2006 NTN (Vol. 30) - 405 [ALLAHABAD HIGH COURT] Hon’ble Rajes Kumar, J.

Trade Tax Revision Nos. 76, 77, 78, 79 & 80 of 1999 M/s Indian Oil Corporation Ltd.

vs. Commissioner of Trade Tax, U.P., Lucknow

Date of Decision : 09th March, 2006 For the Applicant : Sri Bharat Ji Agrawal & Sri Piyush Agrawal, Advs.

For the Opp.party : Sri B.K. Pandey, S.C.

Penalty - Central Sales Tax Act, 1956-Section 10-A clause (b) – False representation that items being purchased were covered by registration certificate-Dealer engaged in the business of manufacture and whole sale and bulk distribution of all type of Petroleum products, lubricants and greases such as motor spirit, HSD, CDO Kerosene, lubricants, grease, furnace oil, liquefied petroleum gas (Indane), Naphtha, Aviation Turbine fuel, aviation gasoline, MTO Petroleum cape, waxes - Purchase of LPG Cylinder, Safety Boots, Wooden Sleeper, Mica Brick, Ladder, RCC Pipe, Kambal (Blanket), Vessels, Cement, Yarn, Trailer, Hospital Equipment, Transmitter, Fire Fighting Pump, Cement Paint, Film, G.I. Wireness, Seal, Brush, Rassi, Sticker, Aguigay, Puller Earth, Welding Pipe Fitting, Electrode, Aluminium, Bearing- Such items not mentioned in the registration certificate

Dealer claiming purchases made under bonafide belief - No valid explanation.

[A] Whether in the facts and circumstances of the case LPG Gas Cylinders can be

treated to be covered by the registration certificate under the entry of empty packages?

Held-No, under the registration certificate empty packages is mentioned for resale and not for use in the manufacturing. Gas were sold filled in cylinder. Cylinders were never sold. It is not the case of the applicant that the gas has been sold along with cylinders. Thus cylinder was not resold. It is also not intended for use in the manufacturing because the filling of gas in the cylinder is after manufacturing of gas and is required for delivery of the manufactured goods and not for the manufacturing. It has also been stated by the Tribunal that in the registration certificate LPG Cylinder was added in the registration certificate. The dispute relates to the purchases of LPG cylinders prior to 12.08.1982 when the LPG cylinder was not mentioned in the registration certificate. For the aforesaid reasons, in my view the issue of Form C for the purchase of LPG cylinders prior to 12.08.1982 was not proper and the inference drawn by the authorities below that while issuing Form C for the purchase of LPG cylinder applicant had made false

representation that it was registered for the said item, is correct.

[B] Whether in the facts and circumstances of the case, purchase of Safety Boot, Wooden Sleeper, Mica Brick, Ladder, R.C.C., Pipe, Kambal, Cement, Yarn, Trailer, Hospital Equipment, Transmitter, Fire Fighting Pump, Cement Paint, Film, G.I. Wireness, Seal, Brush can be treated to be covered under the goods required for use in

the manufacture or processing of goods for sale?

Held-No, Safety Boot, Wooden Sleeper, Mica Brick, Ladder, R.C.C., Pipe, Kambal, Cement, Yarn, Trailer, Hospital Equipment, Transmitter, Fire Fighting Pump, Cement Paint, Film, G.I. Wireness, Seal, Brush were not intended for the use in the manufacturing and they have not been used in the manufacturing. They were not required in the manufacturing process directly or indirectly. Vessels is required for filling LPG tank, which is not part of the manufacturing process. Thus, it is also not required for use in the manufacturing. The claim that it is covered under steel plate

cannot be accepted by any stretch of imagination.

Thus, for the reasons stated above, the applicant while making the purchases and issuing Form C made false representation that it was registered in respect of the aforesaid goods under Central Sales Tax Act while fact was otherwise. In fact, the applicant was not entitled for the benefit of concessional rate of tax because goods were not intended for use in the manufacturing

under Section 8 (3) (b) of the Act and Rule 13. Tribunal has rightly sustained the penalty under

Section 10-A of the Act.

Cases referred :

J.K. Cotton Spinning & Weaving Mills Co. Ltd. vs. S.T.O. 16 STC 563 Indian Copper Corporation Ltd. vs. C.C.T., Bihar & Others 16 STC 259 State of Rajasthan vs. Jaipur Udyog Ltd. 30 STC 565 C.T.O., Jaipur vs. Rajasthan Electricity Board 104 STC 89 C.S.T., M.P., Indore vs. Bombay Garage 57 STC 67 Braja Lal Banik vs. State of Tripura & Others 78 STC 283 Spring Valley Fruits Product Co. Ltd. vs. C.S.T. 1995 NTN (Vol. 7) 368 C.S.T. vs. Tek Invest (India) Pvt. Ltd. 1998 NTN (Vol. 12) 1 C.S.T. vs. Rama and Sons, General Merchant 1999 NTN (Vol. 15) 828 C.S.T. vs. Rewa Cold Fields Ltd. & Another 1999 JT (10) SC 257 Vijay Electrical vs. State of Tamil Nadu 82 STC 268 Integrated Enterprises vs. State of Kerala 46 STC 103 C.S.T. vs. Misra Modern Rice Mills, Gorakhpur 2003 NTN (Vol. 23) 713 Anwarkhan Mahboob Co. vs. State of Bombay 1961 (1) SCR 709 Union of India vs. V.M. Salgaoncar & Bros. (P) Ltd. 1998 JT (2) SC 490

C.C.E. vs. Ballarpur Industries Ltd. 1989 JT (4) SC 396

JUDGMENT

(Hon’ble Rajes Kumar, J.)

