In Brief
A fertilizer manufacturer in Uttar Pradesh obtained a recognition certificate allowing it to purchase natural gas at concessional tax rates under Form III-B for use in manufacturing urea. The dealer subsequently transferred finished urea to other States through stock transfer rather than direct sale. The revenue authority imposed a penalty of over Rs. 10 crores, arguing the Form III-B certificate was false because the goods were not sold as prescribed. The Supreme Court held that Section 3-B applies only when a false or wrong certificate is issued—here the raw material was genuinely used for the stated purpose. Section 4-B(6), a specific provision for cases where dealers fail to meet their stated intentions, is the proper remedy. The two sections must be read harmoniously to avoid rendering Section 4-B(6) meaningless. The appeal was dismissed and the tribunal's annulment of the penalty was upheld.
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