Concessional purchase misuse under CST law: goods bought against C forms for customer work attracted penalty for contravention.

Goods purchased against C forms under section 8(3)(b) of the Central Sales Tax Act were required to be used in the manufacture or processing of the dealer's own goods for sale. Using colours and chemicals to dye yarn belonging to customers was treated as consumption outside that concession, not as manufacture or processing of the dealer's own goods. On that footing, the misuse of the concessional purchase facility constituted contravention, and in the absence of reasonable excuse the penalty under section 10A was upheld.

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Issues: Whether goods purchased against C forms under section 8(3)(b) of the Central Sales Tax Act, 1956 could be used for dyeing yarn belonging to customers, and whether such use attracted penalty under section 10A read with section 10(d) of the Act.

Analysis: The expression "manufacture or processing of goods for sale" was held to mean manufacture or processing of goods belonging to the dealer and intended for sale by him. Use of the purchased colours and chemicals for dyeing yarn of customers was not use in the manufacture or processing of the dealer's own goods for sale. Such use amounted to consumption of the goods obtained on concessional terms and therefore fell outside the scope of section 8(3)(b). In the absence of any reasonable excuse, the contravention justified imposition of penalty under section 10A.

Conclusion: The penalty was rightly imposed and confirmed; the contention that there was no contravention failed.

Final Conclusion: The revision petition was not maintainable on merits and the assessee remained liable to the penalty for misuse of the concessional purchase facility.

Ratio Decidendi: Goods purchased against C forms under section 8(3)(b) must be used in the manufacture or processing of the dealer's own goods for sale; using them for work done for customers constitutes contravention attracting penalty under section 10A.

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