P. Govindan Nair, C.J.
1. These appeals arise from the same judgment in O.P. No. 2970 of 1970. The original petition challenged an order, exhibit P6, produced along with the O.P. by which the Sales Tax Officer, Cannanore, imposed a penalty of Rs. 47,433.66, which is the maximum penalty that could be imposed on the assessee under Section 10 of the Central Sales Tax Act, 1956 (for short, the Act). The violation for which this penalty has been imposed is said to be that of Section 10(b) and (d). To understand the case of the department that there has been violation of Section 10(b) and (d), it is necessary to refer to Section 8 of the Act. That section provides that every dealer, who, in the course of inter-State trade or commerce, sells to the Government any goods or sells to a registered dealer other than the Government goods of the description referred to in Sub-section (3), shall be liable to pay tax under the Act, which shall be three per cent of his turnover. Sub-section (3) of Section 8 with which we are concerned, states that the goods referred to in Clause (b) of Sub-section (1) 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 rules made by the Central Government in that 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.
2. Section 10 deals with penalties, We are concerned in this case with Sub-sections (b) and (d) thereof. We shall extract those Sub-sections :
If any person....
(b) being a registered dealer, falsely represents when purchasing any class of goods that goods of such class are covered by his certificate of registration ; or....
(d) after purchasing any goods for any of the purposes specified in Clause (b) or Clause (c) or Clause (d) of Sub-section (3) of Section 8 fails, without reasonable excuse, to make use of the goods for any such purpose ;....
The case of the department is seen from the notice issued to the appellants in Writ Appeal No. 281 of 1973, which is exhibit P4, produced along with the O, P. The relevant part of that notice stated:
According to the registration certificate granted to them, they are permitted to purchase goods intended to use in the manufacture or processing of goods for sales only against issue of C declarations. A scrutiny of their accounts for the year 1965-66 revealed that they issued C forms against purchase of machinery and plants for calendering works for Rs. 3,16,223.91, which was not intended for the purpose for use in the manufacture or processing of goods for sales specified in the registration certificate granted to them.
3. The appellants in Writ Appeal No. 281 of 1973 showed cause against the imposition of penalty for alleged breach of Sub-sections (b) and (d) of Section 10 of the Act. Notwithstanding the explanation, penalty has been imposed by exhibit P6 order. The relevant part of that order says nothing more than what is stated in the show cause notice, excepting the observations :
I have carefully examined the contents of the objection filed. The firm has not adduced any valid evidence in support of this contention that there was no misuse of C forms.
4. Counsel on behalf of the appellants in Writ Appeal No. 281 of 1973 contended before the learned Judge that there has been no violation either of Sub-section (b) or Sub-section (d) of Section 10. The learned Judge accepted the contention that there has been no violation of Sub-section (d) and held that the conclusion of the Sales Tax Officer that there has been violation of Sub-section (b) without a finding that there has been false representation is unsustainable and so remanded the case for the consideration of the question whether there was any false representation. The quantum of punishment was also directed to be reconsidered. Writ Appeal No. 281 of 1973 is against the remand for, according to appellants, no offence has been made out, and the appeal by the revenue, Writ Appeal No. 284 of 1973, is on the basis that there was no ground to set aside the order, exhibit P6.
