1997 (8) TMI 486 - HC - VAT and Sales Tax

Penalty upheld for purchasing items not covered by registration certificate under Central Sales Tax Act

Rajrajan Electrical Equipments Versus State of Tamil Nadu

Rajrajan Electrical Equipments Versus State of Tamil Nadu - [1999] 115 STC 611 (Mad) Issues:1. Whether the assessee-dealers were entitled to purchase certain items on the basis of their certificate of registration under the Central Sales Tax Act.2. Whether the penalty imposed on the assessee-dealers for purchasing items not covered by their certificate of registration was justified.3. Whether the assessee-dealers made false representations in purchasing goods not covered by their certificate of registration.Analysis:Issue 1:The case involved a tax revision case where the assessee, a dealer in electrical equipment, purchased items like aluminium extrusions and sheets using 'C' forms for fabrication and supply of bus ducts. The Commercial Tax Officer imposed a penalty for these purchases not covered by the certificate of registration. The Appellate Assistant Commissioner upheld the penalty, stating that the purchased items did not fall under the category of 'electrical equipment' authorized by the certificate. The Tribunal also dismissed the appeal, finding that the purchased items did not qualify as electrical equipment under the registration certificate.Issue 2:The penalty imposed by the Commercial Tax Officer was challenged by the assessee-dealers, arguing that the purchased items were used in electrical equipment supplied to a specific project. However, the Appellate Assistant Commissioner reduced the penalty but upheld its imposition. The Tribunal, after considering the arguments and evidence, affirmed the decision, stating that the purchased items did not fall under the classification of 'electrical equipment' as per the certificate of registration. The Tribunal dismissed the appeal, upholding the penalty imposed by the assessing officer.Issue 3:The question of whether the assessee-dealers made false representations in purchasing goods not covered by their certificate of registration was raised. Referring to a previous case, the court emphasized that a dealer's conduct in purchasing goods not covered by the registration certificate could imply a 'blameworthy conduct,' even without proving mens rea. The court found that the assessee-dealers, by purchasing items for bus ducts fabrication not authorized by the certificate, exhibited blameworthy conduct. Despite no explicit finding of false representation, the court inferred such conduct based on established facts and circumstances, upholding the penalty. The court dismissed the tax revision case, concluding that the penalty was justified based on the conduct of the assessee-dealers.