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TMI Blog2010 (9) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... a common question of law, it would be convenient to dispose them of by this single judgment. 2.Shorn of unnecessary details, the facts essential for the adjudication of these appeals are : C.A. Nos. 2344-2347 of 2004 The respondent (hereinafter referred to as "the dealer") is registered under Section 7(2) of the Act and since the year 1977-78 is engaged in the business of manufacture and sale of Handloom fabrics. The dealer was authorized to issue Form 'C' on the import of cotton and cotton yarn as raw materials. It is not in dispute that the dealer had imported cotton waste, polythene, sutli and tat against Form 'C' in order to avail the benefit of payment of concessional rate of Central Sales Tax. On 15th October 1985, the revenue issued a notice to the dealer to show cause as to why penalty under Section 10(b) read with Section 10A of the Act should not be imposed on them for using Form 'C' for the purchase of items which were not covered by their certificate of registration. Immediately on the issuance of the said notice, dated 15th October 1985, the dealer applied for amendment of the certificate of registration for inclusion of "cotton waste" in the certificate. The sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of penalty imposed. Being dissatisfied with the order of the Tribunal, dated 22nd January 1991, the dealer filed Sales Tax Revisions before the High Court of Allahabad. The only dispute which was put in issue in these revisions was with regard to the levy of penalty for use of Form 'C' on the purchases of cotton waste. As stated above, by the impugned judgment the High Court has allowed the revision petitions, inter alia, observing : "Cotton" and "Cotton Waste" are two different commodities known to Sales Tax Laws. However, there is not much distinction from the point of view of ordinary people. The applicant is a registered dealer since the assessment year 1977-78 and has been making purchases of "Cotton waste" and issuing Form-C thereof since then. The department earlier than 15th October, 1985 raised no objection. This as was submitted by the learned counsel for the applicant is very relevant circumstance for determination of the question "false representation" occurring in Section 10(b) of the Act............................................................................................................................ ................................................... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot being satisfied with the order passed by the Tribunal, the revenue took the matter in revision to the High Court. As afore-stated, the High Court came to the conclusion that the order of the Tribunal deleting the penalty was erroneous. However, having regard to the facts and circumstances of the case, the High Court held that since the revenue had been regularly issuing Form 'C' in spite of details being furnished by the dealer, penalty only to the extent of benefit availed by the dealer i.e. @ 4% should be levied. Accordingly, the High Court reduced the penalty to Rs. 27,275/- and Rs. 66,955/- in respect of assessment years 1985-86 and 1986-87 respectively. 3.Hence both the revenue and the dealer are before us in these appeals. 4.We have heard learned counsel for the parties. 5. Mr. Aarohi Bhalla, learned counsel appearing for the revenue contended that the judgment of the High Court deleting the penalty is erroneous in as much as the revisionary jurisdiction of the High Court under Section 11 of the UP Trade Tax Act, 1948 is very limited and confined only to an examination of the question of law. Section 11 of the UP Trade Tax Act does not contemplate re-evaluation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the same very items in the previous years regularly without any objection by the revenue, the dealers entertained a bona fide belief that these items were covered under the Registration Certificate, penalties under the said provision were not leviable on the dealers. Relying on the decision of this Court in Commissioner of Sales Tax v. Govind Ram Bhagat Ram, learned counsel submitted that in the case of M/s. Hari Oil & General Mills (C.A. Nos. 6382-6383 of 2004), the High Court should not have interfered with the findings of fact recorded by the Tribunal to the effect that since Form 'C' were being issued regularly by the revenue for the purchase of oil seeds without any objection for the last five years and the accounts rendered in that behalf had been verified and accepted by the Assessing Authority, it could not be held that the dealer had made false representation while making purchases of oil seeds against the said forms. 8. Thus, the first and the foremost issue arising for our consideration is whether the requirement of mens rea is an essential ingredient for the levy of penalty under Section 10(b) read with Section 10A of the Act? 9. 1n order to answ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 sub-section (2) of section 8 in respect of the sale to him of the goods, if the sale had been a sale falling within that sub-section : 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." 10. Section 10 of the Act not only enumerates seven types of violations of the provisions of the Act which constitute an "offence", it also makes them punishable by prosecution and punishment, which ranges from simple imprisonment for a period, which may extend to six months, or fine or both and in a case of continuous offence, the Section provides for a daily fine. Section 10A of the Act provides for the imposition of penalty in lieu of prosecution. It provides that if any person purchasing goods is guilty of an offence under clause (b) or clause (c) or clause (d) of Section 10 of the Act, a penalty of fine may be imposed. Thus, the violations enu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question whether the element of guilty mind is excluded from the ingredients of an offence. Mens rea by necessary implication may be excluded from a statute only where it is absolutely clear that the implementation of the object of the statute would otherwise be defeated. The nature of the mens rea that would be implied in a statute creating an offence depends on the object of the Act and the provisions thereof." 14.In Union of India & Ors. v. Dharamendra Textile Processors & Ors., while examining the scope of Section 11-AC of the of the Central Excise Act, 1944, a three judge Bench of this Court, observed that : "A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for the violation of criminal or penal laws. " 15. However, in Union of India v. Rajasthan Spinning & Weaving Mills, this Court observed that : "We fail to see how the decision in Dharamendra Textile can be said to hold that Section 11-AC would apply to every case of non-payment or short-payment of duty regardless of the conditions expressly mentioned in the section fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dictionary (6th Edition), the word "false" has two distinct and well-recognized meanings : (1) intentionally or knowingly or negligently untrue; (2) untrue by mistake or accident, or honestly after the exercise of reasonable care. A thing is called "false" when it is done, or made, with knowledge, actual or constructive, that it is untrue or illegal, or is said to be done falsely when the meaning is that the party is in fault for its error. 20.Likewise, P. Ramanatha Aiyar in Advance Law Lexicon (3rd Edition, 2005) explains the word "false" as : "In the more important uses in jurisprudence the word implies something more than a mere untruth; it is an untruth coupled with a lying intent......or an intent to deceive or to perpetrate some treachery or fraud. The true meaning of the term must, as in other instances, often be determined by the context'." 21. In Cement Marketing Co. of India Ltd. v. Assistant Commissioner of Sales Tax, Indore & Ors. a similar question fell for consideration of this Court. In that case, a penalty under Section 43 of the Madhya Pradesh General Sales Tax Act, 1958 and Section 9(2) of the Act was imposed on the dealer on the ground that he had furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n offence under Section 10 of the Act, ordinary remedy is prosecution which may entail a sentence of imprisonment and the penalty under Section 10A of the Act is only in lieu of prosecution. In light of the language employed in the Section and the nature of penalty contemplated therein, we find it difficult to hold that all types of omissions or commissions in the use of Form 'C' will be embraced in the expression "false representation". In our opinion, therefore, a finding of mens rea is a condition precedent for levying penalty under Section 10(b) read with Section 10A of the Act. 23. That takes us to the next question viz. whether on the facts of the two cases before us it could be said that the dealers had purchased the goods in question and furnished Form 'C' in respect of those goods knowing that the said goods were not covered by their certificates of registration and, therefore, the requirement of mens rea was satisfied. 24. As regards, the first set of appeals, as afore-stated, the High Court has deleted the penalty on the ground that apart from the fact that on earlier occasions the department had not raised any objection while issuing Form 'C' to the dealer, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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