These five revisions under Section 11 of U.P. Trade Tax Act (hereinafter referred to as “Act”) are directed against the order of Tribunal dated 24.12.1998 relating to the Assessment

Years 1981-82, 82-83, 83-84, 86-87 and 87-88 under Central Sales Tax Act.

2. Applicant is a company incorporated under the Indian Companies Act, 1956, engaged in the business of petroleum product etc. Applicant was issued registration certificate under Section 7 (1) and 7 (2) of Central Sales Tax Act in Form “B”. Initially certificate was issued on 24.04.1962 w.e.f. 26.03.1962. In the certificate following items have been notified as goods

under Section 8 (1), 8 (2) and 8 (3) of the Central Sales Tax Act:

“PUNAH VIKRAYARTHA Petrol, Kerosene, High speed Diesel & Light Diesel Oil, Lubricants,

Grease, Empty Package Drum & Tin Only”.

3. In the aforesaid certificate w.e.f. 31.07.1968, the following items have been added:

“(A) Menthol, (B) Distilled Water, (C) Water Menthol Mixture”.

4. In the aforesaid certificate w.e.f. 29.10.1976, the following items have been added:

1. Generating sets, alternators, connectors, voltage establishers, transformer with related accessories.

2. Steel pipe, steel plate, steel reinforcement bars.

3. Insulators and seals, vent pipe, top & bottom ends.

4. Coalatar enamels.

5. Coaltar primer.

6. Fibre Glass.

7. Kraft paper.

8. PVC Tape.

9. Cathodie Protection Materials.

10. Oil an buch.

11. Control instruments.

12. Tale control and tale communication equipments.”

5. In the aforesaid certificate w.e.f. 09.03.1973, the following items have been added:

“Laboratory equipment, implement, machinery plant, cranes, trolleys, conveyors, vehicle for transport of material from ware house to laboratory, accessories, spare parts, lubricants,

fuel, glass ware, scales, chemicals, acids, electrical goods, air conditioner.”

6. In the aforesaid certificate w.e.f. 18.06.1973, the following items have been added:

“Manufacturing purpose (1) Plant and machinery, (2) Laboratory Equipment, (3) Equipment and materials, (4) Tools and implement, (5) Locomotive and motor vehicle, (6) Fittings and fixtures, (7) Office equipment, (8) Electrical goods, (9) Air conditioners, (10) Raw materials, (11) Chemicals and additives, (12) Spare & accessories, (13) Consumable stores, (14) Lubricants and greases.”

7. In the aforesaid certificate w.e.f. 22.03.1977, the following items have been added:

“(1) Hydraulic Brake Fluid, (2) Manthonol Mixture”.

8. In the aforesaid certificate w.e.f. 11.05.1982, the following items have been added:

“STYLE OF BUSINESS: Govt. of India undertaking in the business of manufacture and whole sale and bulk distribution of all type of Petroleum products, lubricants and greases such as motor spirit, HSD, CDO Kerosene, lubricants, grease, furnace oil, liquefied petroleum gas (Indane), Naphtha, Aviation Turbine fuel, aviation gasoline, MTO

Petroleum cape, waxes.”

2. FOR RESALE: Petroleum products of all kinds including Liquefied Petroleum Gas (Indane) Furnace oil, LSHS, FSHS, Naphtha, Aviation turbine fuel, aviation gasoline,

M.T.O. Containers.

3. FOR PROCESSING OF GOODS FOR SALE (FOR LPG PLANTS)

LPG Filling Machines, NOZZLES, Pump Sets, Compressor valve.

4. FOR PACKING OF GOODS

Containers, Accessories and component of containers steel sheet and plates for

fabrication of containers.”

9. During the years under consideration, applicant had purchased LPG Cylinder, Safety Boots, Wooden Sleeper, Mica Brick, Ladder, RCC Pipe, Kambal (Blanket), Vessels, Cement, Yarn, Trailer, Hospital Equipment, Transmitter, Fire Fighting Pump, Cement Paint, Film, G.I. Wireness, Seal, Brush, Rassi, Sticker, Aguigay, Puller Earth, Welding Pipe Fitting, Electrode, Aluminium, Bearing. Assessing Authority initiated the proceeding under Section 10-A for the alleged violation of Section 10 (b) on the ground that the applicant had not registered for the aforesaid items during the years under consideration under the Central Sales Tax Act and was not entitled for the benefit of concessional rate of tax, still issued Form “C” while making the

purchases and as such made false representation.

