Mens rea is essential for false representation under the CST Act, so bona fide diesel purchases escaped penalty.

Mens rea is an essential ingredient of "falsely represents" under Section 10(b) of the Central Sales Tax Act, 1956, so penalty cannot be imposed where a dealer bona fide believed the disputed goods were covered by its registration certificate. The Madras HC held that diesel purchased against C forms for generator sets used in manufacturing was not contumacious conduct merely because diesel was not separately listed in the certificate. On that footing, penalty under Section 10(b) read with Section 10-A was not exigible, and the assessee could use C forms for the purchases.

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Issues: Whether penalty under Section 10(b) read with Section 10-A of the Central Sales Tax Act, 1956 could be imposed for purchase of diesel used for generator sets against C forms, when diesel was not separately mentioned in the registration certificate and the dealer acted under a bona fide belief.

Analysis: The decisive question was whether the dealer falsely represented that the goods purchased were covered by its registration certificate. The governing principle applied was that the expression "falsely represents" in Section 10(b) imports mens rea as an essential ingredient. Where a dealer honestly believes that the goods are covered by the certificate and purchases them for use in manufacturing activity, the conduct is not contumacious and penalty cannot follow merely because the item was not separately listed in the certificate. The Tribunal's view also found support from the fact that diesel was used for running the generator set in the manufacturing process and the purchases were treated as bona fide.

Conclusion: Penalty under Section 10(b) read with Section 10-A of the Central Sales Tax Act, 1956 was not exigible, and the assessee was entitled to use C forms for the disputed purchases.

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