Bona fide use of C-form goods in works contracts avoids penalty where reasonable excuse negates wilful misuse.

Penalty under sections 10(d) and 10A of the Central Sales Tax Act was held inapplicable where goods were purchased on C forms for use in ship-building works contracts, because the use amounted to a technical contravention rather than a deliberate misuse. The decisive factor was the existence of reasonable excuse: the declaration matched the registration certificate, the assessee honestly believed the certificate permitted such use, prior objection by the authorities was absent, and no intent to evade liability was shown. The revisions were dismissed and the assessee's bona fide conduct protected it from penalty.

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Issues: Whether penalty was leviable under section 10(d) read with section 10A of the Central Sales Tax Act, 1956 for purchase of goods on C forms for use in ship-building works contracts, and whether the assessee had failed without reasonable excuse to make use of the goods for the purpose stated in the declaration.

Analysis: The declaration in the C forms corresponded to the registration certificate, and the assessee's use of the goods in works contracts was found to be a technical contravention rather than a deliberate or wilful misuse. The decisive question was whether the breach was without reasonable excuse. On the facts, the assessee acted under a bona fide belief that the certificate permitted such use, the authorities had not objected earlier, and no motive to evade liability was established. The case was therefore distinguishable from authorities where a clear absence of reasonable excuse was found.

Conclusion: Penalty under sections 10(d) and 10A was not attracted, as the contravention of section 8(3)(b) occurred with reasonable excuse and in bona fide belief. The revisions were dismissed in favour of the assessee.

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