Somnath Iyer, J.
1. The Additional Assistant Commercial Tax Officer, Mangalore, commenced proceedings against the petitioner who is the proprietor of a business concern which engages in retreading tyres, for the imposition of penalty under section 10-A of the Central Sales Tax Act on the allegation that he had committed offences under clauses (b) and (d) of section 10 of that Act.
2. By an order in which he did not record findings in support of his conclusion, he directed the petitioner to pay a penalty of Rs. 4,628.50 in respect of the assessment year 1961-62 and a sum of Rs. 5,649.89 in respect of the year 1962-63.
3. There were two unsuccessful appeals preferred by the petitioner to the Assistant Commissioner, and in the further appeals preferred to the Sales Tax Appellate Tribunal the limited relief which he secured was a reduction in the penalty.
4. In these two revision petitions, the petitioner asks us to quash the orders made in that way.
5. The petitioner was registered as a dealer under section 7 of the Central Sales Tax Act (which will be referred to as 'the Act') and a registration certificate was granted to him under section 7(4) which authorised him to purchase goods belonging to the class of 'rubber': He did make purchases of rubber slabs and other articles made for rubber known as repairs material and curing air bags. He also purchased paints of a small value.
6. There were two charges against the petitioner. The first charge rested on the allegation that repairs material and curing air bags and paints were not covered by the certificate of registration, but that he used the certificate of registration, for making these purchases to get the benefit of the lower rate of sales tax to which section 8 refers. The second charge rested on the allegation that the goods so purchased were not used for the purposes enumerated in section 8(3)(b).
7. An imposition of penalty under section 10-A is possible only when a person who purchases goods under a certificate of registration, commits an offence under clause (b)(c) or (d) of section 10 and the notice which was issued to the petitioner stated that offences under clauses (b) and (d) had been committed by the petitioner. These two clauses read :
'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; or
* * * * (d) after purchasing any goods for any of the purposes specified in clause (b) of sub-section (3) of section 8 fails, without reasonable excuse, to make use of the goods for any such purpose;
* * * * he shall be punishable with simple imprisonment which may extend to six months, or with fine, or with both; and when the offence is a continuing offence, with a daily fine which may extend to fifty rupees for every day during which the offence continues.'
8. It is seen from clause (b) that an offence is committed under it only when there is a false representation by a registered dealer that the goods purchased by him were covered by his certificate of registration. It is not every purchase of goods which is not covered by a certificate of registration that constitutes an offence. That offence is committed only when the goods are not covered by the certificate of registration and there is a false representation that they are so covered.
9. The representation to which clause (b) refers becomes a false representation only when the registered dealer knows that the goods purchased by him are not covered by his certificate of registration but asserts that they are so covered and is thus able to purchase them. An intentional misrepresentation that the goods were covered by the certificate is an essential ingredient on the establishment of which alone an offence can be said to have been committed. That was the enunciation made by this Court in M. Pais & Sons v. State of Mysore. [ 17 S.T.C. 161]
10. But the Additional Assistant Commercial Tax Officer recorded no finding that any such false representation was made by the petitioner when he purchased the goods. It was maintained before him on behalf of the petitioner that the certificate of registration did cover repairs material and caring air bags which the petitioner purchased. It appears to have also been maintained that the purchases had been made by the petitioner who honestly believed them to be purchases which were possible under the certificate of registration.
11. That being the position and since section 8(3)(b) speaks of the classes of goods of which there should be a specification in the certificate of registration it was contended for the petitioner that the word 'rubber' refers to a class of goods in which materials such as repairs material and curing air bags are also included and that it was the duty of the Assistant Commercial Tax Officer to bestow thought to the question whether there was any false representation when the petitioner purchased those goods, or even the paint. On that there was no discussion by the Assistant Commercial Tax Officer. So he could not record a finding that an offence was committed under section 10(b) unless he reached the conclusion that the petitioner who knew that the goods were not covered by the certificate of registration made a false statement that they were when he made the purchases. The finding that an offence under section 10(b) was committed is therefore an unsustainable finding and it was not possible for the Assistant Commissioner of Sales Tax and the Sales Tax Appellate Tribunal to confirm it.
12. The offence of which section 10(d) speaks, which, according to the Assistant Commercial Tax Officer had also been committed by the petitioner is misuse, without reasonable excuse, of goods purchased for the purposes specified in section 8(3)(b).
13. Three ingredients constitute that offence and every one of them must be proved. The first is that the goods were purchased for the purpose enumerated in section 8(3)(b) the second is that they were not used for that purpose; and the third is that the failure to so use them did not have the support of any reasonable excuse.
14. The Assistant Commercial Tax Officer did no more than to record a finding that there was failure to use the goods purchased by the petitioner for the purpose for which they were purchased. He did not proceed to record a finding that the purchases were made for the purposes specified in section 8(3)(b), or that there was no reasonable excuse for the failure to so use them.
15. Some argument was expended during the hearing over the question whether the petitioner in the application presented for the grant of the registration certificate had or had not stated that the goods in respect of which he sought a registration certificate were required by him for the manufacture of goods for sale. That application is not before us; nor do we have the registration certificate granted to him. But what the petitioner stated in his application or what was stated in the registration certificate granted to him, ceases to have materiality when it is remembered that even on the assumption that the petitioner's registration certificate authorised purchase of goods only for the manufacture of goods for sale, no offence under clause (d) of section 10 is committed unless such is the purpose of which the purchase is made and there is misuse of the goods and there was no reasonable excuse for the failure to : use the goods for that purpose. The Assistant Commercial Tax Officer could not record a ending that an offence was committed under that clause unless he recorded a positive finding that the failure to use the goods for the purposes referred to in that clause was without reasonable excuse and that filing he did not record. So, it is clear that his finding that an offence was committed under section 10(d) is equally unsupportable.
16. The imperfection in the order of the Additional Assistant Commercial Tax Officer, to which we have referred, are also the imperfections which are discernible in the orders of the Assistant Commissioner and the Sales Tax Appellate Tribunal They overlooked the deficiencies in the order of the Additional Assistant Commercial Tax Officer and the clear provisions of clauses (b) and (d) of section 10 of the Act.
17. We, therefore, set aside the order of the Additional Assistant Commercial Tax Officer and also the orders made by the Assistant Commissioner of Sales Tax and the Sales Tax Appellate Tribunal.
18. We are informed by Mr. Aithala that the penalty imposed upon the petitioner has been recovered. If it has been so recovered, what has been recovered shall be refunded to him. We make no direction in regard to costs.
19. Petition allowed.