5. Before we proceed to deal with the real question arising for consideration, we must advert to an attempt made by the counsel on behalf of the revenue to make out a case on the basis of the certificate of registration that there has been no goods at all mentioned in the certificate and that, therefore, the appellants are not entitled to issue C forms in relation to their business. We have been taken through the application made by the dealer, which is exhibit P1, as well as the certificate of registration, exhibit P2. We have also perused the application forms given under the Rules, the Central Sales Tax (Registration and Turnover) Rules, 1957 (for short, the Rules). The relevant forms are form A, the application for registration, and form B, the certificate of registration. It appears to us that in view of the provision in Section 8(3)(b) of the Act in para 16 in form A, as well as in the certificate of registration, space should have been provided for specifying the goods or classes of goods with reference to which the application is made and with reference to which the certificate had been granted. Para 16 in form A starts by saying: 'The following goods or classes of goods'. But without any gap, proceeds to say 'are purchased by the dealer in the course of inter-State trade or commerce for' ; and then comes below the words 'resale', 'use in the manufacture or processing of goods for sale', 'use in mining', 'use in the generation or distribution of electricity or any other form of power' and 'use in the packing of goods for sale/resale'. Similar is the method adopted in the form given for the issue of a registration certificate. Those who fill up the application forms and those who issue the certificates are likely to be misled by the particular forms used. In fact, we think they have been misled in this case. In the application for registration, exhibit P1, notwithstanding the absence of a space in the form for showing the goods or classes of goods, goods have actually been mentioned by the applicant as 'machinery, machinery spares, sizing materials, electrical accessories, and motor spares', and the goods to be manufactured were also indicated as 'finishing starch, handloom cloths, yarns, and manufacturing/calendering/finishing handloom mill cloths'. But counsel for the revenue is well-founded in his submission that these goods had not been repeated in the registration certificate, exhibit P2. If we accept his submission in toto, it will mean that no goods whatever are mentioned in the certificate. We do not think in this case we can proceed on that basis, because that was nobody's case. As we understand the show cause notice, the question that was considered was whether, to state it very briefly, the machinery purchased for the manufacture or processing of goods for sale, would be a purchase of goods that would fall under Section 8(3)(b) of the Act. A reading of the Section as such might give an impression that the machinery, which is to be utilised for the manufacture of goods for resale, will not by itself fall within the ambit of this Section. That is the view that the learned Judge has taken in the judgment under appeal. But Section 8(3)(b), specifically states, 'subject to rules' and so we have necessarily to go through the relevant rule to understand the scope and ambit of the Section. The relevant rule is Rule 13 of the Rules, which is in these terms:
The goods referred to in Clause (b) of Sub-section (3) of Section 8, which a registered dealer may purchase, shall be goods intended for use by him as raw materials, processing materials, machinery, plant, equipment, tools, stores, spare parts, accessories, fuel, or lubricants, 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.
When Section 8(3)(b) is read with Rule 13, it seems to us to be clear that even the purchase of machinery, which is to be used, as the rule says, for the manufacture of goods for sale, such purchases would be governed by the concessional provision in Section 8(1) read with Section 8(3)(b) of the Act. We need not labour on this, particularly, because the matter is directly covered by a decision of the Supreme Court in J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. Sales Tax Officer, Kanpur  16 S.T.C. 563 (S.C.). The observations of Shah, J., therein would leave no doubt whatever that the concession granted by the section when it is read with Rule 13 would take within its ambit machinery, spare parts, lubricating oils, electrical accessories, and similar things, and goods purchased for the purpose of enabling the manufacture or the processing of goods for sale provided the other requirements of the goods being covered by the registration certificate and the issue of the necessary C forms are complied with. On this aspect, we think the Sales Tax Officer has erred, for when the application form is read with the certificate issued, the appellant is seen to have authorised by the certificate to purchase machinery and equipment for what is called calendering, which is one of the items of business mentioned by the dealer. If that be so, there cannot be any violation of Sub-section (b) of Section 10 of the Act, while issuing the C forms stating that the machinery and equipments purchased are covered by the certificate of registration. It follows that there has been no violation of Sub-section (b) of Section 10 of the Act
6. It is admitted on all hands that the assessee did not use the machinery and equipment for the manufacture or processing of goods for sale. It appears that the dealer did not obtain the necessary machinery for manufacture of the goods, which were to be calendered. That was the explanation offered by the counsel on behalf of the dealer before us. The question then is because of the non-user of the machinery for the purpose of manufacture or processing of goods for resale by the dealer, was there any violation of Sub-section (d) of Section 10. Sub-section (d) will be attracted only in cases where there has been no such manufacture as envisaged by the Sub-section 'without reasonable excuse'. Whether there was reasonable excuse or not has not been considered by the officer. It is not for us to determine that aspect in these proceedings. This question has to be considered and determined by the officer empowered to impose the penalty.
7. We are in full agreement with the judgment under appeal that in cases of this type, wherever there is an infringement of any of the sub-sections of Section 10, it does not automatically follow that the maximum penalty that can be imposed under the section must be imposed on the dealer. A discretion, which is in the nature of a judicial discretion, must be exercised by the officer before determining the quantum of penalty. The learned Judge has also directed this aspect of the matter to be borne in mind by the officer, if he determines to impose a penalty on the dealer.
8. In the light of the above, we confirm the judgment under appeal in so far as it set aside exhibit P6. We hold that there has been no violation of Sub-section (b) of Section 10. The question whether there has been a violation of Sub-section (d) of Section 10 will be considered by the officer concerned afresh after affording a reasonable opportunity to the dealer. The officer will also determine the quantum of penalty to be imposed in the light of what is stated above, if he decides that a penalty has to be imposed.
We allow these appeals to the extent indicated and dispose of them on the above terms. We direct the parties to bear their costs.