Reasonable excuse under Central Sales Tax law barred penalty where goods were used based on earlier departmental view of manufacture.

Penalty under section 10(d) of the Central Sales Tax Act, 1956 arises only when goods purchased for a purpose under section 8(3)(b) are not used for that purpose without reasonable excuse. The assessee used the goods in retreading tyres on the footing that the activity amounted to manufacture, and the department had earlier treated retreading as manufacture before changing its view. That prior departmental position constituted a reasonable excuse for the assessee's conduct, and the Tribunal's acceptance of that circumstance was upheld. The penalty was therefore not sustainable.

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Issues: Whether the assessee had reasonable excuse for failing to use the goods purchased for the declared purpose so as to avoid penalty under the Central Sales Tax Act, 1956.

Analysis: Penalty under section 10(d) of the Central Sales Tax Act, 1956 is attracted only where the purchaser, after buying goods for a purpose specified in section 8(3)(b) of that Act, fails without reasonable excuse to use them for that purpose. The assessee used the goods for retreading tyres on the footing that such activity amounted to manufacture. The department itself had, in earlier years, treated retreading as manufacture, and only later changed its view. That prior departmental stance furnished a reasonable excuse for the assessee's conduct, and the Tribunal's appreciation of that circumstance was not erroneous.

Conclusion: The assessee had reasonable excuse for the failure to use the goods for the purpose for which they were bought, and the penalty was not sustainable.

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