Set-off of tax after concessional purchase contravention was treated as a real question of law requiring reference.

Where a registered dealer bought goods at a concessional rate for self-use and later used or disposed of them contrary to the declaration, the statutory scheme required payment of the full rate of tax on the purchase price, with any contravention penalty operating additionally. The excess amount paid in consequence of the contravention could not be characterised as payment only under the penalty provision so as to deny set-off of tax. The High Court treated this as raising a real question of law and directed the Tribunal to refer the questions sought by the assessee.

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Issues: Whether the tax paid by the registered dealer on goods purchased at a concessional rate, after contravention of the declaration for self-use, was liable to be treated as tax paid under the charging provision for purposes of set-off, and whether the substantial questions of law sought to be referred arose for consideration.

Analysis: The statutory scheme showed that where a registered dealer purchases goods at a concessional rate for self-use and then uses or disposes of them contrary to the declaration, the dealer becomes liable to pay the full rate of tax on the purchase price, and the penalty under the contravention provision is additional. The excess amount paid on such contravention could not be treated as a payment made only under the penalty provision so as to deny the assessee the benefit of set-off. On that basis, the questions raised by the assessee involved a real legal issue requiring reference.

Conclusion: The applications were allowed and the Tribunal was directed to refer the questions of law.

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