Bona fide belief defeats sales tax penalty where generator purchase was honestly treated as covered by registration

Penalty for misstatement in Form C under the Central Sales Tax Act is attracted only where the representation is false and made knowingly. The dealer purchased a generator for use in fruit preservation and manufacturing, and the court accepted that he bona fide believed it was plant or machinery covered by the registration certificate. On that footing, the statement made at the time of purchase could not be treated as false to the dealer's knowledge, so penalty was not leviable.

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Issues: Whether penalty under section 10(b) of the Central Sales Tax Act could be imposed for purchasing a generator against Form C on the footing that the generator was not covered by the registration certificate, and whether the dealer's belief that it was covered was bona fide.

Analysis: The generator was purchased for generating electricity for use in the assessee's fruit preservation and manufacturing activity. The Court held that the dealer acted under a bona fide belief that the generator was a plant or machinery covered by the registration certificate and required for the business. In such circumstances, the statement made while purchasing the goods could not be treated as false to the dealer's knowledge. Penalty under section 10(b) is attracted only where the representation is false and knowingly so.

Conclusion: Penalty under section 10(b) of the Central Sales Tax Act was not leviable, and the assessee succeeded.

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