( 1. ) ON an order passed by this court, the Board of Revenue, Madhya Pradesh, was required to refer the following question for consideration by this court:

Whether, in the facts and circumstances of the present case, the dyes and colours imported on C form declaration could be held to have been used in such a manner as to absolve the dealer from liability for penalty for infringement of Section l0 (d) of the Central Sales Tax Act, 1956 ?

( 2. ) THE present reference arose on the following facts: The respondent was a registered dealer as per Section 7 (2) of the Central Sales Tax Act, 1956. In his application for registration in form Aappended to the application vide item No. 16, the respondent had mentioned the following particulars : Item 16.-The following goods or classes of goods are purchased by the dealer in the course of inter-State trade for resale or for use in manufacture of goods for sale or for use in the execution of contracts :. . (VERNACULAR MATTER OMMITED ). . (a) For resale, (b) For use in manufacture, (c) For use in the execution of contracts.

( 3. ) AT both the places the respondent had struck out the phrase underlined, namely, "for use in the execution of contracts". The said words had also been struck out in the registration certificates. Clause (b) of Sub-section (3) of Section 8 of the Central Sales Tax Act, 1956, as it originally stood prior to the amendment, dated 1st October, 1958, was as follows : (b) in any other case, are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or for use by him in the manufacture of goods for sale or for use by him in the execution of any contract.

( 4. ) IT is to be noted that the said provision requires that the goods should be intended for resale by the registered dealer or for use in the manufacture of goods for sale or for use by him in the execution of a contract. As such, the necessary ingredient is that mere manufacture by the registered dealer will not be enough, but it must be manufacture of goods for resale. Therefore, if a registered dealer merely manufactures goods, he will not be entitled to the benefit of the said provision unless the manufacture is coupled with resale. It is an admitted fact in the present case that the respondent merely executed contracts for dyeing the goods of other persons and no sale was ever intended of the goods so dyed. After the amendment, dated 1st October, 1958, Clause (b) of Sub-section (3) of Section 8 stands as under : In the case of goods other than declared goods are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or subject to any Rles made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power.

( 5. ) IT is to be noted that manufacture or processing in the amended provision is in respect of goods for sale. Thus, the manufacture processing of goods is coupled with the sale of goods and the two cannot be separated from each other. Therefore, even according to the amended provision, the element of sale was altogether lacking, while the respondent undoubtedly manufactured or processed goods of others by simply dyeing them.

( 6. ) THE relevant period in the instant case was the year 1960-61. Subsequently also, the said provision was amended on 1st April, 1963. But, we are not concerned with that amendment. On these facts, the question of law referred by the Board of Revenue arose whether the respondent rendered himself liable to a penalty under Section 10 (b) or Section 10 (d) of the Central Sales Tax Act, 1956, inasmuch as he contravened Section 8 (3) (b) of the said Act by giving incorrect declaration in form A.

( 7. ) THE Sales Tax Officer, by order dated 7th August