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2018 (8) TMI 936 - HC - VAT and Sales TaxPenalty - Misuse of Form C - non-production of Form –C of Central Sales Tax Act - Section 10(a) of the Central Sales Tax Act, 1986 - It is the case of the petitioner that mens rea is established by conduct of the respondent himself and the question of reestablishing the mens rea, does not arise - Held that:- The main ingredient under Section 10(a) of the Act is that unless it makes out that the respondent or purchaser has used Form-C for the purpose of the availing concession of tax in contravention of provisions, it is not permissible to levy penalty. In order to invoke Section 10(a) of the Act, the very important ingredient is whether there is mens rea or involvement of mind to defraud the Government. Mens rea or guilty mind, it is sine quo non before invoking Section 10(a) of the Act. When an Authority invokes Section 10(a) of the Act, Authority should clearly establish or elicit defraud to the Government by misusing Form-C for the purpose of resale. When it is permissible under Part-M of Schedule-II of Entry No.1 of KST Act, which specifically includes the machineries of the nature which respondent has bought from outside, it is permissible for the purpose of his use - it cannot be held that he has misused Form-C for the purpose of defrauding the Government. The petitioner has utterly failed to establish mens rea on the part of the respondent. Under these circumstances, it is proper to hold that there is no substantial question of law involved in this matter - petition dismissed - decided against Revenue.
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