The Allahabad High Court upheld the penalty imposed on Hindustan Petroleum Corporation under the Central Sales Tax Act, 1956 as the assessee failed to prove bonafide intention in wrong representation while purchasing goods.
Shri Pradeep Agarwal, counsel for the revisionist and Shri Sanjay Sareen, Additional Chief Standing Counsel for the State – respondents.
The Revisionist, M/S Hindustan Petroleum Corp is a Central Government Corporation engaged in the business of refinery of crude oil and marketing of petroleum product throughout India. The revisionists do not have any refinery in the State of Uttar Pradesh ( UP ). The petroleum products are either purchased from other oil marketing companies or imported from outside the State of U.P. for trading in the State of U.P.
The revisionist sold LPG Gas in cylinders as well as kerosene oil through the public distribution system. The revisionist is registered both under the UP VAT Act and the Central Sales Tax Act. As required under the Act, the revisionist obtained a registration certificate under the Central Sales Tax Act ( ‘the Act’ ) where the goods are being mentioned to be purchased at a concession rate. The word “container” is mentioned in the certificate.
In the normal course of business, the revisionist purchased valves, regulators, PP caps, Aluminum Seal, blue dye, etc. While passing the penalty order under section 10-A of the Act for the assessment year 2004-05, it has been observed that the above goods to the tune of Rs. 3,88,42,792/-.
While passing the order under section 10-A of the Act for the assessment year 2007-08, total purchase of above goods was shown to the tune of Rs. 1,84,38591/- and accordingly, the penalty was imposed @ 15%, which comes to Rs. 58,26,419/- for the assessment year 2004-05 and Rs. 2765789/- for the assessment year 2007-08, respectively, against which first appeals were preferred, which were dismissed vide order dated 26.05.2012, against which second appeals were preferred, which were dismissed by the impugned order dated 26.04.2013.
The revisionist submitted that since in the registration certificate, the container was specifically mentioned and the item purchased, such as regulator, valves, PP caps, aluminium seal, and SC wires are covered under the word “container”, therefore, the revisionist had bonafidely issued the same. To elaborate on his submission, he submitted that since the revisionist is selling LPG gas filled in container/cylinder, therefore, the items were required for delivery of goods and therefore, were essentially required. He further submitted that values are an integral part of the container/cylinder, which prevents LPG gas from leakage.
Without a regulator, the LPG gas would not be released from the cylinder. PP caps are safety features, which are used the cap valve to prevent any leakage from LPG. Similarly, the aluminium seal protects and prevents valves from being damaged. He further submits that these essential items are required for storage, transport and use of LPG gas-filled cylinders and therefore, the word “container”, which is specifically mentioned was under a bonafide belief and trust that the same is covered under the word “container” mentioned in the registration certificate granted under the Act.
Further submitted that in the first round of litigation up to the High Court, Revision Nos. 253 & 254 of 2011 was allowed by the Court and the matter was remanded by order dated 20.10.2011, where a specific direction was given to the authorities to decide the issue in terms of the order passed by the Apex Court in the case of M/s Sanjeev Fabrics, but the authorities have failed to follow the specific direction of the Court in the above-mentioned revisions.
Per contra, the Additional Chief Standing Counsel supported the impugned order and submitted that the revisionist has failed to respond to the show cause notice issued to it and therefore, while framing the penalty order, a specific finding of fact has been recorded against the revisionist that the revisionist has failed to bring on record any material in support of its contention to justify the mens rea.
A single bench comprising Justice Piyush Agrawal held that purchases of valves, regulators, PP caps, aluminium seals, etc. are not mentioned in the registration certificate and the use of Form – C could not be demonstrated by the revisionist that the same are covered under the word “container” was under bonafide belief or mistake of fact as on remand, notice was issued, but the revisionist failed to bring on record any cogent materials to justify the bonafide belief a therefore, a finding of fact was recorded by the assessing authority, which was not challenged by the revisionist, either in the first appeal or in second appeal.
While dismissing the petition, the Court upheld the impugned judgements & orders passed by the Commercial Tax Tribunal.
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