Mens rea is essential for CST penalty under Section 10(b); bona fide mistaken belief about registration coverage defeats liability.

Penalty under Section 10(b) of the Central Sales Tax Act, 1956 requires a conscious false representation that the goods are not covered by the dealer's certificate of registration. The Allahabad HC noted that where the dealer honestly and bona fide believed the imported goods against C forms were within the scope of the registration certificate, the representation could not be treated as false and mens rea was absent. On those facts, the appellate finding of no mens rea was not displaced, and penalty under Section 10(b) read with Section 10-A was held not exigible.

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Issues: Whether penalty under Section 10(b) of the Central Sales Tax Act, 1956 was leviable in the absence of mens rea where the dealer bona fide believed that the goods imported against C forms were covered by its certificate of registration.

Analysis: The expression used in the penal provision requires a false representation, which imports knowledge that the goods are not covered by the registration certificate. Where the assessee honestly and bona fide believes that the goods are within the scope of the certificate and acts on that belief, the representation cannot be treated as false. The finding of the appellate authority that there was no mens rea was not displaced, and the factual circumstances supported that conclusion.

Conclusion: Penalty was not exigible under Section 10(b) read with Section 10-A of the Central Sales Tax Act, 1956, and the assessee succeeded.

Ratio Decidendi: For penalty under Section 10(b) of the Central Sales Tax Act, 1956, a conscious false representation is necessary and a bona fide mistaken belief that the goods are covered by the registration certificate negatives mens rea and excludes liability to penalty.

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