PANNALAL UMESH KUMAR Vs. COMMISSIONER OF SALES TAX

JUDGEMENT

(1.) AT the instance of the assessee, the Tribunal (Board of Revenue) has referred to this court under Section 44 of the M. P. General Sales Tax Act, 1958, for its opinion the following question of law: Whether or not on the facts and circumstances of the case the imposition of the penalty was legal and justified?

(2.) THE material facts, as appearing from the statement of the case, are these: The assessee is a registered dealer who manufactures bidis for sale. During the period 1962-63 the assessee purchased goods worth Rs. 18,816 after furnishing declarations that those goods were to be used in the manufacture of other goods for resale. These goods, which were bardana, jhilli, paper, labels, motor tyres and tubes, were not specified in the assessee's registration certificate as being required for use in the manufacture or processing of goods for resale. That constituted a breach of Clause (b) of Section 10 of the Central Sales Tax Act, 1956. Therefore, the Sales Tax Officer, Rewa, levied on the assessee, after giving him an opportunity of being heard, a penalty of Rs. 1,000 under Section 10a of that Act. In doing so, he observed as follows:

(3.) IT is now well settled that a penalty under a provision like Section 10a of the Act is not levied merely because there has been a disregard of the provisions therein mentioned including Section 10 (b) of the Act. So, in Commissioner of Sales Tax v. Bombay General Stores, Shahdol [1969] 23 S. T. C. 449, a Division Bench of this court stated: The object of Section 10 (b) is to protect the revenue by preventing misuse of registration certificates and we do not think that this object would be defeated by construing the section as embracing the element of metis rea. In most cases it would not be in doubt that the article purchased under 'c' form is not entered in the registration certificate and in such cases it will be easy to infer that the false representation by furnishing the declaration in 'c form was knowingly or intentionally made. But cases cannot be ruled out where it may be a matter of bona fide dispute whether a particular article purchased by a dealer fell within 'the class or classes of goods' specified in his registration certificate. There is nothing in the section to show that the Legislature intended to punish a dealer who honestly though incorrectly represented that a particular article fell within the description of goods specified in his certificate. The presumption of existence of metis rea as a necessary constituent of the offence falling under Clause (b) of Section 10 is not rebutted by anything in its object or language and consistent with the presumption it must be held that the word 'false' is used in that clause in a restricted sense and does not exclude the element of mens rea. In our opinion, in the absence of mens rea, a dealer cannot be penalised for contravention of Clause (b) of Section 10. The view that we have taken has also been taken by the Kerala High Court in Varghese and Sons v. Sales Tax Officer [1965] 16 S. T. C. 323. In the Kerala case relied upon by the Division Bench, K. K. Mathew, J. , observed: I think here there is an error of law apparent on the face of the record. There is a clear distinction between a representation which is negligent and one which is fraudulent. The section, as I have already said, requires that the representation must have been made falsely, viz. , without any belief in its truth. A representation, however negligent, is not fraudulent. In Deny v. Peek (1889) 14 App. Cas. 337 at 375, Lord Herschell said: