K.A. Nayar, J.The petitioner is an assessee on the file of the first respondent. It is a registered dealer both under Kerala General Sales Tax Act, 1963 and also under Central Sales Tax Act, 1956. The Sales Tax Officer found on verification that the assessee issued C form for the purchase of goods not covered by certificate of registration granted to them and thus misused C forms issued. The petitioner purchased beedi labels, wrappers, paper, etc., from outside the Kerala State using the C forms. Originally the petitioner-assessee used to purchase beedi, tobacco and leaves only for resale. But from 11th October, 1975, onwards the petitioner was authorised to issue C forms for purchasing beedi, tobacco and leaves for use in the processing of goods for sale. Since the first respondent found that the petitioner was using C forms for the purchase of beedi labels, wrappers, paper also, etc., it was proposed to impose penalty at 15 per cent of the tax due on the purchases effected during the years 1979-80, 1980-81, 1981-82, 1982-83 and 1983-84. Notice was issued to the petitioner u/s 10A of the Central Sales Tax Act, 1956, calling for objection. The assessee-petitioner submitted its objection and the petitioners contention is that beedi labels, wrappers, etc., are an integral part of the industry and it was purchasing the same without objection for the past several years and therefore under the bona fide intention that the petitioner purchased these goods using C form. But the Sales Tax Officer found that the purchase of beedi labels, wrappers, papers by using the C forms for use in the manufacture of other goods for sale are not authorised by the certificate of registration in force. So he held that the assessee has misused the C form. The Sales Tax Officer imposed on the petitioner the maximum penalty of Rs. 1,38,146. This was by order dated 26th November, 1983, on the ground that the petitioner has violated the provision in Sub-section (d) of Section 10 read with Section 8.

2. The petitioner filed revision before the Deputy Commissioner, Agricultural Income Tax and Sales Tax, Palghat. The revisional authority found that the offence will fall u/s 10(b) and not u/s 10(d). Thereafter on examining the case he found that by the registration certificate the petitioner was authorised to purchase beedi, tobacco and leaves for use in the processing of goods for sale. But in so far as the petitioner purchased also labels, wrappers and paper by issuing C form, he found the same was not authorised. The revisional authority rightly pointed out that the main thing to be seen was whether this item was mentioned in the registration certificate. Thereafter he found that the petitioner made a false representation in so far as the wrappers, labels, etc., are not included in the certificate of registration. He also did not accept the argument on behalf of the assessee that he acted only under a bona fide and honest belief that the goods are covered by the certificate of registration. According to him representation made by the petitioner in the C form is false and he also agreed with the Sales Tax Officer that maximum penalty should be imposed in the circumstances of the case.

3. The petitioner took up the matter in further revision before the Board of Revenue (Taxes), Trivandrum, the third respondent. The third respondent found that the purchase of packing materials such as wrappers, labels and paper were admittedly not included in the certificate of registration issued to the petitioner. He also found that the question whether the offence would come under Sub-section (b) or Sub-section (d) of Section 10 of the Central Sales Tax Act was not disputed in the revision before the Board. On the question of mens rea, the Board, after considering the decision of the Supreme Court in State of Gujarat and Another Vs. Acharya D. Pandey and Others, etc., , came to the conclusion that the petitioner acted mala fide in making what was clearly a false representation. But on the question of penalty, the Board was inclined to take a lenient view and reduced the maximum penalty equal to 1 1/2 times of tax due on the purchase value of the goods covered by the misused C forms to 1 1/4 times. That order of the third respondent is exhibit P3. The petitioner challenges the said order.

4. The contention advanced on behalf of the petitioner is that the original proceedings against the petitioner was u/s 10(d) and the revisional authority committed a mistake in converting the proceedings as one u/s 10(b) of the Central Sales Tax Act. Counsel on behalf of the petitioner also contended that even if it is construed as an offence coming u/s 10(b), the respondents could not establish the case against the petitioner. The respondents have not proved that the petitioner made a false statement at the time of issuing the certificate to the effect that the goods are covered by this certificate. In other words, the question of mens rea has not been considered in its proper aspect. The petitioner also contended that with respect to quantum of penalty imposed, the Board of Revenue was prepared to take a lenient view and it reduced the same to 1 1/4 times from 1 1/2 times. In doing so it failed to advert to the fact that the petitioner has already paid tax at the concession rate.

5. The contention of the Government Pleader is that even though Section 10(d) alone is mentioned by exhibit P1, order of the first respondent, the ingredients clearly fall u/s 10(b). It is seen from exhibit P1 that the assessee issued C form for the purchase of goods not covered by certificate of registration granted to them and thus misused C forms issued. The Government Pleader submitted that the notice issued to the petitioner by the first respondent clearly indicates the nature of the offence which is coming u/s 10(b) even though the section mentioned is Section 10(d). He also submitted that mentioning a wrong section will not vitiate the order if it can be justified by another section in the Act. This principle is well-known. The court has the duty to apply the correct provision of law. [See in Abbas Bhai and Others Vs. T. Deivayani Ammal and Others, and Union of India and Another Vs. Tulsiram Patel and Others, ].

