INTEGRATED ENTERPRISES Vs. STATE OF KERALA

JUDGEMENT

(1.) THE petitioner who is an assessee under the Kerala General Sales Tax Act, 1963, and the Central Sales Tax Act, 1956 ('the Central Act' for short), has been registered as a dealer under Section 7 of the Central Act in respect of Coca -Cola, Fanta Orange and Fanta Soda. Exhibit A is a copy of the certificate of registration. This entitled the petitioner to purchase these articles for resale at concessional rate of sales tax after issuing C forms prescribed by the Rules. The Assistant Commissioner (Assessment), Special Circle, Ernakulam, found that the petitioner had purchased bottle coolers for Rs. 1,61,767.40 by issuing C forms during the years 1970 -71 and 1971 -72. As the registration certificate did not include bottle coolers, the Assistant Commissioner thought that the issue of C forms declaring that bottle coolers were covered by the registration certificate constituted firima facie a violation of Section 10(b) of the Central Act. He, therefore, issued a notice (exhibit E) to the petitioner to show cause why penalty of 11/2 times the tax at 15 per cent due on the purchase of bottle coolers should not be imposed upon them under Section 10A. To this the petitioner filed a lengthy reply contending that they had no mens rea in making the purchase by issuing C forms as they bonafide believed that the registration certificate was comprehensive enough to include all categories and classes of goods relating to their business. The Assistant Commissioner thereafter heard the petitioner's representative and rejecting the objections held that the declaration in the C form clearly stated that the goods purchased were covered by the registration certificate, that this was a false representation knowingly and deliberately made so as to earn the benefit of concessional rate of sales tax and that there was clear mens rea to make the petitioner liable. He thus found the petitioner guilty and taking a lenient view levied a penalty of Rs. 24,265. On appeal this order was confirmed successively by the Deputy Commissioner of Agricultural Income -tax and Sales Tax (Appeals), Ernakulam, and the Sales Tax Appellate Tribunal, Trivandrum. Aggrieved by these orders, the petitioner has preferred this revision.

(2.) SECTION 10 of the Central Act lays down the penalties for infraction of the Act and the Rules. Clause (b) of the section penalises a registered dealer who 'falsely represents when purchasing any class of goods that goods of such class are covered by the certificate of registration'. Section 10A, so far as material, provides that if any person purchasing goods is guilty of an offence under Clause (b) of Section 10, the authority who granted to him or who is competent to grant to him a certificate of registration may instead of prosecuting him impose the prescribed penalty. The competency of the Assistant Commissioner and the extent of the penalty levied by him were not contested before us; nor was it disputed that bottle coolers were not covered by the petitioner's certificate of registration or that the petitioner purchased them by issuing C forms. The arguments before us were principally devoted to establish that the petitioner had no metis rea which is necessary and which is implicit in the expression 'falsely represents' in Section 10 and they could not therefore be penalised. That then is the only question that falls to be decided.

(3.) AFTER quoting an earlier decision, Hindustan Steel Limited v. State of Orissa [1970] 25 S.T.C. 211 (S.C.), in support of the above position, the Supreme Court continued: