Bona fide use of C forms for manufacturing goods outside the registration certificate did not justify penalty.

Penalty under the Central Sales Tax law was held unsustainable where C forms were used for goods not expressly listed in the registration certificate, because the assessee acted under a bona fide belief that the goods were covered. The authorities accepted that the items were purchased for use in manufacture, the same practice had been accepted in earlier assessments, and the registration certificate was later amended to include the goods. On those facts, the conduct was not treated as an offence attracting penalty, and the penalty was set aside.

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Issues: Whether penalty was leviable for use of C forms in respect of goods not expressly mentioned in the registration certificate, when the assessee acted under a bona fide belief that the goods were covered and the position had been accepted in earlier assessments.

Analysis: The assessee used C forms for goods such as linseed oil, iron hoops, PVC sheets, spirals and wire nails in the course of its manufacturing business. The assessing authority accepted that the goods were purchased for use in manufacture and that the forms were used under a bona fide belief. The use had also been accepted in earlier assessments, and the registration certificate was later amended to include the items. In these circumstances, the conduct could not be treated as an offence attracting penalty under the Central Sales Tax law.

Conclusion: Penalty was not sustainable and was set aside, in favour of the assessee.

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