Judgment :- The petitioner society is a registered dealer under the Kerala General Sales Tax Act, 1963 as well as under the Central Sales Tax Act, 1956. The said society was formed to protect the interest of the small rubber growers of Palghat District. The society decided to set up a crumb rubber factory with the assistance received from the World Bank, the State Government and the Rubber Board. Approximate cost of the machinery was Rs. 35 lakhs. 2. According to the petitioner, the Secretary of the society was the Joint Registrar of Co-operative Societies in the Co-operative Department on deputation. The petitioner society was under the bona fide belief that they could purchase machinery for crumb rubber factory. They have therefore issued C-Form declarations for purchase of the machinery at the concessional rate under the bonafide belief that their certificate of registration issued under the Central Sales Tax Act and enable them to purchase machineries. Accordingly, C-Forms were issued for a small portion of the value of machinery to the extent of Rs. 3,21,203.75. But at the time of the final assessment for the year 1985-86, the first respondent scrutinised the C-Forms register and informed the petitioner that the certificate of registration did not specifically include the machineries for which they had issued C-Forms and under such circumstances, C-Forms could not be issued. Petitioner, there after, did not issue any C-Forms even though the machinery is valued at Rs. 35 lakhs. 3. On 18-5-1987, the first respondent issued a notice proposing to impose a penalty of Rs. 48,181/- to the petitioner society under S.10A of the Central Sales Tax Act on the ground that petitioner has committed an offence under S.10(b) of the Act. The petitioner sent a reply to the said show cause notice on 27-5-1985 itself stating that C-Forms were issued under the bona fide belief that the same could be issued for purchase of machinery for setting up the crumb rubber factory. They have also said that there was no malafide intention in issuing C-Forms. They, therefore, requested to drop all further proceedings and to drop the imposition of the proposed penalty. 4. They have also said that there was no malafide intention in issuing C-Forms. They, therefore, requested to drop all further proceedings and to drop the imposition of the proposed penalty. 4. Without taking into consideration the objections filed by the petitioner in its correct perspective, the first respondent over-ruled the objections and imposed a penalty on the petitioner society stating that the explanation offered by the society that they are under the bona fide belief in issuing the C-Forms for purchase of electric goods is unacceptable. He has also found that ignorance of law is not a valid excuse. First respondent further found that even though the society had applied for amending the certificate of registration for the purpose of inclusion of the machinery and the same was granted, it is not sufficient to condone the misuse of the C-Forms. He further found that there is no material in the objection filed by the society and hence he over-ruled the same and imposed the penalty of Rs. 48,181/- under S.10A of the Central Sales Tax Act for the offence committed under S.10(b) of the Act. 5. The petitioner society had filed a revision before the Deputy Commissioner, Agricultural Income Tax and Sales Tax, Palghat. Before the Revisional Authority also they have pleaded that C-Forms were issued under the bona fide belief that the machinery is included in the certificate of registration and the machineries were heeded for the establishment of the crumb rubber factory. They have further contended before the Deputy Commissioner that there is no malafide intention for them in issuing the C-Forms. According to the petitioner, they have also prayed for a stay of the recovery of penalty imposed under Ext. P1 and when the said petition was heard, instead of hearing the revision petition, the Deputy Commissioner passed Ext. P2 order on the revision petition itself without giving them an opportunity to argue the revision on merits. In Ext. P2, the Deputy Commissioner found that the Secretary of the society is an educated man and when such a person signs the C-Form declaration, which contains the affirmation that the goods are covered by the registration certificate, there is a false representation and no further evidence is required to prove the mens rea. In Ext. P2, the Deputy Commissioner found that the Secretary of the society is an educated man and when such a person signs the C-Form declaration, which contains the affirmation that the goods are covered by the registration certificate, there is a false representation and no further evidence is required to prove the mens rea. Therefore, he has found that an offence under S.10(b) of the Act had been proved and hence confirmed the levy of penalty as legal and proper. 6. Against Ext. P3, the petitioner has filed a revision before the Board of Revenue evidenced by Ext. P3. Ext. P3 revision was considered by the Board of Revenue and passed Ext. P6 order wherein the Board of Revenue also confirmed the orders, Exts. P1 and P2 passed by the statutory authorities. But according to the petitioner, the Board of Revenue did not consider independently the question of malafide intention raised before the authority by the petitioner society in the matter of issuing C-Forms. The petitioner challenges the validity of Exts. P1, P2 and, P6 orders passed by the respondents in this proceedings under Art.226 of the Constitution of India. 