TMI Blog1966 (4) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... t is a matter which has already been determined by the notified authority issuing the certificate of registration. - Civil Appeal No. 334, 335 And 338 of 1965 - - - Dated:- 19-4-1966 - WANCHOO K.N., SHAH J.C. AND SIKRI S.M. JJ. A.V. Rangam, for the appellant in C.A. No. 338 of 1965. Bishan Narain, Senior Advocate (A.V. Rangam with him), for the appellants in C.As. Nos. 334 and 335 of 1965. N.D. Karkhanis, and O.C. Mathur, J.B. Dadachanji and Ravinder Narain of J.B. Dadachanji Co., for the respondents in C.As. Nos. 335 and 338 of 1965. K.R. Chaudhuri, for the respondent in C.A. No. 334 of 1965. -------------------------------------------------- The judgment of the Court was delivered by SHAH, J.- This is a group of appeals filed by the State of Madras against orders passed by the High Court of Judicature at Madras which raises the following common question as to applicability of concessional rate of sales tax to transactions of inter-State sale and taxable under the Central Sales Tax Act, 1956: "When a purchasing dealer in one State furnishes in Form 'C' prescribed under the Central Sales Tax (Registration and Turnover) Rules, 1957, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale within the meaning of section 8(3)(b) of the Central Sales Tax Act, because electricity was not at the material time "goods" within the meaning of the Act. The order passed by the Appellate Assistant Commissioner was confirmed by the Sales Tax Appellate Tribunal, Madras. The High Court, following an earlier judgment in Deputy Commissioner of Commercial Taxes, Madras Division v. Manohar Brothers [1962] 13 S.T.C. 686., modified the order holding that if the selling dealer within the State produces a certificate in Form 'C' setting out one or more of the purposes in section 8(3)(b) of the Act, and if the Sales Tax Authorities on behalf of the State do not deny that the purchasing dealer is a registered dealer, the selling dealer will not be denied the concessional rate of tax under the Act, even if it transpires that the purchasing dealer has utilised the goods for purposes other than those mentioned in the certificate of registration. The High Court then held that out of the certificates in Form 'C' produced by the selling dealer, certificates in respect of a turnover of Rs. 42,080 set out the purpose as manufacture of electrical energy" and since this was not one of the purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistration in Form 'B', whether the goods specified in the purchasing dealer's certificate can be used for the purpose mentioned in the certificate in Form 'C', and whether the goods were applied for the purpose for which they were purchased. Counsel also submitted that a certificate in Form 'C' which specifies more purposes than one for which the goods are intended to be used by the purchasing dealer is invalid. We may in the first instance set out the relevant provisions of the Act and the Rules. The Central Sales Tax Act (74 of 1956) was enacted by the Parliament to formulate principles for determining when a sale or purchase of goods takes place in the course of inter- State trade or commerce or outside a State or in the course of import into or export from India. By Chapter II principles for determining when a sale or purchase of goods takes place in the course of inter- State trade or commerce or outside a State or in the course of import or export are enacted. Chapter III deals with inter-State sales tax. By section 6 liability is imposed upon every dealer to pay tax under the Act on all sales effected by him in the course of inter-State trade or commerce during any year. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aler, falsely represents when purchasing any class of goods that goods of such class are covered by his certificate of registration; or (c) not being a registered dealer, falsely represents when purchasing goods in the course of inter-State trade or commerce that he is a registered dealer; or (d) after purchasing any goods for any of the purposes specified in clause (b) of sub-section (3) of section 8 fails, without reasonable excuse, to make use of the goods for any such purpose; (e) has in his possession any form prescribed for the purpose of sub-section (4) of section 8 which has not been obtained by him or by his principal or by his agent in accordance with the provisions of this Act or any rules made thereunder; he shall be punishable with simple imprisonment. * * * *'' Section 14 deals with declared goods in respect of which by section 8(1) read with section 8(3)(a) the concessional rate of tax applies when the goods are purchased as being intended for resale. Reading section 8(1) with section 8(3)(b), it is clear that the Legislature intended to grant the benefit of concessional rates of tax under the Act to registered dealers, provided that the goods sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng State....................................................................... Issued to holder of Registration Certificate No............... Serial No.......... To ..................... (Seller) Certified that the goods **Ordered for in our purchase order No................dt.......... ------------------------------------------ *Purchased from you as per bill/cash memo stated below. ------------------------------------------ Supplied under your chalan No.............dated.............are for *"resale use in manufacture of goods for sale --------------------------- use in the execution of contracts --------------------------- packing of goods for resale, and are covered by my/our registration certificate No................ dated............issued under the Central Sales Tax Act, 1956. (Name of the purchasing dealer in full). (Signature and status of the person signing the declaration) *Particulars of Bill/Cash Memo. Date.................... No...................... Amount.................... "Strike out whichever is not applicable. ( Note : To be retained by the selling dealer.)". The scheme of the Rules read with the Act is that the purchasing dealer as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods and if he purchases goods specified in his certificate, but without making up his mind about the precise purpose for which the goods will be used, provided it is one of the purposes, he will still be complying with the statutory requirements if he declared in Form 'C' that the goods are purchased for more than one purpose. The Act and the Rules do not impose an obligation upon the purchasing dealer to declare that goods purchased by him are intended to be used for one purpose only, even though under his certificate of registration he is entitled to purchase goods of the classes mentioned in section 8(3)(b) for more purposes than one. When the purchasing dealer furnishes a certificate in Form 'C' without striking out any of the four alternatives, it is a representation that the goods purchased are intended to be used for all or any of the purposes, and the certificate complies with the requirements of the Act and the Rules. The Sales Tax Authority is, of course, competent to scrutinise the certificate to find out whether the certificate is genuine. He may also, in appropriate cases, when he has reasonable grounds to believe that the goods purchased are not covered by the regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods are specified in the certificate of registration in Form 'B', it is not open, when a claim is made in respect of the purchase of those goods for the application of concessional rate of tax, to the Sales Tax Officer to deny to the selling dealer of those goods the benefit on the ground that the goods specified cannot be used by the purchasing dealer for the purpose of his business. It is open to the Tax Officer to ascertain whether the goods in respect of which a claim for concessional rate is made are specified in the certificate of registration, but if the class of goods is included in the certificate of registration in Form 'B' he cannot say that the class of goods should not have been specified. The Act seeks to impose tax on transactions, amongst others, of sale and purchase in inter-State trade and commerce. Though the tax under the Act is levied primarily from the seller, the burden is ultimately passed on to the consumers of goods because it enters into the price paid by them. Parliament with a view to reduce the burden on the consumer arising out of multiple taxation has provided in respect of sales of declared goods which have special importance in inter-State trade or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the stated purpose or even usable for such a purpose, so long as the purchasing dealer has furnished the required declaration to the selling dealer, the selling dealer becomes under law entitled to the benefit of section 8(1) of the Act. It is no function of the selling dealer to enter into a judicial examination of whether the goods are in fact used or usable for the manufacture or processing of goods for sale by the purchasing dealer. The purchasing dealer declares that they are required for such a purpose and are further so specified in his form of registration granted by the Sales Tax Authorities. It is not the function of the selling dealer to enquire whether the requirement of the purchasing dealer is bona fide or even is or is not within the certificate of registration of that dealer." It is implicit in the context in which these observations occur that if the purchasing dealer holds a valid certificate specifying the goods which are to be purchased, and furnishes the required declaration to the selling dealer, the selling dealer becomes on production of the certificate entitled to the benefit of section 8(1). It is of course open to the Sales Tax Authority to satisfy hims ..... X X X X Extracts X X X X X X X X Extracts X X X X
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