(1.) IT is proposed to dispose or the above two revision petitions by this common order as they are directed against the same order of Dy. Commissioner Excise and Taxation (Appeals) dated 5. 2. 1963, whereby the learned Dy. Commissioner rejected the appeal of M/s. Oriental Engineering Co. , Jaipur, against the assessment order of the Sales Tax Officer, Jaipur Circle 'b' dated 19. 11. 1962. By this order, the Sales Tax Officer had imposed a penalty of Rs. 4,000/- on the assessee for the misuse of 'c' forms.
(2.) THE assessee is a registered dealer and holds the registration certificate No. 283/jaipur/b, which was issued on 22. 7. 57 and the goods for the purpose of sub-secs. (1) and (3) of sec 8 of the Central Sales Tax Act specified therein are, agricultural machinery and parts. It was found that the dealer was using 'c' forms for goods other than 'agricultural machinery and parts', and, therefore, a notice was issued to him to show cause why action should not be taken against him under sec. 10-A sec. 10 (b) of the Central Sales Tax Act. In reply to this notice, a written statement supported by an affidavit of Shri B. N. Bhargava, partner of the firm was filed, wherein the following pleas were taken - (a) that they had been importing all types of machinery and parts under the bonafide belief and faith that these goods were specified in their Registration Certificate, (b) that they had been submitting their returns during all these years giving complete details of items for which 'c' forms were used, but no objection had ever been raised by the Deptt. , (c) that the officers of the deptt. had inspected their registers from time to time, but this irregularity had never been pointed out to them, (d) that assessments had been made for several years in the past but the mistakes had never come to notice, (e) that in their application for registration they had mentioned clearly 'machinery and parts', but somebody who was neither their representative nor in any way connected with the families of the partners had unauthorisedly added the word "agricultural" before the words "machinery and Parts" and as a result of this interpolation the registration certificate has been issued for "agricultural Machinery and Parts. "
The assessing authority found that the total purchase made on the basis of 'c' forms during the relevant years came to Rs. 19,25,688/14/ -. Out of these the following items were considered as covered by their registration certificate - 1. Centrifugal pump rs. 2,14,397. 22 np. 2. Electrical pumping sets rs. 52,636. 00 np. The rest of the sales were not held covered by the registration certificate. Having considered the arguments advanced by the assessee, the assessing authority came to the conclusion that the fact that the 'mistake' or irregularity' being committed by the assessee during all these years had not been taken notice of by the assessing or inspecting authorities could not absolve the assessee of the responsibility of contravening the law, though it could be taken as an extenuating circumstance while determining the penalty. As regards the interpolation,, it was found that the same had been made by one S. N. Bhandari, who was said to be an assistant of their counsel, Shri A. B. L. Bhargava. Though he was not one of the proprietors of the firm nor his name appeared in the power of attorney, yet, the registration certificate had been delivered to him on 22. 7. 57 and the same had reached the assessee. Therefore, the assessing authority held that this Mr. Bhandari could not be said to be interested against the firm. However, taking a lenient view of the case, the assessing authority excluded the purchases of machinery and parts, but held that the following purchases could not be excluded - General goods . . . Rs. 42,258. 72 np. Lamps, tubes and fans . . . Rs. 118,006. 29 np. Lubricants . . . Rs. 2,224. 12 np. Total . . . Rs. 162,489. 13 np.
It was held that these purchases could by no stretch of imagination or construction belong to the class of the machinery and parts. The assessing authority therefore, came to the conclusion that the assessee had falsely represented while making the purchases of the above that they were covered by the registration certificate. Under the circumstances, it found the assessee guilty of an offence under sec. 10 (b) of the Central Sales Tax Act, but taking into consideration only the purchases made after 16. 9. 58, the date on which the penal provisions of sec. 10-A were introduced in the Act and also the fact that the assessee had paid tax on the sale of these goods in Rajasthan, the assessing authority imposed a penalty of Rs. 4,000/-only.
Having felt aggrieved by this order, the assessee filed an appeal before the Deputy Commissioner Excise Taxation (Appeals), Ajmer and Kota Division. Before him also, the same arguments were reiterated. But the Deputy Commissioner also found no reason to interfere with the order of the assessing authority. Before the Deputy Commissioner the assessee had, further, argued that the general goods worth Rs. 42,258. 72/-were small parts of machinery. While rejecting the appeal, the Deputy Commissioner observed that if general goods were taken to be parts of machinery, even then the value of lamps, tubes, fans and lubricants which had been imported under 'c' forms would be Rs. 1,20,130. 41. These goods had been imported irregularly under 'c' forms and the appellant had thus paid about Rs. 7,000/-less by taking undue advantage of 'c forms. As against this loss caused by the appellant, the assessing authority had imposed a penalty of Rs. 4,000/- which could not be considered as excessive. The appeal was, therefore, rejected.
The assessee has come up in revision against this order and has reiterated the arguments advanced by him earlier. It is his contention that, if at all, in this case only an irregularity has been committed and there is no question of false representation. It is also contended that the action under sec. 10-A of the Central Sales Tax Act was without jurisdiction and invalid in the absence of a proper notice, and also that the said section was ultra vires and offended against the constitutional guarantees and fundamental rights provided in the Constitution.
