Declared goods sales by endorsed railway receipts remain taxable under the CST proviso, and omission to apply it is rectifiable.

The proviso to section 9(1) of the Central Sales Tax Act, 1956 applied to subsequent inter-State sales of declared goods effected by endorsement of railway receipts, so the turnover remained taxable in Uttar Pradesh. The Court rejected the argument that declared goods were outside that proviso and held that the statutory scheme of sections 7 and 8 did not exclude such sales. It further held that failure to apply the proviso was a patent mistake apparent on the record, making rectification under section 22 of the Uttar Pradesh Sales Tax Act, 1948 valid. The rectification was also within limitation because it was made within three years of the assessment order.

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Issues: (i) Whether the proviso to section 9(1) of the Central Sales Tax Act, 1956 applied to subsequent sales of declared goods effected by endorsement of railway receipts so as to make the turnover taxable in Uttar Pradesh. (ii) Whether the original assessment order contained a mistake apparent on the record capable of rectification under section 22 of the Uttar Pradesh Sales Tax Act, 1948. (iii) Whether the rectification order was barred by limitation under section 22 of the Uttar Pradesh Sales Tax Act, 1948.

Issue (i): Whether the proviso to section 9(1) of the Central Sales Tax Act, 1956 applied to subsequent sales of declared goods effected by endorsement of railway receipts so as to make the turnover taxable in Uttar Pradesh.

Analysis: The proviso to section 9(1) governs subsequent sales during movement of goods and fixes levy and collection in the State from which the registered dealer effecting the subsequent sale obtained, or could have obtained, the prescribed declaration form. The statutory scheme of sections 7 and 8 and the prescribed forms does not exclude declared goods from that regime. The distinction suggested between declared goods and other goods was rejected, and the omission of the earlier clause in section 8(3) did not take declared goods outside the scope of the proviso. No exemption under section 6(2) was claimed. The contention that the proviso was inapplicable therefore failed.

Conclusion: The proviso to section 9(1) applied, and the subsequent sales were taxable in Uttar Pradesh. The finding was against the assessee.

Issue (ii): Whether the original assessment order contained a mistake apparent on the record capable of rectification under section 22 of the Uttar Pradesh Sales Tax Act, 1948.

Analysis: A mistake apparent on the record means a patent mistake not requiring elaborate argument. The assessment order had ignored the proviso to section 9(1), although the statutory provision clearly governed the case. The later view of the High Court merely confirmed what the law already required. The error was therefore patent and fell within the rectification power under section 22.

Conclusion: The original assessment order contained a mistake apparent on the record and was validly rectified. The finding was against the assessee.

Issue (iii): Whether the rectification order was barred by limitation under section 22 of the Uttar Pradesh Sales Tax Act, 1948.

Analysis: The rectification order was made within three years from the date of the assessment order. The statutory right of appeal under the Uttar Pradesh Act runs from service of the copy of the order, so the assessee was not prejudiced by the communication date. Limitation for rectification was computed from the making of the order, and that requirement was satisfied.

Conclusion: The rectification order was not barred by limitation. The finding was against the assessee.

Final Conclusion: The assessment could be rectified, the turnover remained taxable in Uttar Pradesh, and the challenge to the rectification failed in full.

Ratio Decidendi: The proviso to section 9(1) of the Central Sales Tax Act, 1956 applies to subsequent inter-State sales of declared goods effected by transfer of documents of title, and a patent failure to apply that proviso constitutes a mistake apparent on the record amenable to rectification within the statutory period.

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