10. The details of the items purchased and are claimed to have been covered under the

items mentioned in the registration certificate are as follows:

ITEMS ASSESSMENT YEAR COVERED IN

REGISTRATION

CERTIFICATE UNDER

1981-82 1982-83 1983-84 1986-87 1987-88

L.P.G. CYLINDERS 8847786 690837 — — — EMPTY PACKAGES

SAFETY BOOTS 35280 — 254101 — — CONSUMABLE STORES

WOODENSLEEPER 4311717 — — — — CONSUMABLE STORES

MICA BRICK 811676 — — — — CONSUMABLE

STORES/INSULATORS

LADDER 59550 — — — — FITTING & FIXTURES

R.C.C. PIPE 223200 — 83290 — — FITTING & FIXTURES

KAMBAL (BLANKET) 247847 — 11875 — — PROTECTION

MATERIAL /INSULATORS

VESSELS — 2106230 — — — PLANT

CEMENT — 505198 7562 — — CONSUMABLE STORES

YARN — 26700 — — — CONSUMABLE STORES

TRAILER — 11640 — — — LOCOMOTIVES &

MOTOR VEHICLES

HOSPITAL — 51590 — — — EQUIPMENTS &

EQUIPMENT MATERIALS

TRANSMITTER — 204677 — — — EQIPMENTS/

ELECTRICAL GOODS

FIRE FIGHTING PUMP — 263651 172318 — — EQUIPMENTS &

MATERIALS/

PROTECTION MATERIALS

CEMENT PAINT — — 13125 — — CONSUMABLE STORES

FILM — — 15876 — — CONSUMABLE STORES

G.I. WIRENESS — — 3898 — — CONSUMABLE STORES

SEAL — — 64862 — — SEALS

BRUSH — — 3549 — — CONSUMABLE STORES

RASSI — — 3763 — — CONSUMABLE STORES

STICKER — — 480 — — CONSUMABLE STORES

AGUIGAY — — 104000 — — CONSUMABLE STORES

PULLER EARTH — — 16800 — — CONSUMABLE STORES

WELDING PIPE FITTING— — — 85015 — FITTING & FIXTURES

ELECTRODE — — — 343092 — CONSUMABLE STORES

ALUMINIUM — — — 944 — CONSUMABLE STORES

BEARING — — — 402122 187470 SPARES &

ACCESSORIES

11. Assessing Authority had not accepted the plea of the applicant and levied the penalty under Section 10-A of the Act. First appeals filed by the applicant were dismissed. Applicant filed second appeals before the Tribunal, which too have been dismissed by the impugned

order.

12. Heard Sri Bharatji Agrawal, learned Senior Advocate, assisted by Sri Piyush Agrawal,

learned Counsel for the applicant and Sri B.K. Pandey, learned Standing Counsel.

13. Learned Counsel for the applicant submitted that the aforesaid items are covered under the items mentioned in the registration certificate as per details provided. He submitted that in any view of the matter, applicant issued Form “C” under the bonafide believe that the aforesaid items were covered under the items mentioned in the registration certificate. Thus, there was no case of false representation. He submitted that unless a case of false representation is made out, penalty under Section 10-A of the Act was not leviable. In support of his contention he

relied upon the following decisions:

1. J.K. Cotton Spinning & Weaving Mills Co. Ltd. vs. The Sales Tax Officer, Kanpur and

Another, reported in 16 STC 563

2. Indian Copper Corporation Ltd. vs. Commissioner of Commercial Taxes, Bihar and Others,

reported in 16 STC, 259.

3. State of Rajasthan vs. Jaipur Udyog Limited, reported in 30 STC, 565.

4. Commercial Taxes Officer, Circle D, Jaipur vs. Rajasthan Electricity Board, reported in 104

STC, 89.

5. Commissioner of Sales Tax, Madhya Pradesh, Indore vs. Bombay Garage, reported in 57

STC, 67.

6. Braja Lal Banik vs. State of Tripura and Others, reported in 78 STC, 283.

7. M/s Spring Valley Fruits Product Co. Ltd., Bareilly vs. CST, reported in 1995 NTN (Vol. 7)

368; 1994 UPTC, 1207.

8. CST vs. M/s Tek Invest (India) Pvt. Ltd., Haridwar, reported in 1998 NTN (Vol. 12) 1; 1998

UPTC, 128.

14. Learned Standing Counsel submitted that the LPG cylinder was added in the registration certificate w.e.f. 12.08.1982 and prior to the 12.08.1982 neither empty packages nor LPG cylinders were mentioned and, therefore, applicant had made false representation while issuing the Form “C” in respect of LPG cylinder for which it was not registered. He further submitted that the applicant is not able to show that how the aforesaid items are required for use in the manufacturing. Thus, while issuing the Form “C” false representation was made. In

support of his contention he relied upon the following decisions:

1. CST vs. S/s Rama and Sons, General Merchant, Ballia, reported in 1999 NTN (Vol. 15)

828; 1999 UPTC, 425.

