2009 (3) TMI 991 - HC - VAT and Sales Tax

Trade Tax Tribunal overturns penalty on assessee for unauthorized Form C issuance under Central Sales Tax Act

The Trade Tax Tribunal set aside a penalty order imposed on an assessee for issuing Form C for diesel engines and spare parts without proper authorization ... - Issues Involved: The judgment involves issues related to the legality of setting aside a penalty order under Section 10-A of the Trade Tax Act, the justification for quashing the penalty order based on mens rea, and the observation regarding false representation by the assessee.Issue 1: Legality of Setting Aside Penalty OrderThe Trade Tax Revision No. 493 of 2001 was filed under Section 11 of the U.P. Trade Tax Act for the Assessment Year 1991-92 (Central). The questions of law raised included whether the Trade Tax Tribunal was justified in setting aside the penalty order passed by the Assessing Officer under Section 10-A of the Trade Tax Act for issuing Form C for diesel engine and spare parts without proper authorization under the Central Sales Tax Act.Issue 2: Quashing of Penalty Order based on Mens ReaAnother question raised was whether the Trade Tax Tribunal was legally justified in quashing the penalty order under Section 10-A based on mens rea, contrary to legal pronouncements made by the Supreme Court. The Tribunal found no malafide intention or false representation on the part of the assessee while issuing Form C for diesel engines.Issue 3: Observation on False RepresentationThe Trade Tax Tribunal observed that there was no case of false representation by the assessee, despite issuing Form C for diesel engines not included in the Central registration certificate. The Tribunal concluded that there was no wrongful intention or false representation made by the assessee in this regard.In the case, the assessee, engaged in the business of agricultural implements, issued Form C for the purchase of diesel engines and spare parts. The Assessing Authority imposed a penalty under Section 10-A of the Central Sales Tax Act amounting to Rs. 28,300. Subsequently, the dealer's first appeal was dismissed, leading to a second appeal before the Trade Tax Tribunal.The Trade Tax Tribunal, in its order, noted that the diesel engines were previously included in agricultural implements, leading the assessee to issue Form C under a bonafide belief that the item was covered under its registration. The Tribunal found no malafide intention or false representation by the assessee in issuing Form C for diesel engines, emphasizing the absence of mens rea for imposing penalties under Section 10-A.Consequently, the Tribunal upheld the second appeal of the assessee and set aside the earlier orders, stating that there was no wrongful intention or false representation on the part of the assessee. The Tribunal's decision was based on the lack of evidence supporting any malafide intent or false representation by the assessee, leading to the dismissal of the revision with no question of law arising for consideration.