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of <h1>Court Protects Selling Dealer's Tax Responsibility Under Kerala Sales Tax Act</h1> The court ruled in favor of the selling dealer, emphasizing that their responsibility is limited to obtaining and furnishing declaration forms under ... - Issues: Interpretation of Section 5(3) of the Kerala General Sales Tax Act, 1963 regarding the liability of a selling dealer when goods purchased under declaration forms are not used for the intended purpose.Analysis:1. The judgment discusses Section 5(3) of the Kerala General Sales Tax Act, which allows for a concessional tax rate of one percent on goods sold for use as a component part of other goods mentioned in the First Schedule. The provision requires the selling dealer to obtain a declaration form from the purchasing dealer to avail of this concessional rate. The responsibility of the selling dealer is limited to obtaining and furnishing the declaration form to the assessing authority. The dealer cannot be held accountable for the actual use of the goods purchased from him by the purchasing dealer. The scheme of the Act indicates that once the selling dealer complies with the proviso of Section 5(3), their responsibility ceases, and they are entitled to the concessional tax rate.2. The case involves a dealer dealing in paper and stationery, where the assessing authority sought to reopen the assessment based on a change in interpretation regarding what constitutes 'paper products' under the Act. The petitioner had sold goods under declaration forms provided by purchasing dealers, but the assessing authority attempted to levy tax at the normal rate based on a different interpretation. The court held that the selling dealer's responsibility is limited to obtaining and furnishing the declaration forms, and they cannot be penalized if the goods are not used as intended. The court quashed the order seeking to reopen the assessment, stating that the selling dealer is not liable to pay tax at a rate higher than the concessional rate.3. Drawing parallels with a similar provision in the Central Sales Tax Act, the judgment emphasizes that the selling dealer cannot be penalized for the misuse of goods purchased by the purchasing dealer. The selling dealer's duty is limited to ensuring the validity of the declaration forms and collecting tax based on the information provided in the forms. Any penalty for misapplication of goods lies with the purchasing dealer, and the selling dealer cannot be held responsible for the actual use of the goods. The court ruled in favor of the selling dealer, stating that there is no justification to reopen the assessment and quashed the order seeking to levy tax at the normal rate.In conclusion, the judgment clarifies the limited responsibility of selling dealers under Section 5(3) of the Kerala General Sales Tax Act and establishes that they cannot be held liable for the actual use of goods purchased under declaration forms. The court's decision protects selling dealers from being penalized for the actions of purchasing dealers and upholds their entitlement to the concessional tax rate as per the provisions of the Act.
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