2. CST vs. Rewa Cold Fields Ltd. and Another, 1999 JT (10) SC, 257.

15. Before the Assessing Authority, applicant had explained the individual uses of the items

as follows:

1. LPG Gas Cylinders claimed to be covered under Empty packages. Assessing Authority stated that in the registration certificate empty packages is shown under the column of resale. It is further stated that the LPG gas cylinder is not required for use in the

manufacturing, in as much as it is used for filling of gas after the manufacturing.

2. Safety Boots. – It is claimed to be covered under the consumable stores. It is stated that it is used by the employees while filing tank in lorry and also dipping and for its

measurement.

3. Wooden Sleeper. – It is used in keeping the goods.

4. Mica Brick – It is used for floor making.

5. Ladder – It is used for filling of petroleum products.

6. R.C.C. Pipe – It is used for extracting water from building and filling sheds.

7. Kambal (Blanket) – It is used by chaukidars in night duty.

8. Vessels – It is used for filling of LPG tank. It is claimed to be covered under the item steel

plate.

9. Cement – It is used in the construction of building.

10. Yarn – It is used as safety cap of cylinders. It is covered under consumable stores.

11. Trailer – It is used for transporting the gas cylinders from one place to another place. It is covered under motor-vehicle.

12. Hospital Equipment – It is used as hospital equipments and is covered under consumable

stores.

13. Transmitter – It is used for measurement while filling the petroleum product in tanks and

lorry.

14. Fire Fighting Pump – It is used for safety. It is covered under the consumable stores.

15. Cement Paint – It is used for painting of building filling shades etc. It is covered under

consumable stores.

16. Film – It is X-ray films. It is used for the testing of pipe line. It is covered under the

consumable stores.

17. G.I. Wireness – It is used for the safety of boundary wall. It is covered under the

consumable stores.

18. Seal – It is used for the filling of carks of RCC flooring. It is consumable stores.

19. Brush – It is used for painting and for cleaning of flooring. It is consumable stores.

20. Rassi – It is used for erection purpose. It is consumable stores.

21. Sticker – It is used for giving messages on cylinders. It is consumable stores.

22. Aguigay – It is a kind of foam. It is used for extinguishing of fire. It is consumable stores.

23. Puller Earth – It is used for providing earthing to the electric connection. It is consumable

stores.

24. Welding Pipe Fitting – It is used for giving bend to pipe line. It is covered under fitting and

fixing.

25. Electrode – It is used for welding of pipe. It is covered under consumable stores.

26. Aluminium – It is used for covering of fire fighting equipment. It is consumable stores.

27. Bearing – It is used in the pump and generators as spare parts and accessories. It is

covered under spare parts and accessories.

16. Assessing Authority held that none of the items are required in the manufacturing directly or incidentally and, therefore, they are not consumable stores as defined under Section 13 of the Central Sales Tax Act (Registration and Turnover Rules, 1957). Order of the Assessing Authority has been upheld in first appeal and by the Tribunal. It is useful to refer the relevant

Section and Rules.

17. Section 10 (b) of the Central Sales Tax Act reads as follows:

Penalties – If any person –

(a) …………………..

(b) being a registered dealer, falsely represents when purchasing any class of goods that

goods of such class are covered by his certificate of registration; of

18. Section 8 (3)(b) and Rules 13 reads as follows:

Section 8. Rates of tax on sales in the course of inter-State trade or commerce –

(3) The goods referred to in Clause (b) of sub-section (1) –

(b) ………….. are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or in mining or in the generation or

distribution of electricity or any other form of power;”

Rule 13. The goods referred to in Clause (b) of sub-section (3) of Section 8 which a registered dealer may purchase, shall be goods intended for use by him as raw materials, processing materials, machinery, plant, equipment, tools, stores, spare parts, accessories, fuel or lubricants, in the manufacture or processing of goods for sale or in

mining, or in the generation or distribution of electricity or any other form of power.”

19. Contents of declaration in Form “C” are as follows:

The Central Sales Tax (Registration and Turnover) Rules, 1957

Form – ‘C’

Form of Declaration [See Rule 12 (1)]

Name of issuing State …………………………………..

Office of issue……………………………………………..

Date of issue…………………………………………….

Name of the purchasing dealer to whom issued along with his Registration Certificate

No……………………………………………….

Date from which Registration is valid……………………………..

Seal of

Issuing Authority

Serial No……………………………….

To,

……………………………(seller)

……………………………………

( ) Certified that the goods

** ordered for in our purchaser order

No……………..dated……………………and

Supplied as per bill/cash memo/challan

……………….dated………………..as stated below purchased from you as per bill/cash memo

challan No…………………dated………………..as stated below*)

Supplied under your challan No………dated……………….are for

**resale

use in manufacture/processing of goods for sale………………………. Use in mining

use in generation/distribution of power packing of goods for sale/resale and are covered by my/our registration certificate No. …………..dated ……………….issued under the Central

Sales Tax Act, 1956

( )

{It is further certified that I/We am/are not registered under Section 7 of the said Act in the State of ………………. in which the goods covered by this form are/will be delivered}.

