Job-work counted as business use, so penalty for coal imported under declaration form was not sustainable.

Penalty under section 15A(1)(r) of the U.P. Trade Tax Act was not attracted because coal imported against form XXXI was used in job-work for refining oil, which fell within the statutory definition of "business." On that footing, use of the coal to generate steam in the refining process did not amount to use outside business or any contravention of the Act or Rules. As the penalty provision could operate only on a proved breach, and none was established on these facts, no penalty could be sustained.

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Issues: Whether penalty under section 15A(1)(r) of the U.P. Trade Tax Act, 1948 was attracted where coal imported against form XXXI was used in job-work for refining oil.

Analysis: The relevant question turned on whether use of the imported coal for job-work amounted to use outside the assessee's business so as to constitute a contravention of the Act or the Rules. The definition of "business" under the U.P. Trade Tax Act was held by the Supreme Court to include job-work. In that light, use of coal for generating steam in the refining process fell within the assessee's business activity, and no contravention could be said to have occurred merely because the coal was used in job-work. The penalty provision could operate only upon a proved breach of the Act or the Rules, which was absent on these facts.

Conclusion: Penalty under section 15A(1)(r) was not attracted and the question was decided against the Department.

Final Conclusion: The revisions failed because the assessee's use of coal for job-work was treated as use in business, leaving no statutory breach to sustain the penalty.

Ratio Decidendi: Where the statutory definition of business includes job-work, use of goods for job-work does not constitute a contravention merely because the goods were imported under a declaration form for business use.

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