Tyres & Tubes were ‘Spare Parts’ in CST Regn. Certificate for Road Construction: Allahabad HC scraps Penalty for Invalid Purchase [Read Order]

The Allahabad High Court recently deleted a penalty imposed on a road construction firm under Section 10-A of the Central Sales Tax Act, 1956, ruling that tyres and tubes used for road construction machinery constituted ‘spare parts’ as per the company’s CST registration certificate.

The Department purported that M/s K M C Construction had falsely represented tyres and tubes as eligible items under the certificate, and thus attracted penal action for invalid purchase. However, the assessee contended that its registration certificate specifically mentioned ‘spare parts and machinery,’ which lawfully covered tyres and tubes required for operating heavy equipment used in road construction.

The Assessing Authority had earlier levied a penalty under Section 10-A for the offence enumerated in Section 10(b) for allegedly misusing the CST registration.

“10. Penalties : If any person-

(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;”

A revision petition was filed by the Commercial Tax Department against K M C Construction, challenging an order by the Commercial Tax Tribunal, Allahabad which affirmed that tyres and tubes were eligible purchases.

Appearing for the Revenue, Ravi Shanker Pandey, submitted that tyres and tubes were not expressly listed as registered goods and that their purchase was unauthorized under the CST framework.

Rishi Raj Kapoor appearing on behalf of the assessee, argued that the phrase ‘spare parts and machinery’ under Serial No. 38 of the registration clearly encompassed tyres and tubes as integral components of construction vehicles and equipment.

He further submitted that once the said fact is mentioned in the registration certificate, the firm cannot be accused of having committed any error to purchase of tyre and tube, which was duly covered under the head of spare parts.

Justice Piyush Agrawalobserved that Serial No.38 of the CST registration certificate explicitly included ‘spare parts and machinery’, and thus the tyres and tubes were rightly treated as covered goods. The Court held that the Tribunal committed no illegality in deleting the penalty and that the impugned order did not call for interference.

Accordingly, the Allahabad High Court dismissed the revision and affirmed the Tribunal’s order.

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