TMI Blog1974 (7) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 10A of the Central Sales Tax Act, 1956, would be one and half times the amount of tax leviable under the Act if the applicant-firm had not issued C forms against the purchases?" The short facts which have given rise to this reference are as under: The petitioner-company was registered as a dealer both under the Bombay Sales Tax Act, 1959, hereinafter referred to as the "Act" as well as under the Central Sales Tax Act, 1956, hereinafter referred to as the "Central Act". The company was doing business of ginning, pressing and bailing the cotton of the customers. In bailing work, the company had to use kantan, hessian and bailing hoops, that is patti. The company used to purchase kantan against the relevant form C from the other States. The company had shown in the certificate of registration these goods in the column meant for resale. In the assessment years 1967, 1968 and 1969, the Sales Tax Officer found that this kantan purchased against form C by the company had been used for the job-work and the company had not resold kantan and thereby it had contravened the relevant declaration in form C and had committed an offence which attracted penalty under section 10(d) read with s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication is in conformity with the provisions of the Act and the Rules, the dealer has to be registered and granted a certificate of registration in the prescribed form B specifying the class or classes of goods for the purposes of sub-section (1) of section 8. Under section 8(1)(b) a special concessional rate of 3 per cent is provided on sales in the course of inter-State trade or commerce, to a registered dealer in the case of goods of the description referred to in sub-section (3). Under section 8(2)(b), in the case of goods other than declared goods, the rate shall be calculated at 10 per cent, if the aforesaid concession in section 8(1) was not attracted, or the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher. Sub-clause (3) defines those goods referred to in section 8(1)(b) for which concessional rate of 3 per cent is provided. It is as under: "(b) are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or subject to any rules made by the Central Government in this behalf for use by him in the manufacture or proces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith simple imprisonment which may extend to six months, or with fine, or with both; and when the offence is a continuing offence, with a daily fine which may extend to fifty rupees for every day the offence continues." Section 10A(1) enacts that if any person purchasing goods is guilty of an offence under clause (b) or clause (c) or clause (d) of section 10, the authority who granted to him a certificate of registration under this Act may, after giving him a reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum not exceeding one-and-a-half times the tax which would have been levied under this Act in respect of the sale to him of the goods if the offence had not been committed, provided that no prosecution for an offence under section 10 shall be instituted in respect of the same facts on which a penalty has been imposed under this section. Therefore, these relevant penal provisions in sections 10 and 10A of the Central Act envisage for such offence under section 10(d) a criminal prosecution or a departmental penalty in lieu of such prosecution. It is in this context that the relevant controversy has to be resolved as to whether the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuse. Therefore, all these three ingredients including the one specified in the relevant expression "without reasonable excuse" are obviously the ingredients of this offence. Even the entire context of section 10 makes it clear that all the clauses are penal clauses where the default has a further ingredient explicit or implicit in the statutory language. In section 10(b) and (c) the ingredient of false representation has been provided as a material ingredient of the penal offence. Similarly, in section 10(e) it is provided that the person must be in possession of the prescribed form under section 8(4) which had not been obtained by him or by his principal or by his agent in accordance with the provisions of the Act and the Rules. Even in section 10(f) the collection of tax amount in contravention of the provisions contained in section 9A is made penal offence. The only remaining clause is section 10(a), which enacts a penal offence on failure of a dealer to get himself registered under section 7. It is also construed by their Lordships in Hindustan Steel Ltd.[1970] 25 S.T.C. 211 (S.C.). in the same sense of a penal default. At page 214, while construing a provision in pari materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pressed in aid the decision of their Lordships in State of U.P. v. Dyer Breweries Ltd.[1973] 31 S.T.C. 588 at 598 (S.C.)., where their Lordships had observed that in fact the levy of penalty was one form of levying tax. Those observations were made in the context that the penalty can be levied by the same authority which imposed the sales tax under the Central Act. That is why in Commissioner of Income-tax v. Anwar Ali[1970] 76 I.T.R. 696 at 700 (S.C.)