JAI GLASSKOW Vs. COMMERCIAL TAXES OFFICER

JUDGEMENT

(1.) This is a revision petition at the instance of assessee directed against the order of the Tax Board, Ajmer, dated May 19, 1998 whereby the Tax Board held that the assessee was not entitled to purchase lathe machine at concessional rate against the declaration in form C under Section 8(1) of the Central Sales Tax Act, 1956 read with Section 8(3)(b) of the said Act and, therefore, the assessee was liable to pay the penalty under Section 10A of the said Act at double the rate of concession wrongly availed by him. All the three authorities below, namely, assessing authority, Deputy Commissioner (Appeals) and Tax Board have concurrently held against the assessee and have upheld the said penalty amounting to Rs. 13,600.

(2.) Mr. Gogra, learned Counsel for the assessee-petitioner, submits that the Tax Board has erred in upholding the said penalty under Section 10A of the CST Act because the lathe machinery was purchased by the assessee at the concessional rate of three per cent as it helped in the production of glass chetons (small glass pieces) used for decorating glass bangles, etc. He submits that the main machinery used for manufacturing glass chetons has several parts and the parts of such main machinery get damaged or worn out time and again during the production process and to repair, mould or manufacture new parts the said lathe machine in question is used and thus it helps in the manufacturing process as secondary machinery and it saves considerable time and extra money to get such parts repaired or purchased in the open market and, therefore, the assessee in his own wisdom and business prudence purchased the said lathe machine itself and installed the same in its factory so that such constant work of making or repairing all parts of the main machine is smoothly done within the factory premises. He submits that the registration certificate issued by the assessing authority under the CST Act clearly stipulated amongst other things "machinery and their parts" for use in the manufacturing or processing of goods for sale. He submitted that so long as these words were included in the registration certificate, the Revenue was estopped from raising a plea otherwise and, therefore, imposition of penalty for alleged misuse of declaration in form C by the assessing authority was wrong and penalty has been wrongly upheld by the appellate authorities. He, therefore, prayed for setting aside the penalty and allowing the present revision petition.

(3.) Mr. R.B. Mathur, learned Counsel for the Revenue, on the other hand, argued that the words "machinery and their parts" used in the registration certificate could not be said to include such machinery which may be useful for setting right or repairing the main machine itself which produces the goods in question, namely, glass chetons. He submitted that on the own admission of the assessee before the assessing authority in his reply to the impugned notice, the assessee has clearly admitted that the lathe machine is a helping machine to the main manufacturing machine. He further submitted that this could be unending process and even the machinery manufacturing the lathe machine could have been purchased by the assessee at concessional rate. He relied upon a judgment of the Madras High Court in Koodal Industries Limited v. State of Tamil Nadu, 1994 93 STC 446, wherein the Madras High Court held that where the petitioner's certificate of registration under the Central Sales Tax Act, 1956, entitled it to purchase "machinery connected with flour milling", and it purchased a generator on the strength thereof, it could be inferred that the petitioner did have knowledge that generators were not covered by its certificate of registration since the certificate used the expression "machinery connected with flour milling" and not simply machinery. The levy of penalty was, therefore, upheld by the Madras High Court.