KERALA HIGH COURT

                                           Kottayam Electricals Ltd

                                                         Vs

                                                 State of Kerala

                                                 (V.V. Kamat, J.)

                                                   08.08.1973

                                                 JUDGEMENT

V.V. Kamat, J.

( 1. ) THE assessee, a company has come up in revision challenging the finding of the Sales-tax
authorities and of the Tribunal that he is guilty of the offence under S. 10 (d) of the Central Sales-
tax Act, 1956 (for brief the Act) and the consequent levy of penalty under S. 10-A of the Act.
THE assessee-company is a registered dealer in electrical goods. It also undertakes works-
contract such as wiring. During the assessment year 1967-68 the Sales-tax Officer, on
verification found that the company had used electrical goods purchased by it for execution of
works contract. THE purpose for which the goods were purchased as entered in the certificate of
registration was 're-sale'. THE assessee company purchased electrical goods worth Rs. 9,948-60
by issuing 'c' Forms, and it was these goods that were used in the works contract undertaken by
the company. Annexure A notice was therefore issued by the Sales-tax Officer proposing to take
action under S. 10-A of the Act. Annexure B is the assessee's objections. THE main contentions
were that the use of the goods for distribution of electricity is permitted under s. 8 (3) (b), that
goods were used only when they were not otherwise available and that therefore there was no
mens tea, and there was 'reasonable excuse' for the use. Overruling the objections the Sales-tax
Officer imposed a penalty of rs. 1,193. 88. Annexure C is the order of the Sales-tax Officer and
therein it is said: "this sort of offence had been committed by the assessee in all the prior years,
and penalty had been imposed for all these cases. THE same offence is being repeated during the
year. "

( 2. ) THE Sales-tax Officer put the offence both under s. 10 (b) and (d) of the Act. THE assessee
appealed. THE Appellate Assistant commissioner also negatived the arguments based on mens
rea and reasonable excuse: He said: "it is further argued, by the appellant's learned representative
that there was no deliberate motive in using the goods for works contract and the same were used
only when there was any necessity. From the facts and in the circumstances of the case, I find
that using of these goods for the execution of contract works instead of reselling them must be
deemed to be an act knowingly done by the appellant. This is also a case where the appellant
should be made liable as if be had purchased goods for his own use and not for resale. THE
appellant has been imposed penally for the misuse of 'c' forms during the previous years also. II
therefore, find that the appellant had knowingly committed the offence. " On further appeal the
Tribunal noticed that the assessee had no case that generation and distribution of electricity were
included in its activities and that wiring was incidental to those activities. Regarding the
contention that the assessee had reasonable excuse for the use, the Tribunal said: "another
argument advanced on behalf of the appellant is that the goods in question were used only when
they were not available and hence there has been'reasonable excuse' in using the goods for wiring
contracts. No evidence has been adduced regarding non. availability of the goods. Nor have the
circumstances in which the goods were not available been explained. When the appellant could
effect the purchases regularly it has to be presumed that the goods were available. So the plea of
non-availability cannot be raised as a reasonable excuse. The contention that the offence under
clause (d) has not been committed therefore fails. " The question of mens rea as such seems not
to have been taken before the Tribunal. The Tribunal found that there was no violation of S. 10
(b) but only of S. 10 (d ). In that view the Tribunal upheld the levy of penalty.

( 3. ) MR. S. Gopalakrishna Iyer, the learned counsel for the assessee contended before us that
this is a case where the assessee had no guilty mind in that he had reasonable excuse for using
the goods for the purpose of works - contract, and that in any case the penalty imposed is in
excess of what is provided in S. 10-A of the Act. In the light of the findings by the Sales-tax
Officer, and the the Appellate Assistant Commissioner that the assessee is a habitual offender and
that in previous years also he had been penalised for violation of the provision of S. 10 (d), and
in view of the fact that before the Tribunal the assessee had not produced any evidence regarding
non-availability of the goods in support of his plea of 'reasonable excuse,' we are of the view that
the assessee had violated the provisions of S. 10 (d) with full knowledge of such violation and
without reasonable excuse. The learned counsel for the assessee invited our attention to the
decision of the Supreme Court in State of Madras v, Radio & Electricals Ltd. , (1966) 18 STC.
222, and particularly to a passage occurring at page 232 which is as follows: "but it is not for the
Tax Officer to hold an enquiry whether the goods specified in he certificate of registration of the
purchaser can be used by him for any of the purposes mentioned by him in form'c', or that the
goods purchased have in fact not been used for the purpose declared in the certificate. " ;