Penalty under the Central Sales Tax Act cannot be imposed absent an express statutory prohibition on the impugned resale conduct.

Penalty under the Central Sales Tax Act was not attracted where goods purchased outside Kerala on C form for resale were later sent to Bombay for sale, because no statutory or rule-based requirement confined resale to Kerala. Mere transport of the goods outside the State did not, by itself, amount to conduct falling within the penal provision. The Kerala HC stated that a penalty cannot be imposed unless the statute or rules expressly prohibit the conduct relied on, and the Revenue's challenge to the penalty therefore failed.

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Issues: Whether penalty under section 10(d) of the Central Sales Tax Act, 1956 was attracted when goods purchased outside Kerala on C form were brought into Kerala and thereafter sent to Bombay for sale instead of being sold within Kerala.

Analysis: The goods were purchased on C form for resale and the dispute turned on whether the statute or rules required the goods to be sold only within Kerala. In the absence of any specific provision imposing such a requirement, the mere fact that the goods were later transported out of Kerala for sale did not amount to a violation bringing the case within the penal provision.

Conclusion: The penalty was not exigible and the assessee succeeded on the penalty issue.

Final Conclusion: The revision was dismissed, and the Revenue's challenge to the penalty failed.

Ratio Decidendi: A penal provision under the Central Sales Tax Act cannot be invoked unless the statute or rules expressly prohibit the conduct relied upon as the basis for penalty.

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