CHAUDHARY PLASTIC BAGS Vs. COMMISSIONER OF SALES TAX

JUDGEMENT

(1.) The present sales tax revision has been filed by the revisionist, M/s. chaudhary Plastic Bags against the order dated 8th January, 1992 passed by the Sales Tax Tribunal Bench-II, Allahabad in second appeal No. 334/91 relating to the Assessment Year 1986-87 in respect of penalty proceedings under Section 10(A) of the Central Sales Tax Act, 1956, hereinafter referred to as the Central Act.

(2.) Briefly stated the facts giving rise to the present revision are as follows:- The revisionist claims itself to be a new unit under Section 4A of the U.P. Sales Tax Act, 1948. hereinafter referred to U.P. Act. It has been issued an eligibility certificate for a period of three years. It has been issued an eligibility certificate for a period of three years. It has established its unit after obtaining a term loan from the National Small Industries Corporation Ltd., Delhi, hereinafter referred to as the Corporation, and the payment has been made to the suppliers of machineries directly by the Corporation. The machineries have been imported by the revisionist for the manufacture of plastic bags. It is a registered dealer both under the Central Act and U.P. Act. In respect of the registration certificate granted under the Central Act the revisionist has been registered for sale of plastic bags on retail as well as wholesale basis granules and for the purchase of plastic granules for the manufacture of plastic bags. It is claimed by the revisionist that at the time of grant of registration under the Central Act the authorized representative Sri Prakash Chaudhary had given a statement on 17th April, 1986 before the Assessing Authority to the effect that the revisionist had taken a loan from Corporation and it would make payment directly to the dealer from whom the revisionist has made the purchases of the machineries. It made an application on 24th April, 1986 for issuance of five Form-C and five Form-31 for import of the machineries. The necessary Form-31 for import of the machineries. The necessary From-31 and Form-C have been issued to the revisionist. Thereafter, the revisionist had imported machineries from outside the state of U.P. and had issued Form-C for the value of Rs. 2,89,875/to two firms of Delhi, namely, M/s. Kailash Engineering Works and M/s. Kuldeep Engineering Works. It appears that on the basis of an internal audit report, the Sales Tax Officer, Sector 5, Allahabad issued notice under Section 10(A) of the Central Act calling upon the revisionist to show cause as to why penalty be not imposed as it had misused declaration Form-C for the purchase of machineries worth Rs. 2,89,875 for which it was not recognized and not entitled to issue declaration Form C. The revisionist submitted its reply to the show cause, stating therein that even though in the registration certificate it has not been mentioned that the revisionist is entitled to purchase machineries required for the manufacture of plastic bags but at the time of grant of registration this fact was specifically mentioned in the oral statement that the revisionist would be importing machineries against the loan sanctioned by the Corporation for which the payment would be made directly by the Corporation. The omission to mention machinery in the registration certificate under the Central Act is accidental and on this ground proceeding for penalty should not have been initiated. It was further submitted that taking into consideration the plea of import of machinery, the Assessing Authority had issued the declaration Form-C an, therefore, there is no misuse.

(3.) The Sales Tax Officer, Sector-5, Allahabad vide order dated 30th september, 1988 did not accept the explanation offered by the revisionist and imposed a sum of Rs. 26,088/- as penalty. The order has been upheld by the Assitant Commissioner (Judicial), sales Tax Range-II, Allahabad and the Sales Tax Tribunal., Allahabad.