6. With regard to mens rea he contended that there is clear finding of fact by first and second revisional authorities. The first respondent has not entered a specific finding. But he considered this aspect and made a factual finding that the petitioner purchased beedi labels, wrappers, papers, etc., by using the C form for use in the manufacture of goods for sale though the same was not authorised by certificate of registration. That can be considered as a finding, according to the Government Pleader. The revisional authority also found after perusing the connected records that the petitioner made a false representation and therefore liable for penalty u/s 10A of the Act. The second respondent also found that the contention of the assessee that he acted under honest belief that he could use the certificate of registration for purchase of packing materials and labels cannot be accepted. The second respondent also entered a categorical finding that the representation made by the petitioner in the C form is false. The third respondent also found that the issue of C form and purchasing the goods not covered by the certificate of registration clearly indicate the petitioners were making false representation in this regard. The Government Pleader also adverted to the finding of the third respondent that the question whether the offence would come under Sub-section (b) or (d) of Section 10 of the Central Sales Tax Act is not disputed in the revision before the Board. In view of this, the Government Pleader contended that the question whether the offence will come u/s 10(b) or (d) cannot be canvassed before this Court. Even if it be permitted to be raised, there is no merit in the contention as mentioning a wrong section will not vitiate the order provided there is another section to support the finding, in this case Section 10(b). He also submitted that the question whether the petitioner acted mala fide or made false representation is a question of fact to be decided on the facts of each case and as the authorities have examined this and entered a finding, this Court will not disturb that finding.

7. In support of the contention of the petitioner, counsel for the petitioner referred to in P.K. Varghese and Sons Vs. Sales Tax Officer, wherein it is stated that in order to constitute an offence u/s 10(b) of the Act it must be proved that the dealer made a representation that the goods purchased were covered by registration certificate with the knowledge that they were not so covered. Where there was no finding that the representations made by the petitioner were false, namely, the C form declarations were issued without the belief that the goods purchased were covered by the registration certificate the imposition of penalty u/s 10A would be illegal. This decision will not help the petitioner as there is a specific finding in this case by first and second revisional authorities that the petitioner made false representation. The next decision referred to is Pannalal Umesh Kumar Vs. Commissioner of Sales Tax, where the facts are said to be more or less identical. In that case the assessee who manufactured beedis for sale, purchased bardana, jhilli, paper, labels, motor tyres and tubes after furnishing declarations that those goods were to be used in the manufacture of other goods for resale. Those goods however were not specified in the assessees registration certificate as being required for use in the manufacture or processing of goods for resale. When the assessee was directed to pay a penalty for contravention of Section 10(b) of the Central Sales Tax Act on the ground that he made false representation, he objected to the same. But, nevertheless, the penalty was imposed. The High Court of Madhya Pradesh, in answering the question referred to it "whether or not on the facts and circumstances of the case the imposition of the penalty was legal and justified " held that it was necessary for the department to prove that the representation was also to the knowledge of the assessee and that in the facts and circumstances of the case the imposition of penalty was not legal. That decision is an authority for the proposition that penalty could not be imposed automatically when it is proved that the goods have not been specified in the registration certificate. It is necessary for the department further to prove that the representation was false to the knowledge of the assessee. A representation though erroneous might not have been dishonest because, in the registration certificate, all other columns except the one in which such goods were intended to be specified, had been scored out. What is more, there was nothing to prevent him from so specifying the goods and it is not unlikely that the assessee believed honestly, though erroneously, that he had already so done. His explanation was that by art oversight the details could not be mentioned, though understood as such by the applicant and the department. This also will not help the petitioner in this case as here there is a specific finding entered against the petitioner. The petitioners counsel also referred to another decision in Bisra Limestone Company Ltd. v. Sales Tax Officer [1971] 27 STC 531 (Ori) [LQ/OriHC/1970/102] , to point out that the ingredients of the offence u/s 10(b) is false representation. Therefore, even though there may be an ultimate finding that the goods are not covered by the certificate of registration no offence u/s 10(b) would be made out if there is no false representation. To bring home the offence u/s 10(b), guilty animus or mens rea is essential. In the absence of mens rea no penalty can be imposed u/s 10A. This proposition as such cannot be disputed. But its application on the facts of this case is not warranted as there is specific finding in this case.