7. I heard the learned counsel appearing on behalf of the petitioner as well as the learned Government Pleader. Even though notice was served on the respondents as early as on August, 1989, no counter affidavit has been filed by the respondents in this case. The learned counsel for the petitioner submits that the first respondent who is the authority competent to impose the penalty under the Act has not entered into any finding regarding the essential ingredients under the Section viz. the mental element in issuing the C-Forms and according to the learned counsel, the authority has not applied his mind on the question whether the petitioner has got any 'mens rea' in issuing the C-Forms in question. This aspect of the matter according to the learned counsel has been elaborately argued before the original authority as well as the revisional authorities. But they did not apply their mind and therefore, the orders imposing penalty on the society are clearly illegal, unjust and uncalled for. This aspect of the matter according to the learned counsel has been elaborately argued before the original authority as well as the revisional authorities. But they did not apply their mind and therefore, the orders imposing penalty on the society are clearly illegal, unjust and uncalled for. The learned counsel also argued that for attracting the penalty under S.10A of the Act, the question of mens rea will have to be considered by the original authority before imposing penalty and in this case, the first respondent has not applied his mind on that jurisdictional aspect of the matter while passing Ext. P1 order. Therefore, according to the learned counsel, orders passed by the statutory authorities are illegal and unwarranted. Section 10(b) and S.10A of the Central Sales Tax Act is extracted below: "S.10: Penalties: If any person (a) .-' (aa) (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;" Section 10A: Imposition of penalty in lieu of prosecution: (c) If any perser purchasing goods is guilty of an of Fence under clause (b) or clause (c) or clause (d) of S.10, the authority who granted to him or, as the case may be, is competent to grant to him a certificate of registration under this Act may, after giving him a reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum not exceeding one-and-a-half times the tax which would have been levied under subsection (2) of S.8 in respect of the sale to him of the goods, if the sale had been a sale falling within that sub-section." 9. Thus, it can be seen that for attracting the penal provision under S.10A of the Act, only when a registered dealer falsely represents when purchasing any class of goods that the goods of such class are covered by his certificate of registration. Thus an element of mens rea is necessary for attracting the provision under S.10 A of the Act. A reading of Ext. P1 order passed by the competent authority would clearly show that there is no finding that the representations made by the petitioner were false viz.,' that the C-Form declarations were issued with the full knowledge that the goods purchased were not covered by the certificate of registration. A reading of Ext. P1 order passed by the competent authority would clearly show that there is no finding that the representations made by the petitioner were false viz.,' that the C-Form declarations were issued with the full knowledge that the goods purchased were not covered by the certificate of registration. In the decision reported in Varghese v. Sales Tax Officer (Vol. 16 STC232), a learned judge of this Court, K.K. Mathew, J. as he then was, quashed an order imposing penalty by the Sales Tax Officer as there was no finding by the said officer regarding the nature of the representation made by the assessee as false and the C-For ra declarations were issued without the belief that the goods purchased were covered by the certificate of registration. Again in the decision reported in Hindustan Steel Ltd. v. State of Orissa (Vol.25 STC 211), the Supreme Court has stated that'll is elementary that S.43 of the Madhya Pradesh General Sales Tax Act, 1958 providing for imposition of penalty is penal in character and unless the filing of an inaccurate return is accompanied by a guilty mind, the Section cannot be invoked for imposing the penalty." Mysore High Court in the decision reported in K.A. Parameswara Bhatta & Bros. v. Deputy Commissioner Commercial Taxes (Appeals), Bangalore & Another (Vol.32 STC 547), it was held that "the condition precedent for the exercise of the jurisdiction of the registering authority to impose a penalty under S.10A of the Central Sales Tax Act, 1956, for an offence under S.10(b) is that there must be a finding that the registered dealer falsely represented when purchasing any class of goods that goods of such class are covered by the certificate of registration. In the absence of such a finding, an order imposing penalty under S.10(b) of the Act has to be quashed." Again, in the decision reported in Rajalakshmi Textiles Finishing Mills and another v. Sales Tax Officer, First Circle, Cannanore and another (Vol.38 STC 302), a Division Bench of this Court considered the effect of S.8(3)(b) of the Central Sales Tax Act, 1956 read with R.13 of the Central Sales Tax (Registration and Turnover) Rules, 1957 and S.10(b) and (d) of the Act and found that S.10(d) will be attracted only in case where there has been no such manufacture as envisaged by that clause 'without reasonable excuse'. Whether there is reasonable excuse has to be considered and determined by the officer empowered to impose the penalty. This court also found that wherever there is an infringement of any of the clauses of S.10, it does not automatically follow that the maximum penalty that can be imposed under this Section must be imposed on the dealer. A discretion which is in the nature of a judicial discretion, must be exercised by the officer before determining the quantum of penalty. In the above case also, the order passed by the assessing authority did not show that the authority has come to the conclusion that there is no' reasonable excuse'. What the authority has found in the order which is extracted in the judgment is "I have carefully examined the contents of the objection filed. The firm has not adduced any valid evidence in support of the contention that there was no misuse of -Forms'. This court also accepted the finding of the learned single judge that there has been no violation of sub-section (d) of S.10 of the Act and held that the