2011 (1) TMI 1266 - HC - VAT and Sales Tax

Revision under section 11 of the U.P. Trade Tax Act 1948 is directed against the order of the Tribunal dated May 22 2003 for the assessment year 1987-88 by which the Tribunal has confirmed the order of the first appellate authority deleting the penalty levied under section 10A of the Central Sales Tax Act 1956 Held that - There was no reason for the first appellate authority and the Tribunal to delete the penalty without setting aside the finding of the assessing authority that there was mens rea in misusing the from C. On the facts and circumstances in my view the assessee had issued form C in respect of the impugned goods making the false representation that it was registered for such goods. There was absolutely no bona fide belief on the part of the assessee in issuing the form C. In the present case the mens rea on the part of the assessee in issuing form C is fully established. In the result the revision is allowed. The order of the Tribunal dated May 22 2003 and the order of the first appellate authority dated April 6 1999 are set aside and the order of the assessing authority is restored.

Summary

Issues:
1. Penalty under section 10A of the Central Sales Tax Act for misuse of form C.
2. Validity of penalty deletion by the first appellate authority and Tribunal.
3. Establishment of mens rea in issuing form C for unregistered goods.

Analysis:
The case involved a revision under section 11 of the U.P. Trade Tax Act against the Tribunal's order confirming the deletion of penalty under section 10A of the Central Sales Tax Act for the assessment year 1987-88. The assessee was registered for specific items but issued form C for unregistered goods like agarbatti, ayurvedic medicine, cosmetics, toilet goods, and feeder. The assessing authority imposed a penalty for misuse of form C, alleging mens rea on the part of the assessee. The first appellate authority and Tribunal deleted the penalty, leading to the revision.

The learned standing counsel argued that the assessee knowingly issued form C for unregistered goods, establishing mens rea. He contended that the assessing authority's finding of mens rea was correct, supported by evidence that the goods were not mentioned in the registration certificate. The counsel for the assessee, however, claimed a bona fide belief in issuing form C based on earlier details provided to the assessing authority. The High Court analyzed the submissions and evidence presented.

The High Court observed that the goods for which form C was issued did not align with the items in the registration certificate, indicating a lack of bona fide belief. The court emphasized that the details of earlier form C usage were irrelevant in this context. It upheld the assessing authority's finding of mens rea and criticized the first appellate authority and Tribunal for deleting the penalty without disputing the established mens rea. The court concluded that the assessee had misrepresented its registration status while issuing form C for unregistered goods, confirming the presence of mens rea.

In the final judgment, the High Court allowed the revision, setting aside the orders of the Tribunal and the first appellate authority. The court restored the assessing authority's decision to levy the penalty under section 10A of the Central Sales Tax Act, emphasizing the established mens rea in issuing form C for unregistered goods.