Heard Shri Aditya Pandey, holding brief of Sri K.N. Kumar for the revisionist and Sri Nimai Das, learned Standing Counsel for the revenue.
The revision arises out of order dated 18.02.2005 passed by the Trade Tax Tribunal, Bench Allahabad in Second Appeal No. 21 of 2004 for the assessment year 2003-04.
The revision was admitted on 01.05.2008 on the following questions of law:-
"1) Whether in the circumstances of the case, penalty u/s 10A of C.S.T. Act can be imposed upon the dealer for issuing Form 'C' for purchases of goods, i.e. goods for hut.
2) Whether there was any infringement of section 10(b) of the C.S.T. Act.
4) Whether there was any material to hold any false representation while issuing Form 'C'."
The facts briefly are that the revisionist/dealer is a foreign company and had entered into a contract with the National Highway Authority of India for construction of bridge across river Yamuna between Naini and Allahabad. The assessing authority, Deputy Commissioner (Assessment III) issued notice under section 10-A of Central Sales Tax Act (hereinafter referred to as the 'Act') for the assessment year 2003-04 proposing penalty for purchasing unauthorisedly from out side U.P. "Hut Material" for the A.Y. 2000-01 against Form-C. The assessing authority by order dated 01.11.2003, passed ex parte order, and imposed maximum penalty of Rs. 5,81,304/- on purchases of Rs. 38,75,360/-
The question in this case is whether the assessee a registered dealer made false representation in the declaration in Form-C issued by him. Both revenue as well as Tribunal have concurred and held against the assessee on the point, the only difference being that the penalty was reduced by the first appellate authority. The application for registration mentioned the goods as "material to be used for Yamuna Bridge Project". In the certificate of registration issued on this application against the column-(B) "Stores Material, consumable etc." were mentioned. The C Form issued by the assessee included "hut material". The stand of the assessee was that he was under a bonafide belief that the registration certificate included this item also and he formed that belief because of the description of goods mentioned in his application and the word "etc." found at the end of the goods described in the registration certificate i.e. "Stores Material and Consumable etc." The Tribunal was not impressed by the contention, and sustained the penalty.
Section 10(b) of the Central Sales Tax Act punishes a person with a term of punishment or fine or with both who "being a registered dealer, falsely represents when purchasing any class of goods that goods of such class are covered by his certificate of registration."
The phrase "falsely represents" clearly indicates that the falsity of the representation should be with the knowledge of the representator. If he is under an honest belief that what he represents is true, he cannot be said to make a false representation. The essence of the offence is the representation of something as true which, in fact and to the knowledge of the representator, is false. It must be proved that dealer made representations that the goods purchased were covered by the registration certificate with the knowledge that they were not so covered. It is only when the representation which was false to the knowledge of the company, and the knowledge that there would be liability under this section for false representation.
Thus, in the light of the language employed in the section and the nature of penalty contemplated, it is difficult to say that all types of omission or commission in the use of Form 'C' will be embraced in the expression "false representation". Finding of mens rea is necessary for levy of penalty under section 10(b) read with section 10-A of the Act.
Hon'ble Supreme Court in CST Vs. M/s Sanjeev Fabrics1, held as follows:-
"22.In view of the above, we are of the considered opinion that the use of the expression "falsely represents" is indicative of the fact that the offence under Section 10(b) of the Act comes into existence only where a dealer acts deliberately in defiance of law or is guilty of contumacious or dishonest conduct. Therefore, in proceedings for levy of penalty under Section 10A of the Act, burden would be on the revenue to prove the existence of circumstances constituting the said offence. Furthermore, it is evident from the heading of Section 10A of the Act that for breach of any provision of the Act, constituting an offence under Section 10 of the Act, ordinary remedy is prosecution which may entail a sentence of imprisonment and the penalty under Section 10A of the Act is only in lieu of prosecution. In light of the language employed in the Section and the nature of penalty contemplated therein, we find it difficult to hold that all types of omissions or commissions in the use of Form `C' will be embraced in the expression "false representation". In our opinion, therefore, a finding of mens rea is a condition precedent for levying penalty under Section 10(b) read with Section 10A of the Act."
The court in M/s Spring Valley Fruits Product Co. Ltd. Bareilly Vs. Commissioner of Sales Tax, U.P. Lucknow2, while dealing with penalty under Section 10-A of the Act held as follows:-
"In my view it was a case in which revisionist acted bonafide in purchase the generator under form C and making a statement that this machinery was covered by its registration cannot be said to be false, it was, thus a case in which it could not be said that the dealer had made a false statement and no penalty can be levied unless the representation is false to the knowledge of the dealer."
The Court in Commissioner, Trade Tax U.P. Lucknow Vs. M/s Project Technologist Pvt. Ltd. Gajaraula3, held as follows:-
"........................ Cable and Light Fitting material may not be said of such material which is not used in the welding machines, grinding machines and the lighting works at the time of execution of works contract of Pipe Fitting and Compressor Works executed by the assessee for Gas Authority of India Ltd., Babrala. Hence, I find no substance in the contention raised on behalf of revenue that assessee was not entitled to import aforesaid items against Form-C. Therefore, I find it expedient that aforesaid appeal be allowed and the penalty imposed against the assessee be set aside."
In the facts of the case can it be said that that the goods mentioned in the Form-C issued by the company was covered by the registration certificate? Reading the language of the certificate in the light of that employed in the application of the assessee, the word "etc." used in the certificate could possibly have raised the belief in the assessee that the word covered the items of goods mentioned in the Form-C. "Et cetera" in the Concise Oxford Dictionary is said to mean "and the rest, and so on". In its noun form in plural it means, extras, sundries. What did the authority which issued the registration certificate mean when it used the word "etc." does appear to be a matter open to doubt. For the revenue it is contended that the word "etc." should be understood in the ejusdem generis sense. I do not see why it should be so. In the application the assessee made it clear that he wanted a certificate in respect of the goods for use in the construction of the bridge. According to him, he thought that "etc." would cover all those articles which may be required for storage of goods used in construction. It is not necessary to decide whether "etc." would actually cover all those articles. It will suffice to say that the assessee could possibly have formed the belief and quite honestly that "etc." would cover those articles. Section 10(b) is a penal provision and where a question arises whether an offence has been committed or not, the dealer who is accused of the offence is entitled to the benefit of the doubt. This is not a case where it can be said that the dealer with the full knowledge of the falsity of the representation made the declaration in the Form-C issued by him.
The impugned order dated 18.02.2005 passed by the Trade Tax Tribunal, Bench Allahabad, is set aside.
The revision is allowed.
No costs.
Order Date :- 24.11.2014 kkm