conclusion of the Sales Tax Officer that there has been violation of sub-sec lion (b) without a finding that there has been false representation is unsustainable and so remanded the case for consideration of the question whether there was any false representation. As stated earlier, unless and until there is a finding by the statutory authority, that there is a false declaration made by the assessee in respect of the C-form issued, no penalty can be imposed under S.10 A of the Act. The learned counsel for the petitioner has also placed reliance on the decision reported in Cement Marketing Company of India v. The Assistant Commissioner, Sales Tax (Vol.45 STC 197) wherein the meaning of the expression 'falsely represents' under S.10 has been explained. Learned Judges found that the words 'falsely represents', postulate mens rea in that representation should be of something as true which in fact and to his knowledge is false and that this element would be excluded if the purchaser acted in the bonafide belief that his representation is true. Learned Judges found that the words 'falsely represents', postulate mens rea in that representation should be of something as true which in fact and to his knowledge is false and that this element would be excluded if the purchaser acted in the bonafide belief that his representation is true. The Supreme Court further considered the question whether the petitioner is liable to penalty under S.43 of the Madhya Pradesh General Sales Tax Act and S.9(2) of the Central Sales Tax Act, 1956 for filing false representation by not including in the taxable turnover, the amount of freight which was part of the' free on rail destination railway station' price at which the goods were sold. The Supreme Court observed: "It was a highly arguable contention which required serious consideration by the court and the belief entertained by the assessee that it was not liable to include the amount of freight in the taxable turnover could not be said to be malafide or unreasonable. What. S.43 of the Madhya Pradesh General Sales Tax Act, 1958, requires is that the assessee should have filed a "false* return and a return cannot be said to be "false* unless a there is an element of deliberateness in it. It is possible that even where the incorrectness of the return is claimed to be due to want of care on the part of the assessee and there is no reasonable explanation forthcoming form the assessee for such want of care, the court may, in a given case, infer deliberateness and the return may be liable to be branded as a false return. But where the assessee does not include a particular item in the taxable turnover under a bonafide belief that he is not liable so to include it, it would not be right to condemn the return as a "false' return inviting imposition of penalty." The learned counsel appearing on behalf of the Revenue placing reliance on the decision of this Court in Integrated Enterprises v. State of Kerala (Vo. 46 STC 103) and submitted that the petitioner's explanation that they bona fide believed that the registration certificate of the petitioner was comprehensive enough to include the purchase of the machinery in question cannot be accepted. There was no basis in the plea of bona fide belief that the certificate of registration did not contain the same. 46 STC 103) and submitted that the petitioner's explanation that they bona fide believed that the registration certificate of the petitioner was comprehensive enough to include the purchase of the machinery in question cannot be accepted. There was no basis in the plea of bona fide belief that the certificate of registration did not contain the same. According to the learned counsel, the plea was too far fetched, unreasonable and baseless to justify an inference of bona fides in favour of the petitioner. The only possible inference in the circumstances was that the petitioner acted malafide in making what was clearly a false representation. But in the said decision, there is a finding by the assessing authority which is extracted at page 104 of the said decision that the declaration in C-Form clearly stated that goods purchased were covered by the registration certificate and this was a false representation knowingly and deliberately made so as to earn the benefit of concessional rate of sales tax and there was a clear mens rea to make the petitioner liable. But in this case, as stated earlier, in Ext. Pf order, there is no finding by the assessing authority that the false declaration was knowingly and deliberately made with malafide intention to earn the benefit of concessional rate of sales tax. As a matter of fact, there is no finding regarding the means rea or the mental element of the assessee at the time when C:Fonns were issued. In the absence of such a finding by the assessing authority, there is absolutely no justification to impose the penalty under S.10A of the Act. 10. In the decision reported in Braja Lai Banik v. State of Tripura and others (Vol. In the absence of such a finding by the assessing authority, there is absolutely no justification to impose the penalty under S.10A of the Act. 10. In the decision reported in Braja Lai Banik v. State of Tripura and others (Vol. 78 STC 283), the Gauhati High Court had held that "Section 10A of the Central Sales Tax Act, 1956, vests the power of levying penalty on a dealer, for offences under clauses (b), (c) and (d) of S.10 of the Act, on the person, or authority "who granted to him or, as the case may be, is competent to grant to him a certificate of registration "under the Act." "Section 10(b) of the Central Sales Tax Act, 1956, provides that if a person being a registered dealer "falsely represents" when purchasing any class of goods that goods of such class are covered by his certificate of registration he shall be punishable with imprisonment and fine. The expression "falsely represents" clearly shows that the element of mens rea is a necessary ingredient of the offence. The gravamen of the offence is the representation of something as true which, in fact, and to the knowledge of the person making the representation, is false. Therefore, in order to levy penalty for commission of an offence under S.10(b) there must be a definite finding regarding "false representation" or existence of mens rea. In the absence of proof of mens rea a person cannot be penalised for the said offence." Again, in the decision reported in Dharmapuri District Co-operative Sugar Mills Limited v. State of Tamil Nadu (Vol.82 STC 296), the Madras High Court held that "that for imposition of penalty, it is necessary to find that the act or omission of the assessee was intentional and whether mens rea was present. The findings of the Tribunal clearly showed that there was no intentional omission on the part of the petitioner inviting penalty under S.10A(1) of the Central Sales Tax Act. The levy of penalty was erroneous." 