Name and address of the purchasing dealer in full…………………..

Date……………………………………………..

(2) {The above statements are true to the best of my knowledge and belief

(Signature)…………………..

(Name of the person signing the declaration)

(Status of the person signing the declaration in relation to the dealer)}.

*Particulars of Bill/Cash Memo. (3) Challan Date…………………………. No……………………

Amount……………………………….

* Name and address of the seller with name of the State.

** Strike out whichever is not applicable.

(Note: - To be furnished to the prescribed authority in accordance with the rules framed under Section 13 (4)(E) by the appropriate State Government dealer)”.

20. Let us examine the cases cited by the learned Counsel for the parties.

21. In the case of J.K. Cotton Spinning & Weaving Mills Co. Ltd. vs. The Sales Tax Officer,

Kanpur and Another, reported in 16 STC, 563, Apex Court held as follows:

“In our judgment if a process or activity is so integrally related to the ultimate manufacture of goods so that without that process or activity manufacture may, even if theoretically possible, be commercially inexpedient, goods intended for use in the process or activity as specified in rule 13 will qualify for special treatment. This is not to say that every category of goods “in connection with” manufacture of, or “in relation to” manufacture, or which facilitates the conduct of the business of manufacture will be included within Rule 13.

Attention in this connection may be invited to a judgment of this Court in which it was held that vehicles used by a company (which mined ore and turned out copper in carrying on activities as a miner and as a manufacturer) fell within Rule 13, even if the vehicles were used merely for removing ore from the mine to the factory, and finished goods from the factory to the place of storage. Spare parts and accessories required for the effective operation of those vehicles were also held to fall within Rule 13. (See Indian Copper Corporation Ltd. vs. Commissioner of Commercial Taxes, Bihar and Others).”

22. In this case goods used in the process of designing has been held to have been used in

the manufacturing of goods. Apex Court further held as follows:

“Building materials including lime and cement not required in the manufacture of tiles for sale cannot, however, be regarded within the meaning of Rule 13, as raw materials in the manufacture or processing of goods or even as “plant”. It is true that buildings must be constructed for housing the factory in which machinery is installed. Whether a building is a “plant” within the meaning of Rule 13, is a difficult question on which no opinion need be expressed. But to qualify for specification under Section 8 (3)(b) goods must be intended for use of the nature mentioned in Rule 13, in the manufacture of goods. Building materials used as raw materials for construction of “plant” cannot be said to be used as plant in the manufacture of goods. The Legislature has contemplated that the goods to qualify under Section 8 (3)(b) must be intended for use as raw materials or as plant, or as equipment in the manufacture or processing of goods, and it cannot be said that building materials fall within this description. The High Court was, therefore, right in rejecting the claim of the

Company in that behalf.

The expression “electricals” is somewhat vague. But in a factory manufacturing cotton and other textiles, certain electrical equipment in the present stage of development would be commercially necessary. For instance, without electric lighting it would be very difficult to carry on the business. Again electrical humidifiers, exhaust fans and similar electrical equipment would in the modern conditions of technological development normally be regarded as equipment necessary to effectually carry on the manufacturing process. We are not prepared to agree with the High Court that in order that “electrical equipment” should fall within the terms of Rule 13, it must be a commodity which is used in the creation of goods. “If, having regard to normal conditions prevalent in the industry, production of the finished goods would be difficult without the use of electrical equipment, the equipment would be regarded as intended for use in the manufacture of goods for sale and such a test, in our judgment, is satisfied by the expression “electricals”. This would be course not include electrical equipment not directly connected with the process of manufacture. Office equipment such as fans, coolers, air conditioning units, would not be admissible to special

rates under Section 8 (1)”.

23. In the case of Indian Copper Corporation Ltd. vs. Commissioner of Commercial Taxes, Bihar and Others, reported in 16 STC, 259. The assessee mined copper and iron ore from its own mines, transported the ore to its factory and manufactured finished products from the ore for sale. The assessee had for the purpose of its business to purchase diverse categories of goods from outside the State. Some of those goods were used in its factory in the process of manufacture and in the copper and kyanite mines, other goods were purchased for use in its offices, factory and mines and in the hospitals set up for affording medical facilities to its employees. The question was whether the following goods should be specified under Section 8 (3)(b) of the Central Sales Tax Act, 1956, in the certificate of registration issued to the assessee: - (i) Locomotives and motor-vehicles; (ii) accessories and spare parts for motor-vehicles and locomotives; (iii) household, laboratory, hospital and general furnishing and fittings; (iv) medical supplies; (v) stationery; (vi) tyres and tubes for motor-vehicles; and (vii) cane baskets. The High Court held that the assessee was entitled to include only the following goods in the certificate of registration : - (a) Locomotives and motor-vehicles actually used in carrying and removing raw materials during the process of manufacture; (b) locomotives and motor-vehicles used both underground and on surface during mining operations; (c) accessories and spare

