Shree Vaishnodevi Mills Pvt. Ltd. vs Commercial Tax Officer

M.M. Sundresh, J.—The writ petitions have been filed by the Petitioner seeking to quash the notice of the Respondent in proceedings Nos.

315516/99-2000 and 315516/98-99 respectively, dated 15.03.2002, in so far as the proposal to impose penalty u/s 10A(i) of the Central Sales

Tax Act (in short ""the Act"").

The Petitioner herein is a 100% Export Oriented Unit manufacturing and exporting cotton knitted fabrics. By the Certificate of Registration

dated 17.08.1993, the class of goods mentioned therein are to be taxable at the specified rates. The particulars of the goods mentioned therein are

extracted hereunder:

a) For use in manufacture of processing of goods for sale:

Cotton yarn, stitching yarn, needles all knitting stitching sewing machined and spares, hydraulic press, power loom cloth, electric iron boxes, textile

manufacturing machineries and accessories, dyeing, calendering, packing machines.

b) For use in mining: Nil d) For use in the general or distribution of Electricity of any other form of Power.

Electric motor, Oil Engine, Generator and alternator card board wooden cases, Hoop iron, nails.

c) Top Lables, cotton tape rolls, calico street, wires, paper bags.

The Petitioner has been assessed to Central Sales Tax over the years. The Petitioner has been buying dyes and chemicals for manufacturing and

exporting the goods. While so, notices have been issued by the Respondent in proceedings Nos. 315516/99-2000 and 315516/98-99

respectively, dated 15.03.2002 on the ground that the Petitioner has effected interstate purchases against Form ""C"" and issued Form ""C

declarations by purchasing dyes and chemicals, which are not covered under Form ""B"" # Certificate of Registration, a penalty imposable u/s 10(A)

(i) of the Act is warranted. Accordingly, the Petitioner was directed to give its objections to the said proposal in writing. Challenging the same, the

present writ petitions have been filed.

Mr. R. Gandhi, learned senior counsel for the Petitioner submitted that the Petitioner has been buying dyes and chemicals over the years. The

Petitioner has shown all those purchases in the respective returns filed. Form ""B""#Certificate of Registration issued clearly covers dyes and

chemicals. The learned senior counsel further submitted that the Petitioner, after the purchase of dyes and chemicals, has exported the same

outside the country. Therefore, the Petitioner is entitled to get protection available u/s 5(1) and (3) of the Act, being the penultimate transaction

prior to export.

It is the further contention of the learned senior counsel for the Petitioner that in the absence of any mens rea attributable on the part of the

Petitioner, the proceedings initiated against the Petitioner, cannot be sustained. In support of his contention that mens rea is a pre-requisite for

imposing the penalty u/s 10(a) of the Act, the learned senior counsel for the Petitioner has relied upon the judgment of the Full Bench of this Court

in State of Tamil Nadu v. Nu-Tread Tyres [(2006) 148 STC 0256].

Per contra, Mr. R. Mahadevan, learned Additional Government Pleader submitted that the writ petitions, as filed, are pre-mature. The learned

Additional Government Pleader submitted that the proceedings have been initiated by the Respondent only on the ground that the purchases made

by the Petitioner for the goods are not covered under Form ""B"" # Certificate of Registration. Therefore it is submitted that the said issue will have

to be decided by the Respondent and cannot be agitated before this Court. The learned Additional Government Pleader further submitted that in

so far as the application u/s 5(1) and (3) of the Act is concerned, this is again a matter of fact to be decided by the authority and in any case, that is

not the basis upon which the proceedings have been initiated.

Similarly, in so far as the contention regarding the establishment of mens rea is concerned, the learned Additional Government Pleader submitted

that the question of mens rea, being a question of fact, the same has to be considered by applying the ratio laid down by the Full Bench of this

Court in the judgment in State of Tamil Nadu v. Nu-Tread Tyres [(2006) 148 STC 256]. Hence it is submitted that the writ petitions will have to

be dismissed.

Admittedly, the orders impugned in the writ petitions are the show cause notices issued by the Respondent proposing to levy penalty, by

exercising the power u/s 10(a) of the Act. As held by the Full Bench of this Court in STATE OF TAMIL NADU v. NU-TREAD TYRES [(2006)

148 STC 256], the question of mens rea is a question of fact to be decided by the Respondent, on the availability of the relevant materials placed

before him.

It is no doubt true that while exercising the power of imposing the penalty, it is incumbent on the part of the Respondent to give a positive finding

that there is mens rea on the part of the Assessee concerned. However, it cannot be said that even at the time of initiating the proceedings, the

Respondent will have to specify about the said aspect. Therefore, establishment of mens rea, being a question of fact, this Court cannot go into the

same, except by directing the Respondent to apply the ratio laid down by the Full Bench of this Court in STATE OF TAMIL NADU v. NU-

TREAD TYRES [(2006) 148 STC 256], while exercising its power u/s 10(a) of the Act.

In so far as the other contentions raised by the learned Counsel for the Petitioner are concerned, the same also cannot be decided by this

Court. Admittedly, there is no adjudication on those issues by the Respondent. What is challenged before this Court is only a show cause notice.

As discussed above, this Court has not find any jurisdictional error on the part of the Respondent. Therefore, it is very well open to the Petitioner

to raise all the contentions, including the applicability of Section 5(1) and (3) of the Act as well as the other contentions, such as the goods which

are the subject matter of the sales are covered by the Certificate of Registration under Form ""B"".

Hence, this Court is of the opinion that the writ petitions, as filed, are pre-mature at this stage. However, while disposing the writ petitions,

liberty is given to the Petitioner to raise all their contentions before the Respondent. The Petitioner is given a further time of eight weeks from the

date of receipt of a copy of this order to make all their contentions before the Respondent. While passing final orders, the Respondent is directed

to consider all the contentions raised by the Petitioner, including the ratio laid down by the Full Bench of this Court in STATE OF TAMIL NADU

v. NU-TREAD TYRES [(2006) 148 STC 256].

With these observations, the writ petitions are disposed of. No costs.