The judgment of the Court was delivered by

J. B. MEHTA, J. - The Tribunal has posed the following three questions to this court :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the failure to record a finding by the Sales Tax Officer about the absence of reasonable excuse before the penalty is imposed under section 10A read with section 10(d) of the Central Sales Tax Act, 1956, is not material ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the applicant-firm had failed to make the use of kantan purchased by it against certificates in form C without reasonable excuse and, that, therefore, a penalty under section 10A read with section 10(d) of the Central Sales Tax Act, 1956, was leviable ?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the maximum penalty that can be imposed under section 10A of the Central Sales Tax Act, 1956, would be one and half times the amount of tax leviable under the Act if the applicant-firm had not issued C forms against the purchases ?"

The short facts which have given rise to this reference are as under :

The petitioner-company was registered as a dealer both under the Bombay Sales Tax Act, 1959, hereinafter referred to as the "Act" as well as under the Central Sales Tax Act, 1956, hereinafter referred to as the "Central Act". The company was doing business of ginning, pressing and bailing the cotton of the customers. In bailing work, the company had to use Kantan, hessian and bailing hoops, that is patti. The company used to purchase kantan against the relevant form C from the other States. The company had shown in the certificate of registration these goods in the column meant for resale. In the assessment years 1967, 1968 and 1969, the Sales Tax Officer found that this kantan purchased against form C by the company had been used for the job-work and the company had not resold kantan and thereby it had contravened the relevant declaration in form C and had committed an offence which attracted penalty under section 10(d) read with section 10A of the Central Act. The company's contention that the user of the kantan in the bailing work of customers amounted to resale of those materials and that it had paid sales tax on that basis at the time of the return was not accepted. The Sales Tax Officer found that as no sales tax was leviable on kantan used in the job-work, which did not amount to any sale contract, the sales tax paid by the company in all the three years must be refunded. Along with this order of refund, the Sales Tax Officer, however, passed a penalty order under section 10A of the Central Act, without giving any positive finding as to this ingredient about reasonable excuse under section 10(d) when the company failed to make such user. In appeal the penalty order was upheld on the ground that there can be no reasonable excuse in the circumstances of the case as the legal question was decided by this court in the decision of Monogram Mills (S.T.R. No. 6 of 1974 decided on 25th November, 1964 (Gujarat High Court).), and after a period of three years such a contention could never be raised by the company. The Tribunal while confirming this order even proceeded on a further assumption that it might be possible that kantan and patti which were required by the company in job-work might not be freely available in the local market in the relevant years and that if it purchased from the other States without form C, it would have been liable to pay tax at the rate of 10 per cent on the purchase of kantan and, therefore, to avail of concessional rate of 3 per cent the company might have intentionally used form C. Therefore, both on the ground that it was wholly immaterial as to what was the understanding in the mind of the company while making such use of kantan and patti in the job-work, and on the ground that th