The revision by the State has been filed on the ground that the assessing authority has taken a lenient view in the matter and that the original application for issue of registration certificate was for "agricultural machinery" and the registration certificate also contained the words "agricultural machinery" and not 'machinery' only. In that event, the case of misuse of 'c' forms clearly stood established by import of goods other than agricultural machinery and, therefore, the assessee was liable to a penalty of Rs. 10,500/- (equal to one and a half times of the amount of tax evaded ).
To take the last argument of the learned counsel for the assessee first, the question of the vires of the Act cannot be considered by this court. As regards the issue of the notice, it may be noted that the notice is not traceable in the record. However, even if it may be assumed for the sake of the argument that the notice was issued under sec. 10 (b) as alleged by the learned counsel for the assessee and the penalty was awarded under sec. 10-A, I fail to appreciate how it is going to materially help the assessee. It will be seen that sec. 10-A provides lor the imposition of penalty in lieu of prosecution of a person guilty of an offence under cl. (b) or cl. (c) or cl. (d) of sec. 10. It, therefore, goes without saying that if a notice had been issued under sec. 10 (b), no further notice under sec. 10-A is called for, as the penalty provided under sec. 10-A, in lieu of the penalty provided under sec. 10 (b) viz. , imprisonment, is of a milder character, and no prejudice has been caused to the assessee thereby.
The main question which, therefore, falls for determination is whether an offence under sec. 10 (b) has been made out or not in the circumstances of this case. Sec. 10 (b) reads as follows - "if any person being a registered dealer falsely represents when purchasing any class of goods that goods of such class are covered by his certificate of registration, he shall be punishable with simple imprisonment which may extend to six months, or with fine or with both ; and when the offence is a continuing offence, with a daily fine which may extend to fifty rupees for every day during which the offence continues. "
It is not denied that 'c' forms were used for the goods other than "agricultural machinery and parts" as specified in the registration certificate. The contention of the learned counsel for the assessee, however, is that there was no intention to commit fraud and that it was only a mere irregularity due to inadvertence. It is contended on the authority of P. K. Varghese & Sons vs. Sales Tax Officer, Special Circle, Ernakulam (1965 S. T. C. 323), that in order to constitute an offence under sec. 10 (b) of the Central Sales Tax Act 1956, it must be proved that the dealer made the representation that the goods purchased were covered by the registration certificate with the knowledge that they were not so covered. Where there was no finding that the representations made by the petitioners were false, namely that the 'c' form declarations were issued without the belief that the goods purchased were covered by the registration certificate, the imposition of penalty under sec. 10-A would be illegal. It was thus observed therein that mens rea is an essential ingredient for the commission of an offence under sec. 10 (b) and that there is a clear distinction between a representation which is negligent and one which fraudulent. It was further observed that the section requires that the representation must have been made falsely, viz. without any belief in its truth and that a representation, however, negligent is not fraudulent.
As the facts of this case disclose the assessee holds a registration certificate for "agricultural machinery and parts" only. He, however, takes shelter behind the plea that he had applied for a certificate for "machinery and parts and that the word 'agricultural' was interpolated by some body. I agree with the assessing authority that even if the story of interpolation is accepted, it was made by an agent of the firm and the firm cannot advance this plea that it was not aware of the nature of goods specified in the registration certificate. Ordinary prudence would require that when the certificate was received, it should have been checked for the nature of goods specified therein, and if it was found that the nature of goods specified therein did not conform to the goods proposed to be entered in the certificate, immediate correction should have been sought.
In view of this reasoning, it cannot be expected that the firm was unaware of the nature of goods specified in this certificate. Thus the issue of 'c' forms in respect of goods not specified in the registration certificate with a view of obtaining tax benefits was a deliberate act and the applicant must take all the consequences of that deliberate act. An assessee who appropriates a concession not admissible to him must face the consequences and cannot take the plea that there was malafide intent. The act of taking the concession in this case was a deliberate act and if the concession claimed is legally inadmissible, the act of obtaining the concession ipso facto proceeds from a false representation.
The argument that this irregularity was not detected by the supervising authorities does not in any manner clothe the act with legal validity. Under the circumstances, I see no force in the revision petition filed by the assessee and hereby reject the same
(3.) AS regards the revision petition filed by the State, as will be obvious from the tenor of the argument advanced above, I do not agree with the assessing authority that the fact that the offence was not detected earlier by the supervising authorities should serve as a mitigating circumstance, justifying a lenient view.
The law in this matter is very clear as was held in Deputy Commissioner of Commercial Taxes, Madras Division, Madras-7 vs. P. Gajapathy Mudaliar (1964 S. T. C. 421 ).
A taxing statute cannot be interpreted by importing notions of equity or natural justice. Where the terms of the statute are clear, they would have to be given effect to whether harsh or unjust. It is established that the assessee being a registered dealer falsely represented when purchasing the goods described in the assessment order as covered by a certificate of registration and he is, therefore, liable to punishment with simple imprisonment which may extend to six months or with fine or with both.
However, under sec. 10-A, the competent authority can, in the alternative, impose upon him by way of penalty a sum not exceeding one and a half times the tax which would have been leviable upon him. It is conceded that at least tax amounting to Rs. 7,000/- was under-paid in respect of the goods for which 'c' forms were 'irregularly' used. Under sec. 10-A, the assessee is liable to a penalty amounting to one and a half times the tax so avoided. I would, therefore, accept the revision petition of the State and enhance the penalty to Rs. 10,000/ -. .