parts for such locomotives and such motor-vehicles; (d) tyres and tubes for such motor-vehicles; (e) laboratory fittings used for the sampling and analysis of the ore and other raw materials in the initial stages of mining operations and in the process of manufacture. With special leave, the assessee appealed to the Supreme Court: Held, that items (i), (ii) and (vi) (locomotives and motor-vehicles, accessories and spare parts for motor-vehicles and locomotives, and tyres and tubes for motor-vehicles), laboratory fittings out of item (iii) used of sampling and analysis of the ore and other raw materials in the mining operations and in the process of manufacture for sale and cane baskets out of item (vii) used for carrying ore and other materials used in the course of manufacture, should be specified in the certificate of registration. Household, hospital equipment with furnishings and fittings [part of item (iii)], medical supplies [item (iv), stationery [item (v)] and cane baskets used for collecting refuse to protect the health and cleanliness in the colony of workmen [part of item (vii)] should not be

included in the certificate of registration. Apex Court held as follows:

24. In a case where a dealer is engaged both in mining operations and in the manufacturing process – the two processes being interdependent – it would be impossible to exclude vehicles which are used for removing from the place where the mining operations are concluded to the

factory where the manufacturing process starts.

25. The expression “goods’ intended for use in the manufacturing or processing of goods for sale’ may ordinarily include such vehicles as are intended to be used for removal of processed

goods from the factory to the place of storage.

26. The mere fact that there is a statutory obligation imposed upon the owner of factory or the mine to maintain hospital facilities would not supply a connection between the goods and the manufacturing or processing of goods or the mining operations so as to make them goods

intended for use in those operations.

27. The expression “intended to be used” cannot be equated with “likely to facilitate” the

conduct of the business of manufacturing or of processing goods or of mining”.

28. In the case of State of Rajasthan vs. Jaipur Udyog Limited, reported in 30 STC, 565 (SC), Hon’ble Supreme Court had a occasion to consider Section 10 (b) read with Section 10-A of the Central Sales Tax Act. In that case dealer was registered for Machinery an has issued Form-C for purchase of Earth Moving Machinery comprising Bulldozers, Dumpers and Tipping Wagons, paying the preferential rate of tax. Assessing Authority levied penalty on the ground that in respect of the aforesaid goods, dealer was not entitled for the benefit of preferential rate. The levy of penalty was confirmed up to the stage of Board of Revenue. In reference, the Division Bench of Rajasthan High Court held that in respect of the above goods, dealer was entitled to preferential rate. Matter went to Hon’ble Supreme Court. Hon’ble Supreme Court held as

follows:

“Now the only question is whether the respondent was guilty of falsely representing, when purchasing the goods referred to earlier, that those goods were covered by the certificate of registration. Unless it is shown that he had made such a false representation, Section 10-A is not attracted. Two Judges of the High Court and one Member of the Board of Revenue have come to the conclusion that the respondent was entitled to the preferential rate which he claimed. That is the view of the law taken by them. Assuming, without deciding, that the view taken by them is incorrect even then it is impossible to say under the circumstances of the case that the respondent was guilty of making any false representation. The view of the law, which he is contending for is supported by the view taken by two judges of the High Court and one Member of the Board of Revenue. Hence, we fails to see how such a view of

the law can be taken as false representation.”

29. In the case of Commercial Taxes Officer, Circle D, Jaipur vs. Rajasthan Electricity Board, reported in 104 STC, 89. Rajasthan Electricity Board was engaged in the business of generation and distribution of electricity. Apex Court affirmed the order of the Rajasthan High Court in which it has been held as follows:

“The High Court held that trucks, trolleys, trailers and the like, but not passenger vehicles, as also their accessories and spare parts, tyres and tubes could be purchased by the respondent-Board at the concessional rate of tax prescribed under Section 8 (1) of the Central Sales Tax Act, 1956 and that, to make things clear, the respondent-Board was entitled to have its registration certificate altered to include “tools and plants, including vehicles and other transportable goods, including their spare parts, tubes and tyres”. The respondent-Board is engaged in the business of generation and distribution of electricity. What is used in the distribution of electricity or intended for such use falls within the scope of Section 8 (3)(b) read with Rule 13 of the Central Sales Tax (Registration and Turnover)

Rules, 1957.

In so far as soaps, paints and varnishes are concerned, the High Court rightly upheld the finding of the Board of Revenue that they were permissible only in so far as they were intended to be used for the purpose of cleaning boilers and machinery and other equipment and for the purpose of painting machinery and electrical goods. Raincoats could not be purchased at the concessional rate of tax so far as they were necessary for the use of linesmen working on transmission lines during the rainy season and winter; similarly, battery cells to the extent they were necessary for use by linesmen for working on

transmission lines during the night.”

