The judgment of the Court was delivered by

MADON, J. - The respondents were registered as a dealer under the Bombay Sales Tax Act, 1959, and carry on the business of manufacture of "vanaspati", soap and other articles at Akola, their principal article of manufacture being hydrogenated vegetable oil. The respondents had also obtained a recognition under section 25 of the said Act. For the purpose of their manufacturing business the respondents used to purchase raw materials. For the assessment period 1st January, 1960, to 31st July, 1960, the respondents made total purchases of the aggregate value of about Rs. 1,97,72.293. Out of these total purchases, purchases of the value of Rs. 1,15,80,625 were made by the respondents by giving certificates in form 15 to the Bombay Sales Tax Rules, 1959, while the remaining purchases of the aggregate value of Rs. 81,91,668 were made otherwise than by giving a certificate in the said form 15. Under clause (b) of section 12 of the Bombay Sales Tax Act, 1959, as in force during the assessment period, when a dealer holding a recognition, who is referred to in the said Act as a "recognised dealer", makes purchases of goods mentioned in the said clause by giving a certificate in the prescribed form and the said goods are of the class specified in his recognition and are purchased by him for use by him in the manufacture or packing of taxable goods for sale by him, the amount of sale price paid by him to his vendor is not to be included in the vendor's turnover of sales and would be excluded on the vendor producing in his assessment the certificates in the prescribed form given by the recognised dealer while purchasing the said goods. Under rule 21 of the Bombay Sales Tax Rules, 1959, as then in force, the certificate for the purposes of the said clause (b) of section 12 was to be in form 15. The said certificate required a declaration to be made by the recognised dealer purchasing the goods and giving the certificate that the goods purchased by him would be used by him in the manufacture of taxable goods specified in the said certificate and that such sale would not take place outside the State and that the said goods were included in the list of goods entered in the recognition held by him. Under section 14 of the said Act, where a dealer has purchased any taxable goods under a certificate given by him, inter alia, under section 12 and contrary to such certificate the goods are used for another purpose or are not resold or despatched in the manner and within the period certified, then such dealer becomes liable to pay purchase tax on the purchase price of the goods purchased against such certificate and, accordingly, he is under an obligation to include the purchase price of such goods in his turnover of purchases in his return which he is to furnish next after such unauthorised user of goods.

During the assessment period the respondents sold goods for the aggregate price of Rs. 2,50,09,145. Out of these total sales, sales of the aggregate value of Rs. 1,40,97,329 were in accordance with the declaration made by the respondents in the certificates in form 15 given by them while purchasing the raw materials, while sales of the aggregate value of Rs. 1,09,11,816 were sales not in accordance with such declaration, that is, had the raw materials which had gone into the manufacture of such goods been purchased against certificates in form 15, the said sales would have been contrary to the declaration made in such certificates. For the sake of convenience we will refer to the first type of sales, namely, sales where, had the raw materials been purchased against certificates in form 15, the condition of such certificates would have been complied with, as "qualifying sales" and the sales of the other type, namely, where, had the raw materials been purchased against certificates in form 15, the sales would have been contrary to the declaration contained in the said certificates, as "non-qualifyin