8. The offence u/s 10(b) is committed when the registered dealer at the time of purchase of any class of goods falsely makes a representation that such class of goods are covered by the certificate of registration. But the offence u/s 10(d) is committed when after purchasing the goods for any of the purposes specified in Section 8(3)(b), the purchaser fails to make use of the same without reasonable excuse for such purposes. The three ingredients required for the offence are (i) the goods must be purchased for the purpose mentioned in Section 8(3)(b), (ii) they are not used for the purpose of which they are purchased and (iii) failure to use for the purpose for which it is purchased has no support or reasonable excuse. [See Manjunatha Tyre Retreading Works v. State of Mysore [1969] 23 STC 428 (Mys)]. But even though the ingredients for Section 10(b) and (d) are different in the penalty proceedings parties proceed on the basis that they are charged u/s 10(b) considering only the ingredients of Section 10(b). In The Ben Gorm Nilgiri Plantations Company Vs. The Government of Madras, it was held that falsity of the representation should be with the knowledge of the representator. The gravity of the offence is the representation which he has falsely made. The offence is not absolute one in the sense that it is not conditional on the presence of mens rea. It is also a principle that Section 10(b) is a penal provision and where a question arises whether an offence is committed or not the dealer who is accused of the offence is entitled to the benefit of the doubt. In Parameswara Bhatta & Bros. v. Deputy Commissioner [1973] 32 STC 547 (Mys), it is observed that the condition precedent for the exercise of the jurisdiction of the registering authority to impose a penalty u/s 10A of the Central Sales Tax Act, for an offence u/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 State of Tamil Nadu v. Gemini Studios [1975] 36 STC 357 ker, the High Court of Madras held that when purchasing goods by issuing C forms, a mere representation based on a bona fide belief by an assessee registered under the Central Sales Tax Act, that the goods are covered by his certificate of registration will not bring him within the mischief of Section 10(b) of the Central Sales Tax Act. The representation in order to come within that provision should be a false representation to the knowledge of the assessee. If a belief is entertained by the assessee bona fide that the goods are covered by the certificate of registration, but it ultimately turns out to be not a proper understanding of the certificate of registration or correct understanding of the same, it will not attract the provisions of Section 10(b). The use of the word "falsely" itself implies that the person making the representation knew that the certificate of registration does not cover that item, but knowing fully well that it does not, he states that it is covered. What is required plainly u/s 10(b) is knowledge that the item is not covered by the certificate and the representation that is covered by the certificate.

9. The question whether the assessee entertained a bona fide belief that the goods are covered by the registration certificate is to be determined by the facts of each case. [See Bhim Sain Sudarshan Kumar Vs. The State, Of course if the dealer honestly believes that the particular goods are embraced by the certificate of registration and in that belief makes a representation, he cannot be held guilty. [See Commissioner of Sales Tax Vs. Bombay Garage, But as stated earlier the question whether the person entertained such belief is a question of fact to be determined by the fact finding authorities. The petitioner knew the certificate does not cover the packing materials and therefore he cannot be heard to say that he bona fide believed that he can purchase packing materials and labels even though not mentioned in the certificate. In such cases inference of bona fide is far fetched and unreasonable. [See Integrated Enterprises Vs. State of Kerala, .

10. In the light of the above principles laid down by the various High Courts it will be seen that there is no merit in the contention of the petitioner that the department has not proved the ingredients of mens rea to establish the offence.

11. With respect to quantum, the first and second respondents imposed the maximum penalty. But the Board of Revenue after careful examination of the whole facts and circumstances of the case and also going into the decision in Paramasivan v. State of Kerala 1971 TLR 1241 and Marikar (Motors) Limited Vs. The Sales Tax Officer, and Another, came to the conclusion that the case in hand is not one for imposition of maximum penalty. This Court also held in Rajalakshmi Textiles Finishing Mills v. Sales Tax Officer [1976] 38 STC 302 SC, that where there is ah infringement of any of the clauses of Section 10, it does not automatically follow that the maximum penalty that can be imposed under the 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. The contention of the petitioner is that the assessee has been made to believe that he can purchase the packing materials and label and proceeded on that basis and the charge is u/s 10(d) and not Section 10(b) and considering all these and going through the file the third respondent was inclined to show some leniency and the maximum penalty fixed was reduced from 1 1/2 times to 1 1/4 times. What exactly worked in the mind of the third respondent has not been indicated in the order. But it can be seen that the department wants to collect the tax leviable on the goods purchased covered by the misuse of C forms and also to collect a nominal penalty for the blame-worthy conduct. But in doing so the third respondent has not considered the fact that the goods covered by misuse of C forms also subjected to levy of concessional rate of tax. If this matter was brought to the notice of the third respondent, counsel submitted, that the third respondent would have imposed a lesser penalty of 1 per cent alone. In the circumstances the prayer of the petitioner is to remand the case to consider the quantum of penalty alone. In the facts and circumstances of this case, this prayer can be allowed. I do so. In all other respects the finding of the authorities will stand confirmed.

I, therefore, set aside exhibit P3 in so far as it relates to the quantum of penalty imposed and direct the third respondent to consider the same afresh after giving an opportunity to the petitioner to be heard. The original petition is allowed to that extent and dismissed in all other respects. No costs.