- (1.) HEARD learned counsel for the parties.
(2.) PETITIONER No. 1, a partnership-firm engaged in the manufacture of steel tube pipe, pipe fittings, pulleys, oil engine parts, cast iron, etc. , was granted a recognition certificate on December 15, 1976 with effect from April 1, 1976. By impugned notice, annexure 3 to the writ petition, relating the assessment year 1977-78, the petitioners were called upon to show cause why penalty be not levied for having used the raw material procured under the certificate for the purposes of manufacturing of pipe and pipe fittings in violation of the terms of the recognition certificate. Section 4-B (5) of the U. P. Trade Tax Act, 1948 (briefly, "the Act") runs as under : " Where a dealer in whose favour a recognition certificate has been granted under sub-section (2) has purchased the goods after payment of tax at concessional rate under this section or, as the case may be, without payment of tax and, - (a) has used such goods for a purpose other than that for which the recognition certificate was granted or has otherwise disposed of the said goods; or (b) the goods manufactured out of such raw material or processing material or the manufactured goods after being packed with such packing material are sold or disposed of otherwise than by way of sale in the State or in the course of inter-State trade or commerce or in the course of export out of the territory of India such dealer shall be liable to pay as penalty such amount as the assessing authority may fix which shall not be less than the difference between the amount of tax on the sale or purchase of such goods payable under this section and the amount of tax payable under any other provisions of this Act but not exceeding three times the amount of such difference. " The contention of the learned Standing Counsel is that the petitioners used the raw material, namely, pig iron for manufacturing of the goods which are not notified. Upon a bare perusal of the recognition certificate, it is manifest that pipe and pipe fittings are mentioned therein. It is, therefore, clear that the recognition certificate was granted for manufacturing the pipe and pipe fittings, inter alia. Therefore, it cannot be said that the raw material which was procured by the petitioners at concessional rate under the recognition certificate was used for the purposes contrary to those as stated in the recognition certificate. It is submitted by the Standing Counsel that the raw material was used for the goods, which are not notified. Under section 4-B (5) (a) penalty can be imposed only where the raw material is used for a purpose other than that for which the recognition certificate was granted. There is nothing to show that penalty can be imposed even if the goods are used for the purpose mentioned in the certificate. Hence the submission has no force.
(3.) THE learned Standing Counsel submits that a notice was given by the respondent to amend the recognition certificate on February 9, 1982 which was challenged by the petitioners under another writ petition. Be that as it may, if the recognition certificate is amended, that will be effective prospectively and that will have no bearing for the assessment year 1977-78 and, therefore, we are of the view that no penalty could be imposed on the facts and in the circumstances of the case for the assessment year 1977-78, inasmuch as the raw material was used by the petitioners for manufacturing the pipe and pipe fittings which are inter alia, mentioned in the recognition certificate. For these reasons, the petition succeeds and is allowed. The impugned notice dated August 19, 1984, annexure 3 to the writ petition, is quashed. Writ petition allowed. .;