Statutory declarations and registered dealer sales sustain deduction; later cancellation or suspicion alone cannot displace proof.

Sales tax deduction was available where sales were made to registered dealers and the required statutory declarations were produced. Later cancellation of the purchasers' registration certificates did not, by itself, prove that they were not registered dealers or did not exist at the time of the transactions. Alleged inability to trace purchasers, absence of transport proof, cash payments, and other suspicious circumstances were insufficient in law to establish collusion or falsity. Suspicion could not replace proof, and the declarations furnished by the assessee remained prima facie evidence of genuine sales to registered dealers.

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Issues: Whether there was legal evidence to support the finding that the sales claimed by the assessee were collusive and not genuine, so as to justify disallowance of the deduction under the sales tax law.

Analysis: The deduction was available if the sales were made to registered dealers and the required declarations were produced. Subsequent cancellation of the purchasers' registration certificates could not, by itself, prove that the purchasers were not registered dealers or that they did not exist at the time of the transactions. The remaining circumstances relied upon, such as alleged inability to trace the purchasers, absence of transport proof, cash payments, and the alleged improbability of the purchases, were treated as insufficient in law to establish collusion or falsity. Suspicion, however strong, could not replace proof, and the declarations furnished by the assessee constituted prima facie proof of sales to registered dealers.

Conclusion: The finding of collusion and non-genuineness was unsupported by legal evidence. The question was answered in the negative, in favour of the assessee and against the department.

Ratio Decidendi: For deduction of sales tax, once sales to registered dealers are supported by the statutory declaration, later cancellation of the purchaser's registration or mere suspicious circumstances cannot displace the prima facie proof unless there is legal evidence establishing that the transactions were not genuine.

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