TMI Blog1997 (3) TMI 589X X X X Extracts X X X X X X X X Extracts X X X X ..... in entirety. Hence, this revision. 2.. Section 10-A of the Act, inter alia, provides for penalty in lieu of prosecution under section 10(b) of the Act. The said section 10(b) provides, if any person being a registered dealer falsely represents when purchasing any class of goods that goods of such class are covered by his certificate of registration, he shall be punishable with simple imprisonment which may extend to six months or with fine, or with both . (Emphasis* supplied). So, the question to be seen, in the present case, is whether the assessee has so falsely represented. 3. The assessee is a firm carrying on business in hardware and non-ferrous metals. Verification of its accounts revealed that it has purchased in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the quantum of penalty. Further, he also concluded that the abovesaid goods purchased by the assessee did not belong to the category hardware . 4.. In the second appeal filed by the assessee, before the Tribunal, the Tribunal allowed the appeal and cancelled the levy of penalty in its entirety. The reasonings by the Tribunal in its order are briefly as follows: (i) The assessment order itself, even, for the earlier year 1975-76 shows that the nature of the business of the assessee is general hardware and non-ferrous metals . If really the abovesaid goods purchased, do not fall within the term hardware , the assessee, who had been doing the business since two decades must have been brought to book under section 10(b) even earlier. E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is eligible to have those goods included in the registration certificate. 5.. In view of the abovesaid factual reasonings, and the findings of the Tribunal that the assessee acted bona fide in having issued the C forms for purchasing the above referred to goods, we posed a question to the learned counsel for the Revenue how an error of law has been committed by the Tribunal in passing the abovesaid order, holding that section 10(b) of the Act is not attracted. To the said question, the said counsel mainly submitted that the Tribunal s observation that the above referred to amendment sought for, would show the assessee s bona fides, cannot be accepted at all, in law. Learned counsel for the Revenue also relied on the decision report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vesaid reason given by the Tribunal that in view of the abovesaid amendment sought for it can be taken that the assessee acted bona fide in issuing C forms in the way it did, there were also the above referred to other reasons for the Tribunal holding that the assessee acted bona fide in issuing C forms as stated above and that therefore there is no case for levying penalty under section 10(b) of the Act. While so, we are unable to hold that there is an error of law in the Tribunal s order. 8.. Further in the decision reported in Sri Lakshmi Machine Works v. State of Madras [1973] 32 STC 407, this Court held that the phrase falsely represents in section 10(b) of the Act, indicates that mens rea is an important ingredient for the offence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring an assessee within the mischief of that provision. Merely because the plea entertained by the assessee turned out to be not proper or correct, it did not imply that the issue of C form certificate was on the basis of a false representation. The Bench then opined that whether there is mens rea or not in a given case, is a question of fact, to be decided on the facts of each case, but since no finding had been recorded that the representation made by the assessee was false, the proceedings under section 10(b) of the Act could not be sustained. 9.. In the present case, there are very many materials as stated above, for the Tribunal coming to the conclusion that the assessee was acting bona fide in issuing C forms as it did. In other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e find the following observation: An investigation of various dictionaries makes this to my mind clear that hardware includes pots, pans and domestic appliances of that sort and simple articles made of metal. (Emphasis* supplied). 10.. Anyway, even assuming, there are two views possible regarding the meaning of the term hardware , one as contended by the learned counsel for the Revenue and the another as contended by the learned counsel for the assessee, there cannot be levy of penalty under section 10(b) of the Act since in such cases it is easier to accept the contention of the assessee that he bona fide believed that the goods purchased by him were covered by the goods described in his certificate of registration. 11.. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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