Certificate-based proof for sales tax exemption is not exclusive; dealers may prove second sale through other evidence.

Rule 45(3)(b) of the Andhra Pradesh General Sales Tax Rules was upheld as a valid exercise of rule-making power and not inconsistent with section 25, because it prescribed a recognised method for proving that goods liable to single-point tax had already suffered tax without excluding other modes of proof. The notices issued on the footing that tax must follow if the prescribed certificate was not produced were unsustainable, because dealers could establish a second sale by oral or documentary evidence and had to be given a fair opportunity to do so. The notices were therefore quashed and the matter remitted for fresh consideration.

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Issues: Whether rule 45(3)(b) of the Andhra Pradesh General Sales Tax Rules is unconstitutional and invalid; and whether the impugned notices requiring production of bills, cash memoranda and certificates under rule 45(3)(b), and proposing to tax the turnovers as first sales, were without jurisdiction and liable to be quashed.

Issue: Whether rule 45(3)(b) of the Andhra Pradesh General Sales Tax Rules is unconstitutional and invalid.

Analysis: The rule was challenged as being inconsistent with the Act on the footing that section 25 dealt only with registered dealers. The rule, however, was upheld under the rule-making power conferred by section 39(2)(g) of the Act, which authorises rules concerning bills, cash memoranda and the manner of maintenance of records. The rule was treated as prescribing one recognised method of proving that goods liable to single-point tax had already suffered tax, but not as excluding every other mode of proof. It was also held that the rule was neither arbitrary nor discriminatory and did not contravene section 25.

Conclusion: Rule 45(3)(b) is valid and constitutional.

Issue: Whether the impugned notices requiring production of bills, cash memoranda and certificates under rule 45(3)(b), and proposing to tax the turnovers as first sales, were without jurisdiction and liable to be quashed.

Analysis: Exemption from tax had to be established by the dealers, but the burden could be discharged by oral or documentary evidence showing that the jaggery purchased and resold was a second sale within the State. Rule 45(3)(b) was held to provide only one mode of proof and not the exclusive mode. The assessing authority could not reject the claim solely because the prescribed certificate was not produced, and had to afford a fair opportunity to prove the claim by other evidence. Since the notices proceeded on the erroneous footing that tax must be levied in the absence of the prescribed documents, they were held to be unsustainable and violative of natural justice.

Conclusion: The impugned notices were illegal and liable to be quashed.

Final Conclusion: The writ petitions succeeded, the notices were set aside, and the assessment issue was left to be decided afresh after giving the dealers a reasonable opportunity to establish that the disputed sales were second sales of jaggery within the State.

Ratio Decidendi: A statutory certificate requirement for proving exemption from a single-point tax is only a permissible mode of proof unless the statute expressly makes it exclusive, and an assessee must be allowed to establish the exemption by other evidence before turnover can be brought to tax.

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