Rebuttable consumer-sale presumption under sales tax law limits inquiry to certificate genuineness, not purchaser's later use.

Section 3-AA of the U.P. Sales Tax Act and rule 12-A created a single-point taxation scheme for cotton yarn sales with a rebuttable presumption that sales were to consumers unless the dealer furnished a form III-A certificate for resale. The certificate procedure was a recognised mode of proof, and the taxing authority could examine whether the certificate was genuine or involved collusion. However, the authority could not require the selling dealer to prove the purchaser's later use of the goods, because subsequent conduct of the purchaser was outside the seller's burden absent falsity in the certificate. The turnover was therefore treated as not liable to tax on that basis.

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Issues: Whether, for sales of cotton yarn under section 3-AA of the U.P. Sales Tax Act, 1948, the furnishing of form III-A certificates and the particulars in form IV conclusively established that the sales were not to consumers so as to exempt the selling dealer from tax, or whether the taxing authority could still enquire into the subsequent use of the goods by the purchasing dealer.

Analysis: Section 3-AA imposed tax on specified goods, including cotton yarn, at the point of sale to the consumer. Rule 12-A treated such sales as sales to the consumer unless the dealer furnished a form III-A certificate stating that the goods were purchased for resale in the same condition. The statutory scheme, read with the presumption in section 3-AA(2), was intended to secure single-point taxation while providing a practical method for the dealer to displace the presumption. The certificate procedure was a legally recognized mode of proof, but it did not authorise the department to insist that the selling dealer further prove how the purchaser later dealt with the goods. The genuineness of the certificate or any collusion could be examined, but not the correctness of the purchaser's subsequent conduct. On the facts, the appellate authority had not found the certificates to be false or fabricated, nor had it upheld the factual basis on which the reopening proceeded.

Conclusion: The certificate mechanism under rule 12-A created a rebuttable evidentiary safeguard, not an irrebuttable presumption against the dealer, and the assessee was not liable to tax on the disputed turnover.

Ratio Decidendi: Where the statute permits single-point taxation and prescribes a certificate as the mode of rebutting the consumer-sale presumption, the taxing authority may test the genuineness of the certificate but cannot require the selling dealer to prove the purchaser's subsequent use of the goods in the absence of falsity or collusion.

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