Penalty under concessional sales tax forms fails where goods are duly used, and appellate tribunals cannot enlarge the appeal.

Penalty under Section 4-B(5) of the U.P. Sales Tax Act was unsustainable because the recorded findings showed that all raw material purchased against Form 3-B was used in manufacturing the notified goods and was not diverted for any unauthorised purpose or other disposal. The Tribunal also lacked jurisdiction to remit the matter on an alleged contravention of Section 4-B(6) because that issue had not arisen from the assessment order or the appeal before it. The appellate controversy could not be enlarged beyond the subject-matter actually challenged, so the order remanding the case was set aside and deletion of the penalty was restored.

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Issues: (i) whether penalty under Section 4-B(5) of the U. P. Sales Tax Act was leviable on the facts found; (ii) whether the Tribunal could travel beyond the subject-matter of the appeal and remand the matter on the basis of an alleged contravention of Section 4-B(6) of the U. P. Sales Tax Act.

Issue (i): whether penalty under Section 4-B(5) of the U. P. Sales Tax Act was leviable on the facts found.

Analysis: The finding of the first appellate authority was that the entire raw material purchased against Form 3-B had been used in manufacturing the notified goods and had not been used for any purpose other than that for which the Recognition Certificate was granted. On those findings, the statutory condition for invoking Section 4-B(5), namely purchase at concessional rate followed by use for an unauthorised purpose or other disposal, was not satisfied.

Conclusion: The penalty under Section 4-B(5) was not sustainable.

Issue (ii): whether the Tribunal could travel beyond the subject-matter of the appeal and remand the matter on the basis of an alleged contravention of Section 4-B(6) of the U. P. Sales Tax Act.

Analysis: The appeal before the Tribunal arose only from the cancellation of penalty under Section 4-B(5). No issue regarding Section 4-B(6) had been raised before the assessing authority or the first appellate authority, and the scope of the Tribunal's appellate jurisdiction was confined to the order and grounds actually under challenge. A new ground outside the appeal could not validly be introduced, and the remand on that basis was beyond jurisdiction.

Conclusion: The Tribunal was not competent to decide the alleged contravention of Section 4-B(6) or to remand the case on that ground.

Final Conclusion: The Tribunal's order could not stand, and the assessee succeeded in restoring the order that had deleted the penalty.

Ratio Decidendi: An appellate tribunal cannot enlarge the controversy by deciding a statutory contravention that was neither the subject-matter of the assessment order nor raised in the appeal, and penalty provisions apply only when their statutory preconditions are clearly established on the recorded findings.

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