1989 (7) TMI 327

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.... assessee is a manufacturer of rice from paddy. The assessee under the recognition certificate acquired under section 4-B, purchased paddy for manufacture of rice, which was wholly exempted from tax. Sub-section (6) of section 4-B says that where a dealer in contravention of the terms and conditions laid down in sub-section (2) sells or otherwise disposes of the notified goods or the raw materials....

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....oods in the State or in the course of inter-State trade. Admittedly, in the case in hand there was contravention of the provisions of section 4-B, inasmuch as consignment sales had been made and, therefore, penalty proceedings were initiated against the assessee and vide order dated 29th July, 1985, the assessing officer levied the penalty equivalent to the tax payable on purchase price. Later, th....

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....he order of the assessing officer. I have heard learned counsel for the parties at some length. The learned counsel for the assessee drew my attention to the circular No. 85 dated 10th November, 1982, which gives two options. The first option is that while levying penalty under sub-section (6) of section 4-B, the quantum of penalty will be equivalent to the purchase tax avoided on the purchases....