MOHAMMEDKUTTY Vs. SALES TAX OFFICER

JUDGEMENT

(1.) The petitioner is an assessee on the file of the first respondent. It is a registered dealer both under K.G.S.T. Act, 1963 and also under C.S.T. Act. The Sales Tax Officer found on verification that assessee issued C form for the purchase of goods not covered by certificate of registration granted to them and thus misused C forms issued. The petitioner purchased beedi labels, wrappers, paper etc. from outside the Kerala State using the C forms. Originally the petitioner assessee used to purchase beedi, tobacco and leaves only for resale. But from 11-10-1975 onwards the petitioner was authorised to issue C forms for purchasing beedi, tobacco and leaves for use in the processing of goods for sale. Since the first respondent found that the petitioner was using C form for the purchase of beedi labels, wrappers, paper also etc. It was proposed to impose penalty at 15% of the tax due on the purchases effected during the year 1979-80,80-81,81-82, 82-83 and 83-84. Notice was issued to the petitioner under S.10A of the C.S.T. Act, 1956 calling for objection. The assessee petitioner submitted its objection and the petitioner's contention is that beedi labels, wrappers etc. are an integral part of the industry and it was purchasing the same without objection for the past several years and therefore under the bona fide intention that the petitioner purchased these goods using C form. But the Sales Tax Officer found that the purchase of labels, wrappers, papers by using the C forms for use in the manufacture of other goods for sale are not authorised by the certificate of registration in force. So he held that the assessee has misused the C form. The Sales Tax Officer imposed on the petitioner the maximum penalty of Rs.1,38,146/-.

(2.) The petitioner filed revision before the Deputy Commissioner, Agricultural Income Tax & Sales Tax, Palghat. The revisional authority found that the offence will fall under S.10(b) and not under S.10(d). Thereafter on examining the case he found that by the registration certificate the petitioner was authorised to purchase beedi, tobacco and leaves for use in the processing of goods for sale. But in so far as the petitioner purchased also labels, wrappers and paper by issuing C form, he found the same was not authorised. The revisional authority rightly pointed out that the main thing to be seen was whether this item was mentioned in the registration certificate. Thereafter he found that the petitioner made a false representation in so far as the wrappers, labels etc. are not included in the certificate of registration. He also did not accept the argument on behalf of the assessee that he acted only under a bona fide and honest belief that the goods are covered by the certificate of registration. According to him representation made by the petitioner in the C form is false and he also agreed with the Sales Tax Officer that maximum penalty should be imposed in the circumstances of the case.

(3.) The petitioner took up the matter in further revision before the Board of Revenue (Taxes), Trivandrum, the third respondent. The third respondent found that the purchase of packing materials such as wrappers, labels and paper were admittedly not included in the certificate of registration issued to the petitioner. He also found that the question whether the offence would come under sub-section (b) or sub-section (d) of S.10 of the C.S.T. Act was not disputed in the revision before the Board. On the question of mens rea, the Board, after considering the decision of the Supreme Court in State of Gujarat v. Pande, AIR 1971 SC 866 came to the conclusion that the petitioner acted malafide in making what was clearly a false representation. But on the question of penalty, the Board was inclined to take a lenient view and reduced the maximum penalty equal to 11/2 times of tax due on the purchase value of the goods covered by the misused C forms to 11/4 times. That order of the third respondent is Ext. P3. The petitioner challenges the said order.