IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 22.11.2010 CORAM: THE HONOURABLE MR.JUSTICE M.M.SUNDRESH W.P.NOS.15034 AND 15035 OF 2002 Shree Vaishnodevi Mills Pvt. Ltd., Rep. by its Managing Director 118, Kumaran Road, Tiruppur – 641 601. ... Petitioner in both WPS' Versus The Commercial Tax Officer Central – I, Tiruppur. ... Respondent in both WPs' PRAYER: Writ petitions filed under Article 226 of the Constitution of India praying for the issuance of writ of certiorarified mandamus, to call for the records relating to the notice of the respondent in proceedings Nos.315516/99-2000 and 315516/98-99 respectively, dated 15.03.2002 and to quash the same and to direct the respondent from refraining from doing such acts against the petitioner. For Petitioner : Mr.R.Gandhi Senior Counsel for Mr.T.K.Rajeshwaran For Respondent : Mr.R.Mahadevan Additional Government Pleader (Taxes) COMMON ORDER The writ petitions have been filed by the petitioner seeking to quash the notice of the respondent in proceedings Nos.315516/99- 2000 and 315516/98-99 respectively, dated 15.03.2002, in so far as the proposal to impose penalty under Section 10(A)(i) of the Central Sales Tax Act (in short "the Act"). 2.The petitioner herein is a 100% Export Oriented Unit manufacturing and exporting cotton knitted fabrics. By the Certificate of Registration dated 17.08.1993, the class of goods mentioned therein are to be taxable at the specified rates. The particulars of the goods https://hcservices.ecourts.gov.in/hcservices/ mentioned therein are extracted hereunder: "b) For use in manufacture of processing of goods for sale: Cotton yarn, stitching yarn, needles all knitting stitching sewing machined and spares, hydraulic press, power loom cloth, electric iron boxes, textile manufacturing machineries and accessories, dyeing, calendering, packing machines. c) For use in mining: Nil d) For use in the general or distribution of Electricity of any other form of Power. Electric motor, Oil Engine, Generator and alternator card board wooden cases, Hoop iron, nails. e) Top Lables, cotton tape rolls, calico street, wires, paper bags." 3.The petitioner has been assessed to Central Sales Tax over the years. The petitioner has been buying dyes and chemicals for manufacturing and exporting the goods. While so, notices have been issued by the respondent in proceedings Nos.315516/99-2000 and 315516/98-99 respectively, dated 15.03.2002 on the ground that the petitioner has effected interstate purchases against Form "C" and issued Form "C" declarations by purchasing dyes and chemicals, which are not covered under Form "B" – Certificate of Registration, a penalty imposable under Section 10(A)(i) of the Act is warranted. Accordingly, the petitioner was directed to give its objections to the said proposal in writing. Challenging the same, the present writ petitions have been filed. 4.Mr.R.Gandhi, learned senior counsel for the petitioner submitted that the petitioner has been buying dyes and chemicals over the years. The petitioner has shown all those purchases in the respective returns filed. Form "B"–Certificate of Registration issued clearly covers dyes and chemicals. The learned senior counsel further submitted that the petitioner, after the purchase of dyes and chemicals, has exported the same outside the country. Therefore, the petitioner is entitled to get protection available under Section 5(1) and (3) of the Act, being the penultimate transaction prior to export. 5.It is the further contention of the learned senior counsel for the petitioner that in the absence of any mens rea attributable on the part of the petitioner, the proceedings initiated against the https://hcservices.ecourts.gov.in/hcservices/ petitioner, cannot be sustained. In support of his contention that mens rea is a pre-requisite for imposing the penalty under Section 10 (a) of the Act, the learned senior counsel for the petitioner has relied upon the judgment of the Full Bench of this Court in STATE OF TAMIL NADU VS. NU-TREAD TYRES [(2006) 148 STC 0256]. 6.Per contra, Mr.R.Mahadevan, learned Additional Government Pleader submitted that the writ petitions, as filed, are pre-mature. The learned Additional Government Pleader submitted that the proceedings have been initiated by the respondent only on the ground that the purchases made by the petitioner for the goods are not covered under Form "B" – Certificate of Registration. Therefore it is submitted that the said issue will have to be decided by the respondent and cannot be agitated before this Court. The learned Additional Government Pleader further submitted that in so far as the application under Section 5(1) and (3) of the Act is concerned, this is again a matter of fact to be decided by the authority and in any case, that is not the basis upon which the proceedings have been initiated. 7.Similarly, in so far as the contention regarding the establishment of mens rea is concerned, the learned Additional Government Pleader submitted that the question of mens rea, being a question of fact, the same has to be considered by applying the ratio laid down by the Full Bench of this Court in the judgment in STATE OF TAMIL NADU VS. NU-TREAD TYRES [(2006) 148 STC 0256]. Hence it is submitted that the writ petitions will have to be dismissed. 8.Admittedly, the orders impugned in the writ petitions are the show cause notices issued by the respondent proposing to levy penalty, by exercising the power under Section 10(a) of the Act. As held by the Full Bench of this Court in STATE OF TAMIL NADU VS. NU- TREAD TYRES [(2006) 148 STC 0256], the question of mens rea is a question of fact to be decided by the respondent, on the availability of the relevant materials placed before him. 9.It is no doubt true that while exercising the power of imposing the penalty, it is incumbent on the part of the respondent to give a positive finding that there is mens rea on the part of the assessee concerned. However, it cannot be said that even at the time of initiating the proceedings, the respondent will have to specify about the said aspect. Therefore, establishment of mens rea, being a question of fact, this Court cannot go into the same, except by directing the respondent to apply the ratio laid down by the Full Bench of this Court in STATE OF TAMIL NADU VS. NU-TREAD TYRES [(2006) 148 STC 0256], while exercising its power under Section 10(a) of the Act. 10.In so far as the other contentions raised by the learned https://hcservices.ecourts.gov.in/hcservices/ counsel for the petitioner are concerned, the same also cannot be decided by this Court. Admittedly, there is no adjudication on those issues by the respondent. What is challenged before this Court is only a show cause notice. As discussed above, this Court has not find any jurisdictional error on the part of the respondent. Therefore, it is very well open to the petitioner to raise all the contentions, including the applicability of Section 5(1) and (3) of the Act as well as the other contentions, such as the goods which are the subject matter of the sales are covered by the Certificate of Registration under Form "B". 11.Hence, this Court is of the opinion that the writ petitions, as filed, are pre-mature at this stage. However, while disposing the writ petitions, liberty is given to the petitioner to raise all their contentions before the respondent. The petitioner is given a further time of eight weeks from the date of receipt of a copy of this order to make all their contentions before the respondent. While passing final orders, the respondent is directed to consider all the contentions raised by the petitioner, including the ratio laid down by the Full Bench of this Court in STATE OF TAMIL NADU VS. NU- TREAD TYRES [(2006) 148 STC 0256]. 12.With these observations, the writ petitions are disposed of. No costs. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar TK To The Commercial Tax Officer Central – I, Tiruppur. +2ccs to Mr.T.K.Rajeshwaran, Advocate Sr 83208,83209 +1cc to The Special Government Pleader (Taxes) High Court,Madras Sr 83375 BVN(CO) km/7.12. W.P.NOS.15034 & 15035 OF 2002 https://hcservices.ecourts.gov.in/hcservices/