TMI Blog1985 (11) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... given by the assessee in form 18, made mention of in the proviso to sub-section (3) of section 5 of the Kerala General Sales Tax Act, for short the Act. 3.. The assessing authority accepted the above declarations in form 18, the respondent had given to the Burmah Shell and this resulted in the Burmah Shell being given the concessional rate of tax at 1 per cent as envisaged under section 5(3) of the Act. 4.. It is the case of the revenue that subsequently it was found that the respondent had given form 18 declarations wrongly. The revenue therefore contended that the respondent-assessee must be held to have failed, without reasonable excuse, to make use of goods for the declared purpose, warranting imposition of penalty under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, in the facts and circumstances of the case, the appellants are justified in using form 18 declaration for effecting their purchase of naphtha. Consequently there has been no misuse of these forms and the appellants cannot be penalised on such ground also. It follows that we have to find this point in favour of the appellants.......................................... It is a fact admitted and proved that 'naphtha' has been used for the manufacture of chemical fertiliser. The appellants have been under the bonafide belief and still bold that 'naphtha' is only a component part of chemical fertiliser." 8.. According to the revenue, the following questions of law arise out of the above orders: (a) Whether, on the facts and in the circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .................................. (d) after purchasing any goods in respect of which he has made a declaration under the proviso to sub-section (3) of section 5 fails without reasonable excuse to make use of the goods for the declared purpose, or (e) .................shall, on conviction by a Magistrate not below the rank of a Magistrate of the First Class, be liable to simple imprisonment which may extend to six months or to fine not less than the tax or other amounts due but not exceeding two thousand rupees, or to both." The section thus creates an offence and imposes a penalty of fine and/or imprisonment on the person who after purchasing any goods in respect of which he has made a declaration under the proviso to sub-section (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he chemical fertilisers produced by it. In this connection it is relevant to take note of the following explanation given by the assessee to the notice proposing levy of penalty: "As a matter of fact, naphtha is used as a component part-rather the basic component-for the manufacture of chemical fertilisers by F.A.C.T. The naphtha is first chemically decomposed into its constituent elements, hydrogen being the main. This hydrogen is subsequently made to chemically react with nitrogen to form ammonia and by reaction and chemical combination of this ammonia with other appropriate chemical constituents, the chemical fertilisers like ammonium sulphate, ammonium phosphate, etc., are manufactured in our factory. Further, carbon in naphtha reacts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vely that even assuming that naphtha was found not to be a component part of chemical fertiliser, the assessee could not be said to have failed, without reasonable excuse, to make use of the goods for the declared purpose. The letter of the Board of Revenue extracted in the explanation would show that the assessee-company was, in any event, led to believe that the Board of Revenue which under section 3 of the Act is empowered to administer the provisions of the Act, has made it clear that under "the existing provisions of law" naphtha can be treated as a component part used in the manufacture of the chemical fertiliser and hence the respondentassessee is eligible for the concessional rate of tax of 1 per cent as provided for under section 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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