( 1 ) PRESENT is a Reference under Section 69 of the Gujarat Sales Tax Act, 1969. The matter has been referred to the High Court along with Statement of Case for determination of the following question:-"whether on the facts and in the circumstances of the case, Gujarat Sales Tax Tribunal was justified in law in holding that there is no breach of recitals of declarations in Form I on the part of the opponent and so no purchase tax was payable under section 50 of the Gujarat Sales Tax Act, 1969 by the opponent in respect of the purchase of yarn effected by him against Form I, vide bill No. A/derby/2; dated 7. 2. 84. "certain documents have also been annexed with the statement of the case.

( 2 ) THE facts necessary for proper disposal of the Reference are as under:- the Assessee, appellant before the Tribunal, M/s. Dinesh Syntex Pvt. Ltd. , is a dealer registered under the Gujarat Sales Tax Act, 1969 [in short, "the Act"], they are processors of fabrics on their own account as well as on behalf of customers on job work basis. They were holding exemption certificates as new industry under entry 118 of the government notification issued under Section 49 (2) of the Act, in respect of their said industry at Dholka. On 18. 6. 86, the said assessee made an application to the learned Deputy Commissioner of Sales Tax under Section 62 of the Act for determination of the question, namely; "whether on the facts of our case, any purchase tax is payable under section 50 of the Gujarat Sales Tax Act, 1969, in respect of the purchases of yarn against Form-I under entry 118 (2) as is specified in the purchase bill no. A/derby/2 dated 7. 2. 1984. " Along with the question above-referred, yet another question was posed, but at the time of the argument, the said question was not pressed, therefore, the Commissioner, so also the Tribunal did not refer to that question. It is to be seen that the assessee along with his application filed under Section 62 of the Act submitted certain documents including delivery challan and bills etc. , to show that they had purchased certain goods, they have delivered certain goods to another person for manufacturing the fabric on their behalf and the bills relating to the amount of the job work.

( 3 ) IN the application seeking determination of the question, it was submitted that the yarn was purchased on submission of Form I and the yarn was used in manufacture of grey fabric in another factory at Dholka or Ahmedabad. Grey fabric so manufactured was brought back to the assessees factory at Dholka where it was further processed by using dyes and chemicals purchased against Form-I and the finished goods were thereafter sold by the appellant in accordance with exemption certificate. The assessee also submitted that the appellant had used the goods purchased against the Form-I and the finished goods were thereafter sold by the appellant in accordance with the exemption certificate. The assessee also submitted that the appellant had used the goods purchased against Form-I in the manufacture of finished goods for sale by him and as such, he did not contravene any of the recitals of the certificate in Form-I issued by him under the entry 118 (2) of the government notification and therefore there was no liability. The learned Deputy Commissioner held that since the raw material purchased against the Form-I was not utilized by the assessee in his own factory personally and the goods in their grey form were not even manufactured in the designated areas, there being breach of the recitals/conditions of certificate in Form-I, provisions of Section 50 would be attracted.

( 4 ) BEING aggrieved by the said determination, the assessee preferred an appeal under Section-65 of the Act before the Gujarat Sales Tax Tribunal. After hearing both the sides and on going through the provisions of the exemption scheme, learned Tribunal observed that as the exemption notification or the form were not restricting the use of the p