COMMISSIONER OF SALES TAX, U.P. versus M/S. SANJIV FABRICS

Citation: [2010] 11 S.C.R. 627 · Decided: 10-09-2010 · Supreme Court of India · Bench: D.K. JAIN · Disposal: Appeal(s) allowed

Judgment (excerpt)

(2010] 8 S.C.R. 627 
COMMISSIONER OF SALES TAX, U.P. 
A 
V. 
M/S. SANJIV FABRICS 
(Civil Appeal Nos.2344-2347 of 2004) 
SEPTEMBER 10, 2010 
B 
[D.K. JAIN AND H.L. DATTU, JJ.] 
Central Sales Tax Act, 1956: s. 1 O(b) r. w. s. 1 OA - Misuse 
of registration certificate - Using Form 'C' for purchase of 
commodities not covered by certificates of registration - Levy C 
of penalty - Essential ingredient for - Held. Existence of 
mens rea is an essential ingredient for the levy of penalty JJ/ 
s. 1 O(b) r. w. s. 1 OA -
The use of the expression "falsely 
represents" in s.10(b) indicates that the offence thereunder 
comes into existence only if the dealer acts deliberately in 
D 
defiance of law or is guilty of contumacious or dishonest 
conduct - For levy of penalty u/s. 10A, burden is on the 
revenue to prove the existence of circumstances constituting 
the offence uls.10(b) - On facts, the explanation by dealers 
that they were under bonafide belief that the commodities E 
purchased were covered under the registration certificate 
need consideration afresh - Matter remitted to adjudicating 
authority - Interpretation of statutes. 
Interpretation of statutes: Taxing statute -
For 
determining whether mens rea is an essential element of an 
F 
offence created under a taxing statute, regard must be had 
to the object and scheme of the statute, the language of the 
section and the nature of penalty - Central Sales Tax Act, 
1956 - s.10(b) r.w. s.10A. 
The questions which have arisen for consideration 
in the two sets of appeals are whether the requirement 
of mens rea is an essential ingredient for the levy of 
penalty under Section 10(b) r.w. Section 10A of the 
627 
G 
H 
628 
SUPREME COURT REPORTS 
(2010] 11 S.C.R. 
A 
Central Sales Tax Act, 1956 and whether the dealers are 
guilty of false representation and, therefore, penalty is 
imposable on them for using Form 'C' for the purchase 
of the commodities not covered by their certificates of 
registration. In the first set of appeals, the High Court set 
B 
aside the levy of penalty on the dealers and in the second 
set of appeals, the High Court reduced the penalty in 
respect of earlier assessment years. 
Allowing the appeals and remitting the matters to the 
C adjudicating authority, the Court 
HELD: 1.1. Section 10 of the Central Sales Tax Act, 
1956 not only enumerates seven types of violations of the 
provisions of the Act which constitute an "offence", it 
also makes them punishable by prosecution and 
D 
punishment, which ranges from simple imprisonment for 
a period, which may extend to six months, or fine or both 
and in a case of continuous offence, the Section provides 
for a daily fine. Section 1 OA of the Act provides for the 
imposition of penalty in lieu of prosecution. It provides 
E that if any person purchasing goods is guilty of an 
offence under clause (b) or clause (c) or clause (d) of 
Section 10 of the Act, a penalty of fine may be imposed. 
Therefore, it is to be seen whether the words "falsely 
represents" appearing in clause (b} of Section 10 would 
F 
cover mere incorrect representation or would embraces 
only such representations which are made knowingly, 
wilfully and intentionally. [Para 10-11] [640-H; 641-A-D] 
1.2. The question whether an offence can be said to 
have been committed without the necessary mens rea is 
G a vexed one. However, the broad principle applied by the 
courts to answer the said question is that there is a 
presumption that mens rea is an essential ingredient in 
every offence but the presumption is liable to be 
displaced either by the words of the statute creating the 
H 
COMMISSIONER OF SALES TAX, U.P. v. SANJIV 
629 
FABRICS 
offence or by the subject matter with which it deals and 
both must be considered. While examining whether mens 
rea is an essential element of an offence created under a 
taxing statute, regard must be had to the following 
factors: (i) the object and scheme of the statute; (ii) the 
language of the section and; (iii) the nature of penalty. It 
A 
B 
is true that the object of Section 10(b) of the Act is to 
prevent any misuse of the registration certificate but the 
legislature has, in the said Section, used the expression 
"falsely represents" in contradistinction to "wrongly 
represents." The use of the expression "falsely c 
represents" is indicative of the fact that the offence under 
Section 10(b) of the Act comes into existence only where 
a dealer acts deliberately in defiance of law 

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