Mens rea requirement for CST penalty defeated where registration omission was due to authority error and dealer sought prompt amendment.

Penalty under section 10A of the Central Sales Tax Act was held unsustainable where C forms were issued for goods omitted from the registration certificate due to the registering authority's error, and the dealer had sought amendment on discovering the omission. The dealer had applied for inclusion of machinery and spare parts, but the certificate did not reflect them, and the omission remained unnoticed for years. The dealer's later request for amendment, including retrospective effect, showed negligence rather than deliberate false representation. As penalty for contravention of clause (b) of section 10 required mens rea, the absence of dishonest intention was decisive and the penalty was set aside.

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Issues: Whether penalty under section 10A of the Central Sales Tax Act, 1956 could be sustained for issuing C forms in respect of goods not specified in the registration certificate when the omission to include those goods was attributable to the registering authority and the dealer had sought amendment on discovering the omission.

Analysis: The dealer had applied for specification of machinery and spare parts in the registration certificate, but the certificate issued by the authority omitted them. The omission remained unnoticed for years, and the dealer issued C forms under the impression that the goods were covered. Once the omission came to light, the dealer promptly sought amendment, including retrospective effect. In these circumstances, the conduct disclosed negligence but not a deliberate false representation. Since penalty for contravention of clause (b) of section 10 required mens rea, the absence of dishonest intention was decisive.

Conclusion: Penalty under section 10A was not sustainable and was set aside in favour of the assessee.

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