Bona fide belief on registration coverage defeated penalty for false representation under sales tax law.

Penalty under section 10(b) of the Central Sales Tax Act was attracted only if the dealer falsely represented that the purchased goods were covered by the registration certificate. On the facts, the assessee had long traded in hardware and non-ferrous metals, the department had earlier described its business in similar terms, and the disputed goods were consistently claimed to fall within "hardware". The later request to amend the registration certificate was not an admission of falsity. As the materials supported a bona fide belief and two views were reasonably possible on the scope of "hardware", the Tribunal was correct in holding that penalty was not leviable and the Revenue's revision failed.

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Issues: Whether penalty under section 10(b) of the Central Sales Tax Act, 1956 was leviable for issuing C forms to purchase goods said to be outside the registration certificate, and whether the assessee's conduct amounted to a false representation.

Analysis: Penalty under section 10-A read with section 10(b) is attracted only where the dealer falsely represents that the goods purchased are covered by the registration certificate. On the facts, the assessee had long dealt in hardware and non-ferrous metals, the department itself had earlier described its business in similar terms, and the assessee consistently maintained that the disputed goods were covered by the term "hardware". The subsequent application for amendment of the registration certificate did not amount to an admission of falsity. The materials supported a bona fide belief, and where two views were possible on the meaning of "hardware", the benefit of that view had to go to the assessee.

Conclusion: The Tribunal was in holding that section 10(b) was not attracted and that penalty was not leviable.

Final Conclusion: The revision filed by the Revenue failed and the penalty deleted by the Tribunal remained set aside.

Ratio Decidendi: Penalty for false representation under section 10(b) cannot be imposed where the dealer's claim is supported by a bona fide belief and the materials reasonably admit more than one view as to whether the goods are covered by the registration certificate.

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