30. In the case of Commissioner of Sales Tax, Madhya Pradesh, Indore vs. Bombay Garage, reported in 57 STC, 67, dealer purchased air cooler. Penalty was levied on the ground that air cooler was not covered under the registration certificate. Tribunal has deleted the penalty holding that the assessee was under the bonafide belief that air cooler was covered under the expression “electric motor, refrigerator and allied machines” mentioned in the registration

certificate. Division Bench of Madhya Pradesh upheld the order of the Tribunal.

31. In the case of Braja Lal Banik vs. State of Tripura and Others, (supra) Division Bench of Gauhati High Court set aside the penalty under Section 10-A of the Act on the ground that in the notice issued under Section 10-A of the Act did not contain any details whatsoever of the alleged charges under Section 10 (b) except for replacing the language of the said clause, and no such details were given even after being asked for and even the order of the penalty did not

contain any of these informations.

32. In the case of M/s Spring Valley Fruits Products Co. Ltd., Bareilly vs. CST (Supra) dealer was registered for plant and machinery. It produces generator. Penalty under Section 10-A was levied on the ground that dealer was not registered for generator. The claim of the dealer was that generator was machinery and under this belief Form C was issued. This Court set aside

the penalty on the ground that the dealer was under the bonafide belief.

33. In the case of CST vs. M/s Tek Invest (India) Pvt. Ltd., Haridwar, (Supra), dealer was registered for machinery while it had issued Form C for generator. Thus, penalty was levied under Section 10-A of the Act. This Court upheld the order of the Tribunal and held that

generator is machinery.

34. In the case of CST vs. Rama & Sons reported in 1999 NTN (Vol. 15) 828; 1999 UPTC, 245, dealer was registered for Biscuits under the Central Sales Tax Act and had issued Form-C for purchase of Toffee and Flash Brush. Assessing Authority levied the penalty under Section 10 (b) on the ground that dealer was not registered for Toffee and Flash Brush. Penalty was deleted by the Tribunal. While deleting penalty, Tribunal has observed that Toffee and Biscuits were purchased through common invoice, and both items were taxable at the same rate and dealer had been submitting requisite details in Sales Tax Office from time to time and therefore, there is no mens rea or even intention on the part of dealer. This Court has set aside the order of Tribunal and upheld the penalty under Section 10 (b) read with Section 10-A.

35. In the case of Vijay Electrical vs. State of Tamil Nadu, reported in 82 STC, 268, Form-C was issued for Ball Bearing while the dealer was registered for machinery and electrical goods, a penalty under Section 10-A read with Section 10 (b) of the Act was levied and was confirmed

by the Division Bench of Madras High Court on the ground that false representation was made

by the dealer.

36. In the case of Integrated Enterprises vs. State of Kerala, reported in 46 STC, 103, dealer was registered for Coca cola, Fanta Orange and Fanta Soda while the Form-C was issued for purchase of Bottle Coolers. A penalty was levied under Section 10-A read with Section 10 (b) of Central Sales Tax Act which was upheld by the Division Bench of Kerala High Court on the ground that the dealer was not registered for Bottle Coolers and made a false representation

while issuing Form-C.

37. In the case of CST vs. M/s Misra Modern Rice Mills, Gorakhpur, reported in 2003 NTN (Vol. 23), 713, the dealer was not registered for machinery but has issued Form-C for purchase of Machinery. Penalty under Section 10-A read with Section 10 (b) was levied on the ground that dealer was not registered for Machinery. Tribunal has deleted penalty on the ground that at the time of taking registration in statement on oath it was stated that it requires Form-C and 31 for Machinery. This Court held that such statement made at the time of taking registration, did not amount to bonafide belief. It has been held that the dealer had neither applied for registration for Machinery nor in the registration certificate, machine was mentioned and therefore, it could not be said that the dealer was not aware that it was not registered for Machine while making purchase of machine and thus order of the Tribunal deleting the penalty

under Section 10-A read with Section 10 (b) was set aside.

38. In the case of The CST vs. S/s Hari Oil and General Mills, Mathura (Supra) dealer was carrying on the business of manufacture and sale of oil and oil cakes. Dealer in its registration application sought registration only for machinery, plant, spare parts and electrical goods. The goods used for packing of goods but has not mentioned oil seed in the registration application and accordingly, registration application was not issued in oil seed. Dealer, however, issued Form C for oil seed. This Court held that dealer was liable for penalty under Section 10-A of the

Act for issuing Form C for oil seed for which it was not registered.

