Civil Appeal Nos. 2344-2347 of 2004 with C. A. Nos. 6382-6383 of 2004. Case: 1. Commissioner of Sales Tax, U.P., 2. Hari Oil and General Mills Vs 1. Sanjiv Fabrics, 2. Commissioner of Sales Tax. Supreme Court (India)
| Case Number | Civil Appeal Nos. 2344-2347 of 2004 with C. A. Nos. 6382-6383 of 2004 |
| Judges | D.K. Jain and H.L. Dattu, JJ. |
| Issue | Central Sales Tax Act, 1956 - Sections 7(2), 10(b), 10(A); UP Trade Tax Act, 1948 - Section 11; Madhya Pradesh General Sales Tax Act, 1958 - Section 43 |
| Citation | JT 2010 (10) SC 192, 2010 (258) ELT 465 (SC) |
| Judgement Date | September 10, 2010 |
| Court | Supreme Court (India) |
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Judgment;
D.K. Jain, J.
1. These appeals, by special leave, are directed against the judgments and orders delivered by the High Court of Judicature at < xml:namespace prefix = st1 />
2. Shorn of unnecessary details, the facts essential for the adjudication of these appeals are:-
The respondent (hereinafter referred to as "the dealer") is registered under Section 7(2) of the Act and since the year 1977-78 is engaged in the business of manufacture and sale of Handloom fabrics.
The dealer was authorized to issue Form C' on the import of cotton and cotton yarn as raw materials. It is not in dispute that the dealer had imported cotton waste, polythene, sutli and tat against Form C' in order to avail the benefit of payment of concessional rate of Central Sales Tax.
On 15th October 1985, the revenue issued a notice to the dealer to show cause as to why penalty under Section 10(b) read with Section 10A of the Act should not be imposed on them for using Form C' for the purchase of items which were not covered by their certificate of registration. Immediately on the issuance of the said notice, dated 15th October 1985, the dealer applied for amendment of the certificate of registration for inclusion of "cotton waste" in the certificate. The said amendment was granted on the same day.
In reply to the show cause notice, the dealer pleaded that they were under a bona fide belief that "cotton" included "cotton waste", and thus there was no false representation on their part. However, not being convinced with the reply, sometime in January 1986, the Assessing Authority imposed penalty on the dealer under Section 10(b) read with Section 10A of the Act amounting to Rs.18,840/-; Rs.63,822/-; Rs.55,111/- and Rs.51,141/- for all the four assessment years in question, viz. 1979-80, 1981-82. 1982-83 and 1983-84 respectively, for making false representation in respect of purchase of tat, sutli, polythene, cotton waste, and jute.
The first appeals preferred by the dealer were dismissed by the Assistant Commissioner (Judicial) by two separate orders. Being aggrieved, the dealer filed four separate second appeals before the Tribunal.
It appears that in the meanwhile, by an order dated 30th April 1987, the Tribunal, in Second Appeal Nos. 243 of 1986 for the assessment year 1977-78; 242 of 1986 for assessment year 1978-79 and 550 of 1986 for assessment year 1980-81, set aside the order of penalty on purchase of cotton waste on the ground that no objection was raised by the revenue for the previous years, and therefore, the issuance of Form C' for the purchase of said commodity was a bona fide error on the part of the dealer and it did not involve false representation. In relation to other commodities, the Tribunal remanded the matters for re-fixation of penalty. However, when appeals for the present assessment years were taken up, notwithstanding its earlier orders, the Tribunal vide order dated 22nd January 1991, affirmed the orders levying penalty, inter-alia observing that for the purposes of sales tax, cotton and cotton waste are two different commodities and the fact that the dealer had deliberately used Form C' to import items like cotton waste, sutli, tat etc., established that the dealer had imported the goods by making a false representation and had taken the benefit of concessional rate of tax unauthorizedly. According to the Tribunal, these circumstances proved the mala fide on the part of the dealer. Finally, distinguishing its earlier orders on the ground that in those cases, the matter was remanded and it remained unclear as to how the matter had proceeded further; the Tribunal reduced the amount of penalty imposed.
Being dissatisfied with the order of the Tribunal, dated 22 nd January 1991, the dealer filed Sales Tax Revisions before the High Court of Allahabad. The only dispute which was put in issue in these revisions was with regard to the levy of penalty for use of Form C' on the purchases of cotton waste.
As stated above, by the impugned judgment the High Court has allowed the revision petitions, inter alia, observing:-
"Cotton" and "Cotton Waste" are two different commodities known to Sales Tax Laws. However, there is not much distinction from the point of view of ordinary people. The applicant is a registered dealer since the assessment year 1977- 78 and has been making purchases of... |
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