., their Lordships considered this question as to whether imposition of penalty was in the nature of penal provision because the determination of the question of burden of proof would depend largely on the penalty proceeding being penal in nature or being merely meant for imposition of an additional tax, and as the liability to pay such tax was designated as penalty under section 28. Their Lordships pointed out that the earlier decision in C.A. Abraham v. Income-tax Officer[1961] 41 I.T.R. 425 (S.C.). could not be pressed into service for the view that the penalty was an additional tax because those observations were made in a different context and for a different purpose without considering the question whether the penalty proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of the relevant sections. The object of the section was to provide for a safe working place by imposing criminal and civil liability on the occupier in the event of breach and, therefore, such a construction must be adopted which would best achieve the result, viz., to make and keep the working place safe. Same was the view adopted by Lord Upjohn. In the dissenting view propounded by Lord Reid at page 115, it was, however, pointed out that the question of construction should be approached by considering first what a prosecutor would have to allege and prove in order to obtain a conviction. For, civil liability only arises if there had been a breach of the statutory duty, and he could not see how a pursuer could succeed in a civil action without averring and proving all the facts essential to establish the commission of an offence. It was true that the standard of proof was lower in a civil case so that the pursuer only had to show that it was probable that an offence was committed. But that could not mean that the onus of proof was different with regard to any of the essential elements of the offence. Lord Wilberforce who also dissented also pointed out that the Parliament, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ast decision in Shivananda Electric Company v. State of Mysore[1974] 33 S.T.C. 348., the Division Bench had not differed from the earlier view. The Division Bench merely pointed out that when a show cause notice was issued and thereafter the dealer has not offered any excuse to exonerate him after admitting that he did not make use of the goods for the purpose specified in the C form, on the facts, it must be held that the dealer had not excused himself. It is true that the learned Chief Justice has observed that in the earlier decision the court had not laid down any such law that the department had to prove the mens rea in order to attract penalty. With great respect, the learned Chief Justice had not carried to the logical conclusion the earlier view that this was an ingredient of the statutory offence under section 10(d). Therefore, all the ingredients must be averred and proved by the department or the prosecution agency. If no proof was led, even prima facie, by the prosecution or the department as regards this material negative ingredient, this statutory default would not be made out at all. This relevant aspect seems to have escaped the notice of the learned Chief Justice. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause notice so that the concerned dealer would get an opportunity to meet with the case of the department. It is only when the relevant ingredient is pleaded and proved by the department, of course, by way of presumptive proof, so far as this negative ingredient is concerned, that the onus shifts on the person concerned to rebut that presumption. The law in this connection is well-settled as regards onus of proof. In Collector of Customs v. Bhoormull A.I.R. 1974 S.C. 859 at 864., their Lordships considered the material question of burden of proof in the context of section 167(8) of the Customs Act, when section 178-A did not apply and the burden was on the department to prove that the goods were smuggled goods. Their Lordships pointed out that this was a fundamental rule relating to proof in all criminal or quasicriminal proceeding, where there was no statutory provision to the contrary. But in appreciating its scope and the nature of the onus cast by it, due regard must be paid to other kindred principles, no less fundamental, of universal application. One of them was that the prosecution or the department was not required to prove its case with mathematical precision to a demonst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inciples no penalty under section 10(d) could be attracted. As regards the next question, the Tribunal has proceeded on mere conjectures because there was nothing on the record in the shape of the show cause notice showing what the department relied upon for the purpose of this negative ingredient. In fact, the Sales Tax Officer had not given any finding whatever, because he never considered this to be an ingredient of the offence. The appellate authority as well as the Tribunal also considered it as a matter of an exception which had to be alleged and proved by the defence. The learned Government Pleader vehemently argued that this was the case of circumstantial evidence in the shape of the decision of the High Court in Monogram MillsS.T.R. No. 6 of 1964 decided on 25th November, 1964 (Gujarat High Court)., which was rendered at least three years before the relevant assessment period. If the department had alleged that the assessee knew this unreported decision, the assessee would have got an opportunity to meet this case. Besides, it is obvious that it was even the department's view till this decision that the use of materials in such job-work would amount to "sale" attracting ..... X X X X Extracts X X X X X X X X Extracts X X X X
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