39. In the case of CST vs. Rewa Cold Fields Ltd. and Another (Supra), dealer was engaged in operating the coal mine, sought registration for the purposes of Section 8 of M.P. Sales Tax Act for timber, kerosene oil, drilling bits, hewing implements of all kinds, dry cells, torches, cement and lime and electrical bulbs. Apex Court considered the definition of the raw material given in

Section 2 (l) of the Act held as follows:

“Learned Counsel for the assessee referred to various judgment, Anwarkhan Mahboob Co. vs. State of Bombay (now Maharashtra) (1961) 1 SCR 709, Indian Copper Corpn. Ltd. vs. Commr. of Commercial Taxes (Supra), Union of India vs. V.M. Salgaoncar and Bros. (P) Ltd., JT 1998 (2) SC 490 and CCE vs. Ballarpur Industries Ltd. JT 1989 (4) SC 396 none of which is apposite to the precise definition with which we are concerned. It seems to us clear that, drilling bits apart, none of the articles aforementioned can qualify to be articles “consumed in the process of manufacture” or, to put it in a different way, consumed in the mining of the coal. They may be used for purposes incidental to the mining, but are not integral

thereto.”

40. The question for consideration is whether the goods in respect of which Form C was issued are covered under the items mentioned in the registration certificate and are intended for use in the manufacturing of the goods as contemplated under Section 8 (3)(b) of the Act and Rule 13 and if the answer is in negative, whether on the facts and circumstances it can be said

to be a case of false representation.

41. It is true that “false representation” means something done knowingly having knowledge. If anything is done bonafidely such act cannot be said to be false representation. The language of Form C shows that declaration is required to be made, that the goods are covered by registration certificate, therefore, while issuing Form C in respect of the goods, it is incumbent upon the dealer to be clear that the goods in respect of which Form C is being issued is covered under the registration certificate. Thus, Form C should be issued only when

dealer is sure that the goods for which it is issuing Form C is covered under the registration

certificate.

42. Applicant is a big company and the work of each branch is being looked after by the qualified persons. Applicant had moved the applications time to time for the amendment in the registration certificate, shows that the applicant was fully aware that for the issue of Form C, the registration is required under the Central Sales Tax Act for the items, either required for resale or intended for use in the manufacturing. On these background, it has to be examined whether the items in respect of which Form C was issued were covered or not under the registration certificate and dealer was entitled to issue Form “C” in respect thereof and while issuing Form C in respect of such goods, the applicant acted under the bonafide belief and there was no false representation. Apex Court and the various High Courts have held that the items, which are directly or indirectly required in the manufacturing of goods is eligible for the benefit of concessional rate of tax and would be covered under Section 8 (3)(b) of the Act and Rule 13. It has been held that the goods like building material, hospital equipment etc. are not the goods eligible for the benefit of concessional rate of tax. The goods which are not connected with the manufacturing but are connected with the sale or distribution of the manufactured commodity is also not eligible for the benefit of concessional rate of tax, in as much as they are not required for use in the manufacturing. The applicant claimed to be the manufacturer of petroleum products, lubricants, grease, HSD, Kerosene, Furnace Oil, LPG, Naphtha, Aviation Turbine oil, Aviation Gasoline, MTO, Cape, waxes. The items in respect of which Form “C” was issued and are in dispute are claimed to have been used in the manufacturing and were

intended for use in the manufacturing.

43. With the aforesaid background, let us examine each individual items whether they are

eligible for the benefit of concessional rate of tax.

LPG Gas Cylinder

44. Claimed to be covered under empty packages. Under the registration certificate empty packages is mentioned for resale and not for use in the manufacturing. Gas were sold filled in cylinder. Cylinders were never sold. It is not the case of the applicant that the gas has been sold along with cylinders. Thus cylinder was not resold. It is also not intended for use in the manufacturing because the filling of gas in the cylinder is after manufacturing of gas and is required for delivery of the manufactured goods and not for the manufacturing. It has also been stated by the Tribunal that in the registration certificate LPG Cylinder was added in the registration certificate. The dispute relates to the purchases of LPG cylinders prior to 12.08.1982 when the LPG cylinder was not mentioned in the registration certificate. For the aforesaid reasons, in my view the issue of Form C for the purchase of LPG cylinders prior to 12.08.1982 was not proper and the inference drawn by the authorities below that while issuing Form C for the purchase of LPG cylinder applicant had made false representation that it was

registered for the said item, is correct.

45. Safety Boot, Wooden Sleeper, Mica Brick, Ladder, R.C.C., Pipe, Kambal, Cement, Yarn, Trailer, Hospital Equipment, Transmitter, Fire Fighting Pump, Cement Paint, Film, G.I. Wireness, Seal, Brush were not intended for the use in the manufacturing and they have not been used in the manufacturing. They were not required in the manufacturing process directly or indirectly. Vessels is required for filling LPG tank, which is not part of the manufacturing process. Thus, it is also not required for use in the manufacturing. The claim that it is covered

under steel plate cannot be accepted by any stretch of imagination.

46. Thus, for the reasons stated above, the applicant while making the purchases and issuing Form C made false representation that it was registered in respect of the aforesaid goods under Central Sales Tax Act while fact was otherwise. In fact, the applicant was not entitled for the benefit of concessional rate of tax because goods were not intended for use in the manufacturing under Section 8 (3)(b) of the Act and Rule 13. Tribunal has rightly sustained

the penalty under Section 10-A of the Act.

In the result, all the revisions fail and are accordingly, dismissed.

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