Concessional tax on certified raw material purchases remains available where statutory conditions are met for the qualifying goods sold.

Section 4-B concessional tax on raw material purchases was available where the notified goods manufactured from the certified purchases were sold in the manner required by the statute, and the concession could not be denied merely because the assessee also produced and sold additional goods from other sources. The court noted that the relevant inquiry under sub-sections (2) and (6) was whether the goods made from the recognised raw material complied with the statutory conditions; breach in respect of other goods did not justify denial of relief. A pro rata allocation of sales was held inappropriate on the facts, because the sale of oil exceeded what could have been produced from the oil-seeds bought against the recognition certificate. The concessional rate of 2% therefore remained applicable.

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Issues: Whether an assessee holding a recognition certificate under section 4-B of the Sales Tax Act was entitled to concessional tax at 2% on the first purchase of oil-seeds, and whether a pro rata formula could be applied merely because separate accounts of oil extracted from concessional and non-concessional oil-seeds were not maintained.

Analysis: Section 4-B grants concessional treatment to raw material purchased for manufacture of notified goods, and denial of the concession is attracted only when the conditions attached to the recognition certificate are breached in respect of the goods manufactured from such raw material. The words used in sub-sections (2) and (6) were read together to mean that the relevant inquiry is whether the notified goods manufactured out of the raw material purchased against the certificate were sold in the manner required by the statute. The mere fact that the assessee also manufactured and sold additional goods from other sources did not amount to a breach. Since the sale of oil exceeded the quantity that could have been produced from the oil-seeds purchased against the recognition certificate, the department could not insist on a proportional allocation of sales. The pro rata approach was held appropriate only where the sales of qualifying goods were less than the quantity that should have resulted from the certified purchases.

Conclusion: The assessee remained entitled to concessional tax at 2% under section 4-B, and the direction to apply the proportional formula was not sustainable.

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