11. In the light of the above decision, it has to be found that the order Ext. P1 is clearly illegal and did not satisfy the requirement under S.10A of the Act. There is no finding that the assessee has any mens rca while issuing C-Forms. Therefore, Ext. P1 order cannot be sustained. 12. The levy of penalty was erroneous." 11. In the light of the above decision, it has to be found that the order Ext. P1 is clearly illegal and did not satisfy the requirement under S.10A of the Act. There is no finding that the assessee has any mens rca while issuing C-Forms. Therefore, Ext. P1 order cannot be sustained. 12. So also, the quantum of penalty imposed in this case also is excessive, is the other contention raised by the learned counsel for the petitioner. In support of this, learned counsel placed reliance on the decision reported in St.Michael's Oil Mills v. State of Kerala (Vol.68 STC 360) wherein this Court while dealing with the power of imposition of the maximum penalty leviable under S.28(8) of the Kerala General Sales Tax Act has considered and a Division Bench of this Court held that "the maximum penalty leviable under S.28(8) of the Kerala General Sales Tax Act, 1063 is 50% of the value of the unaccounted stock. However, the mere fact that S.28(8) of the Act permits levy of 50% of the value of unaccounted stock, does -not mean that the officer imposing penalty can impose the maximum amount in all cases. He has first to be satisfied whether on the facts and circum stances of any case, penalty is exigible, and if so, what quantum should be levied. The order levying penalty should show that both these aspects were borne in mind while levying the penalty. Penalty proceedings are quasi-criminal in nature and in imposing penalty under S.28(8), the officer has to act judicially and not arbitrarily or mechanically." In the light of the above decision, there is sufficient force in the contention raised by the learned counsel for the petitioner in this case since the maximum penalty was imposed against the assessee in this case. 13. Even though in Ext. P2, the appellate authority entered into a finding that since the person signs C-Form declaration is an educated man and since it contains the affirmation that the goods are "covered by the registration certificate", there is a false representation and no further evidence is required to prove the mens rea. As staled earlier, there is no such finding to that effect in Ext. P1 order by the assessing authority. As staled earlier, there is no such finding to that effect in Ext. P1 order by the assessing authority. The assessing authority has not applied his mind and entered into a finding whether C-Form declaration was issued by the Secretary of the petitioner society is with a malafide intention to defeat the interest of the revenue. In the absence of such a finding by the assessing authority, I see no justification for the revisional authority to come to such a conclusion that C-Form declaration is false representation and no further evidence is required to prove the mens rca. In Ext. P6 also the Board of Revenue only reiterated what is staled in Ext. P2. They have also not considered independently whether. there is any mens rea for the assessee at the time when they issued C-Form declaration with mens rca to evade payment of tax. It should also be remembered that the assessee society is formed to protect the interests of small growers of rubber and they have decided to set up a crumb rubber factory with the assistance received from the world bank, State Government and the Rubber Board, II is also pertinent to note that even though the approximate cost of the machinery was Rs. 35 lakhs, C-Forms were issued only for a small portion of the value of the machinery for merely Rs. 3.21 lakhs and when the petitioner was informed by the first respondent that the certificate of registration did not specifically include the machineries for which they had issued C-Forms, the petitioner did not, thereafter, issued any C-Forms for the purchase of the machinery for the balance amount of Rs. 32/- lakhs. These aspects of the matter also were not taken into consideration by the assessing authority or the revisional authorities. These are all relevant matters to be considered by the authorities, but the same was not done in the case of the petitioner. In the light of the above stated feels, Exts. P1, P2 and P6 orders are illegal and hereby set aside. But setting aside of these orders will not stand in the way of the respondents to make fresh orders in accordance with law and in the light of the observations contained in this judgment. In the light of the above stated feels, Exts. P1, P2 and P6 orders are illegal and hereby set aside. But setting aside of these orders will not stand in the way of the respondents to make fresh orders in accordance with law and in the light of the observations contained in this judgment. The penalty, if any, recovered from the petitioner would be adjusted against any order that may be passed by the authorities or in case no penalty is imposed, the same may be refunded to them. The Original Petition is allowed. But in the circumstances, there will be no order as to costs.