Penalty for misuse of concessional purchases fails where goods are actually used for the authorised manufacturing purpose.

Penalty under section 10A of the Central Sales Tax Act, 1956 was not attracted because section 10(d) applies only when goods purchased for the specified concessional purpose are not used for that purpose without reasonable excuse. The dealer had bought paper against Form C for manufacture of books, and the goods were actually used in that authorised manufacturing activity. As there was no diversion to any other use, the statutory condition for contravention was not established, and deletion of the penalty was upheld in favour of the assessee.

---

---

Issues: Whether penalty under section 10A of the Central Sales Tax Act, 1956 was leviable for alleged contravention of section 10(d) of the Central Sales Tax Act, 1956 when the goods purchased on concessional terms were used in the manufacture of books.

Analysis: Section 10(d) of the Central Sales Tax Act, 1956 applies only where goods purchased for the purposes covered by section 8(3)(b), 8(3)(c) or 8(3)(d) are not used for such purpose without reasonable excuse. The registered dealer had purchased paper against form C for use in manufacturing books, and the paper was in fact used for that very manufacturing activity. The goods were not diverted to any other purpose falling outside the permitted use. On these facts, the statutory condition for penalty was not satisfied.

Conclusion: The levy of penalty was not sustainable and the deletion of penalty was in favour of the assessee.

Final Conclusion: The revisions failed because no contravention attracting penalty under the Central Sales Tax Act, 1956 was established.

Ratio Decidendi: Penalty under section 10(d) arises only when goods purchased for the specified statutory purpose are not used for that purpose; actual use of the goods in the authorised manufacturing activity negatives the contravention.

---