Form-C concessional purchase penalty fails where goods are registered and used in integrated manufacturing operations.

Penalty under Section 10(b) of the Central Sales Tax Act was held unsustainable because the goods purchased against Form-C were included in the registration certificate and were used in the assessee's integrated manufacturing and transport operations. The Court applied the statutory scheme under Sections 7 and 8 and Rule 13, holding that concessional purchases must match the registered class of goods and intended business use, and that false representation with mens rea is required to attract penalty. As the goods formed an integral part of the manufacturing chain and no false representation was shown, the levy was set aside.

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Issues: Whether penalty under Section 10(b) of the Central Sales Tax Act, 1956 was sustainable when the goods purchased against Form-C were included in the certificate of registration and were used in the assessee's manufacturing and transport operations.

Analysis: The statutory scheme of Sections 7 and 8 of the Central Sales Tax Act, 1956 and Rule 13 of the Central Sales Tax (Registration and Turn Over) Rules, 1957 requires that the goods purchased at concessional rate must be of the class specified in the certificate of registration and intended for the prescribed business use. Penalty under Section 10(b) is attracted only where there is false representation, and the element of mens rea is essential. Where the goods purchased against Form-C were already included in the registration certificate, and the record showed that they were used in an integrated manufacturing and transport process connected with the manufacture and sale of cement, the dealer could not be said to have falsely represented the nature of the goods. The Court applied the principle of commercial expediency and held that goods forming an integral part of the manufacturing chain, including movement of raw materials and finished goods, fall within the intended use contemplated by Section 8(3)(b).

Conclusion: Penalty under Section 10(b) was not sustainable against the assessee, and the levy was set aside.

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