Diversion of concessional sales tax goods to an unregistered use attracts penalty where no reasonable excuse is shown.

Goods purchased at concessional rate against C forms for use in a registered ice factory were diverted to construction of a cold storage, which breached the conditions attached to registration under the Central Sales Tax Act. The dealer's explanation that manufacture of ice could not start because the water was salty was held not to amount to reasonable excuse, as the goods were admittedly used for an unconnected purpose. Penalty under section 10A was therefore attracted for contravention of section 10(d), and the minimum prescribed penalty was upheld.

---

---

Issues: Whether goods purchased against C forms for use in the ice factory, but actually used in the construction of cold storage, amounted to a violation of the conditions of registration under the Central Sales Tax Act and attracted penalty under section 10A despite the dealer's plea of reasonable excuse.

Analysis: The registration had been granted for the manufacture of ice, and the dealer was entitled to purchase specified goods at concessional rate only for use in the ice factory. The admitted position was that the imported goods were used in the construction of cold storage and not in the manufacture of ice. The explanation that manufacture could not commence because water was salty was held not to constitute reasonable excuse. The facts were distinguished from cases where the assessee had acted under a bona fide belief or where the assessing authority's conduct supported such belief.

Conclusion: The use of the goods for construction of cold storage instead of for the registered manufacturing activity constituted a breach of section 10(d) and justified penalty under section 10A. The dealer's plea of reasonable cause was rejected.

Final Conclusion: The revisions succeeded, the Tribunal's order was set aside, and penalty was directed to be imposed at the minimum prescribed level.

Ratio Decidendi: Where goods are purchased at concessional rate for a registered manufacturing purpose but are admittedly diverted to an unconnected use, and no reasonable excuse is established, penalty for contravention is attracted under the Central Sales Tax regime.

---