STATE OF TAMIL NADU versus KODAIKANAL MOTOR UNION (P) LID.

Citation: [1986] 2 S.C.R. 927 · Decided: 01-05-1986 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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927 
STATE OF TAMIL NADU 
v. 
IODAIKANAL MOTOR UNION {P) LID. 
MAY l, 1986 
[R. S. PATHAK AND Si\BYASACHI MUKHARJI, JJ, ] 
Central Sales Tax Act, 1956 - s. lOA - Penalty - Levy of 
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~antum of Penalty - Determination of. 
A 
B 
Interpretation of 
Statutes -
Legislative intent 
C 
y Ascertainment f)f - Duty of court. 
t 
The assessee had purchased motor spare parts on the 
basis of 'C' fo!'lll certificates issued to the11 under the 
Central Sales Tax Act, 1956, for sale, but instead of selling, 
the assessees used the11 for their own consumption. The Revenue 
proceeded on the basis that since the goods purchased had not 
been used for the purpose specified in s.8(3)(b) and as 
recorded in the 'C' form certificates, the assessees !Ld 
comitted offences under s. lO(d) of the Act and therefore, 
-"' were liable to pay penalty as welt. This view was affirmed by 
all the authorities including the Tribunal. 
On the question of quantum of penalty, the Tribunal held 
that 
the 
penalty 
leviable 
under 
s. 
lOA 
should 
be 
one-and-a-half times the concessional rate of tax and not 
i one-and-a-half the tax which would have been leviable if no 
'C' form certificate had been produced. 
D 
E 
F 
,-· -T 
The 
Revenue 
challenged before the High Court the 
'r 
' correctness of the view taken by the Tribunal. The High Court 
following its earlier decision in the State of Madras v. Pre. 
Industrial Corporation (24 S.T.C. 507) approved the view taken 
by the Tribunal. 
G 
Allowing the Appeals of the Revenue to this Court, 
HELD: 1. Sub-section (1) of s. lOA of the Central Sales 
Tax Act, 1956 makes it clear that penalty should be worked out 
H 
A 
928 
SUPREME COURT REPORTS 
[L986J 2 s.c.R. 
at the rate of tax which would have been levied l.f the offence :i._ 
had not been committed. In other words the question is what 
tax would have been levied under the Act if the offence had 
not been comnitted. The assessee would not have comnitted any 
offence only if he had carried out the undertaking given by it 
in its declaration in form 'C' or if he purchased the goods 
B 
without giving any declaration thereby incurring liability to 
pay normal rate of tax as contemplated by sub-s. (2) of s.8. 
One who commits defaults cannot be said to have carried out ~ 
c 
D 
E 
the undertaking given by him. [939 C-E] 
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2. The use of the expression "if" in the phrase "if the 
offence had not been comnitted" was meant to indicate a 
condition, the condition being that at the time of assessing ·~ 
the penalty, that situation should be visualised wherein there , 
was no scope of comnitting any of fence. Such a situation could f 
arise only if the tax liability fell under sub-s. (2) of s.8 
of the Act. The scheme of s.8 indicated the concessional rates 
contemplated by sub-s. (1) thereof would be available only 
with reference to those goods which are covered by the 
declarations in form 'C'. The moment it is found that in 
respect of particular quantity of goods the undertaking given 
by the assessee in form 'C' declaration has not been carried 
out, the goods were presumed to be such in respec.t of which no "' 
undertaking was existing. Such goods would be liable to noI'llllll 
tax contemplated under sub-section (2) of s.8. Therefore, the 
penalty should be worked out only on the basis of the normal 
rates prescribed under sub-s. (2) of s.8. [939 F-H; 940 A-Bl 
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M. Pais & Sons and Another v. 1be State of Mysore, 17 't" 
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F 
S.T.C. 161, Bisra Limestone Company Ltd. v. Sales Tax Officer, 
lloortela Circle, Uditnagar, and Others, 27 S.T.C. 531, 'Die 
Aasessing Authority and another v. ~ 
Metal Rolling Mills, f--', , 
[ 1971] Tax Law Report 1861, Kottay- Electricals Private 
Limited v. 1be State of Kerals, 32 S.T.C. 535 and 1be GeekvaT 
G 
Mills Ltd. v. 1be State of Qijarat, 37 S. T.C. 129·, approved. 
1be State of Madras v. Prea Industrial Corporation, 24, 
s.r.c. 507 and Deputy eo..t.ssioner of tc-rcial taus, 
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Madurai Division, Madurai v. Xodafkaml !btor Union Private 
y 
Limited, 31 s.r.c. l, overruled. 
H 
3. Section lOA was introduced for imposition of penalty 
in lieu of prosecution, that is to visit the person guilty 
STATE v. KODAIKANAL MOTOR UNION 
929 
,J, with certain ·penalty in place of prosecution. lie cannot be 
placed in a better position than one who would have complied 
with the provisions of the Act. [940 B-C] 
4. The Court !DlSt always seek to find out the intention 
of the legislature. This can be done from the language us

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