At, High Court of Judicature at Allahabad
By, THE HONOURABLE MR. JUSTICE YASHWANT VARMA
For the Applicant: Pawan Shree Agarwal and Krishna Agarwal, Advocates. For the Opposite Party: A.P. Tripathi, Standing Counsel.
1. Heard Shri Krishna Agrawal, learned counsel for the revisionist and Shri A.P. Tripathi, learned standing counsel.
2. This revision has been preferred against a judgment of the Tribunal dated 12 February 2007, which has, while setting the aside the decision of the first appellate authority, restored the view taken by the assessing authority that the revisionist was liable to be visited with penalty under Section 10-A of the Central Sales Tax Act 1956.
3. The issue itself arises in the following backdrop. The revisionist held a registration certificate for "adhesive tape". During the assessment year in question it also manufactured and consigned adhesive stickers and labels. It was its case that all three commodities were being utilized for the purposes of packaging goods and materials. It is also undisputed that on 15 December 1993, the revisionist moved an application for amendment of its registration certificate and for inclusion of the commodities namely adhesive stickers and labels. The assessing authority has, while accepting the contention of the revisionist that all three commodities were used as packing material, proceeded to hold that the fact that the assessee applied for amendment is clearly evidence of the fact that he had made a false representation and would thus fall within the ambit of Section 10-A of the CST Act. The first appellate authority has held in favour of the assessee and had noted that there was no misrepresentation or false representation. This order of the first appellate authority has been interfered with by the Tribunal. The Court finds itself unable to sustain the view taken by the Tribunal for the following reasons.
4. It is not disputed that in the relevant Form-C under cover of which the goods were transported, the revisionist had clearly indicated the goods to be adhesive labels and stickers. The fact that the revisionist had moved an application for amendment of his registration certificate rather than being read against him should have, in the considered view of this Court, worked in its favour.
5. In order to justify the imposition of penalty under the provisions of Section 10A, the authority must come to hold conclusively that the dealer had falsely represented when purchasing goods in the course of inter-state commence that they were covered by its certificate of registration. As the Court reads the order of the assessing authority and the Tribunal it finds that no findings have been recorded in support of the case that a false representation had been made by the assessee. The law on the subject is no longer res integra and this Court may only refer to the decision of the Supreme Court in Commissioner of Sales Tax, U.P. v. M/s. Sanjai Fabrics [2010 NTN (Vol.44) 69] in which the position of law was summarized in paragraph 22 which reads thus:
"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."
6. As is evident from the above extract, there is a clear distinction between a false representation and a wrong representation. Every wrong or incorrect interpretation or representation would not result in it being concluded that the person had falsely represented. In order to arrive at a charge of false representation an element of mens r
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ea is also essential. In the backdrop of the facts as noted in the present case, this Court finds itself unable to sustain the view taken by the Tribunal that the conduct of the revisionist would fall within the category of a false representation. 7. Accordingly and for the reasons noted above, this revision shall stand allowed. The order of the Tribunal and the assessing authority are set aside. In consequence, the order of the first appellate authority shall stand restored.