C-form purchases and job-work processing: penalty under the sales tax law was held not leviable on the stated facts.

Penalty under section 10A of the Central Sales Tax Act was considered in the context of C-form purchases for manufacture or processing, where the goods were used in job-work for customers and the processed goods were returned. The controlling principle stated was that concessional treatment under section 8(1)(b) read with section 8(3)(b) applies to goods used in manufacture or processing of goods intended for sale, and penalty arises only where that condition is not met. On the facts described, the use of oil in processing marble stones belonging to others on job-work basis did not justify penalty, and section 10A was held not to be leviable.

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Issues: Whether penalty under section 10A of the Central Sales Tax Act, 1956 was exigible where goods were purchased on the strength of C forms for use in manufacture or processing, but were utilised in job-work for customers and the processed goods were returned to the customers.

Analysis: The concessional rate under section 8(1)(b) read with section 8(3)(b) of the Central Sales Tax Act, 1956 was available only where the declaration was given for goods used in manufacture or processing of goods intended for sale. The controlling principle, as affirmed by the Supreme Court, is that if the goods processed on job-contract basis are not intended for sale by the third party and are instead used for its own purposes, the assessee incurs penalty under section 10A or section 10(d). On the facts found, the oil was used in processing marble stones belonging to others on job-work basis, and the processed goods were returned to the customers. That did not justify imposition of penalty.

Conclusion: Penalty under section 10A of the Central Sales Tax Act, 1956 was not leviable, and the assessee succeeded on the question decided.

Ratio Decidendi: Where goods are purchased against C forms for use in manufacture or processing, penalty under section 10A is not attracted merely because the processing is done on job-work basis for others, unless the processed goods were not intended for sale by the third party.

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