the appropriate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied the use of C form or monthly returns filed by the petitioner which led to initiation of penalty for 1993-94 to 1996-97 only in the year 2000. Therefore, I feel these mitigating factors do not justify levy of maximum penalty which is levied in this case. Even though counsel for the petitioner contended that mens rea is a necessary ingredient for the levy of penalty, I am unable to accept this contention because the purpose of penalty under section 10A in lieu of prosecution is mainly to compensate the State for the loss suffered on account of misuse of C form. It is to be noted that but for the misuse of C form, the petitioner would have had to pay tax at 10 per cent as against 4 per cent paid by the petitioner. In fact, there is no way ..... X X X X Extracts X X X X X X X X Extracts X X X X
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