Mens rea is essential for CST penalty where bona fide belief under Form C was ignored and the order was set aside.

Penalty under Section 10B of the Central Sales Tax Act could not be sustained where the assessing authority failed to consider mens rea and the revisionist's bona fide belief about the nature of the goods and use of Form C. The Allahabad HC held that omission to examine the mental element, in light of the Supreme Court precedent relied upon, rendered the penalty order legally unsustainable. The penalty was set aside and the matter was remitted to the First Assessing Authority for fresh consideration in accordance with law.

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Issues: Whether the penalty order under Section 10B of the Central Sales Tax Act could be sustained without considering the element of mens rea and the revisionist's bona fide belief regarding the nature of the goods and use of Form C.

Analysis: The order imposing penalty was assailed on the ground that the goods in question were treated by the revisionist as integral parts of the gas cylinder and that Form C was used on that basis. The Court found that the impugned order had not taken the element of mens rea into account. In light of the Supreme Court decision relied upon, the omission to examine the mental element rendered the order unsustainable.

Conclusion: The penalty order was set aside and the matter was remitted to the First Assessing Authority for fresh consideration in accordance with law.

Ratio Decidendi: Penalty cannot be sustained where the statutory authority fails to consider mens rea and the surrounding bona fide belief relevant to the alleged contravention.

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