RAJALAKSHMI TEXTILES FINISHING MILLS Vs. SALES TAX OFFICER

JUDGEMENT

(1.) THESE appeals arise from the same judgment in O.P. No. 2970 of 1970. The original petition challenged an order, exhibit P6, produced along with the O.P. by which the Sales Tax Officer, Cannanore, imposed a penalty of Rs. 47,433.66, which is the maximum penalty that could be imposed on the assessee under Section 10 of the Central Sales Tax Act, 1956 (for short, the Act). The violation for which this penalty has been imposed is said to be that of Section 10(b) and (d). To understand the case of the department that there has been violation of Section 10(b) and (d), it is necessary to refer to Section 8 of the Act. That section provides that every dealer, who, in the course of inter -State trade or commerce, sells to the Government any goods or sells to a registered dealer other than the Government goods of the description referred to in Sub -section (3), shall be liable to pay tax under the Act, which shall be three per cent of his turnover. Sub -section (3) of Section 8 with which we are concerned, states that the goods referred to in Clause (b) of Sub -section (1) are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or subject to any rules made by the Central Government in that behalf, for use by him in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power.

(2.) SECTION 10 deals with penalties, We are concerned in this case with Sub -sections (b) and (d) thereof. We shall extract those Sub -sections : If any person.... (b) being a registered dealer, falsely represents when purchasing any class of goods that goods of such class are covered by his certificate of registration ; or.... (d) after purchasing any goods for any of the purposes specified in Clause (b) or Clause (c) or Clause (d) of Sub -section (3) of Section 8 fails, without reasonable excuse, to make use of the goods for any such purpose ;.... The case of the department is seen from the notice issued to the appellants in Writ Appeal No. 281 of 1973, which is exhibit P4, produced along with the O, P. The relevant part of that notice stated: According to the registration certificate granted to them, they are permitted to purchase goods intended to use in the manufacture or processing of goods for sales only against issue of C declarations. A scrutiny of their accounts for the year 1965 -66 revealed that they issued C forms against purchase of machinery and plants for calendering works for Rs. 3,16,223.91, which was not intended for the purpose for use in the manufacture or processing of goods for sales specified in the registration certificate granted to them.

(3.) COUNSEL on behalf of the appellants in Writ Appeal No. 281 of 1973 contended before the learned Judge that there has been no violation either of Sub -section (b) or Sub -section (d) of Section 10. The learned Judge accepted the contention that there has been no violation of Sub -section (d) and held that the conclusion of the Sales Tax Officer that there has been violation of Sub -section (b) without a finding that there has been false representation is unsustainable and so remanded the case for the consideration of the question whether there was any false representation. The quantum of punishment was also directed to be reconsidered. Writ Appeal No. 281 of 1973 is against the remand for, according to appellants, no offence has been made out, and the appeal by the revenue, Writ Appeal No. 284 of 1973, is on the basis that there was no ground to set aside the order, exhibit P6.