Penalty for concessional purchases requires use contrary to the recognition certificate; later amendment cannot affect the relevant assessment year.

Penalty under Section 4-B(5)(a) of the U.P. Trade Tax Act was confined to cases where concessional purchases were diverted to a use other than that covered by the recognition certificate. As the certificate specifically covered pipe and pipe fittings, use of raw material to manufacture those goods was not contrary to the certificate, so the statutory condition for penalty was absent. Any later amendment to the certificate could operate only prospectively and could not affect the assessment year 1977-78. On these facts, the penalty was not leviable and the impugned notice was liable to be quashed.

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Issues: Whether penalty under Section 4-B(5) of the U.P. Trade Tax Act, 1948 could be imposed for using raw material purchased at concessional rate to manufacture pipe and pipe fittings specifically mentioned in the recognition certificate, and whether any subsequent amendment to the certificate could affect the assessment year in question.

Analysis: Section 4-B(5)(a) authorises penalty only where goods purchased under the recognition certificate are used for a purpose other than that for which the certificate was granted. The recognition certificate covered pipe and pipe fittings, and the raw material was used for manufacturing those very goods. On that footing, the use was not contrary to the certificate. Any later amendment of the certificate, even if made, would operate prospectively and could not govern the assessment year 1977-78.

Conclusion: Penalty was not leviable on the facts of the case, and the impugned notice was liable to be quashed.

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