( 1 ) STATE is before us aggrieved by the order of the Tribunal dated 9.10.2003 passed in STA No. 390 and 391/2002 in the case on hand. The following question of law is raised: whether the respondent could utilise the benefits of Form-37 declarations when not engaged in any manufacturing activity or sale of goods. ( 2 ) THE respondent is a registered dealer engaged in rendering heat treatment process to the materials brought by his customers. The respondent is said to have purchased machinery parts against Form-37 declaration and availed reduced rate of tax at 4% in terms of the Notification issued Under Section 8a of the Act. The assessing authority after notice came to a conclusion that the respondent has mis-used the facility given under the notification. He imposed penalty. The same was challenged by way of Writ Petition. Thereafter Writ Petition was withdrawn with liberty to file an appeal. Appeal was filed by the assessee. The Tribunal has chosen to allow the appeal and the Tribunal has set aside the penalty imposed Under Section 5a (2) (v) of the KST act. The State, aggrieved by this order is before us by raising the above referred question of law. ( 3 ) HEARD Smt. Sujatha, learned Government Advocate and Sr. Narayan, learned Counsel appearing for the respondent and perused the material placed on record. ( 4 ) SECTION 5-A (2) (v) reads as under: having his manufacturing unit inside the State and having purchased any inputs by furnishing a declaration under first proviso to Sub-section (1) uses such inputs contrary to such declaration. The AA after giving such person a reasonable opportunity of being heard, shall, by order in writing, impose upon him by way of penalty a sum which shall not be less than twice the amount of tax leviable Under Section 5 but not exceeding thrice the amount of such tax on the inputs so purchased. A reading of the said provision would show that to levy penalty, the unit must have purchased inputs inside the State and the units must have purchased the inputs by furnishing a declaration in terms of Section 5-A (2) (v) of the Act. ( 5 ) THE Tribunal, on facts has come to a conclusion that the ingredients of Section 5-A (2) (v) is not set aside in the case on hand. ( 5 ) THE Tribunal, on facts has come to a conclusion that the ingredients of Section 5-A (2) (v) is not set aside in the case on hand. We are in agreement with the findings of the Tribunal. The order is based on facts. No error of law is seen. Petition stands rejected without answering the question of law in the case on hand and in the given circumstances. ( 6 ) ORDERED accordingly. No costs.