Certificate of intended use suffices for sales tax exemption; seller need not prove actual end-use absent collusion.

Under section 5(2)(a)(iv) of the Punjab General Sales Tax Act, 1948, a selling dealer making sales to an electricity undertaking for use in generation or distribution of electrical energy was not required to prove actual end-use after sale when competent officers of the undertaking issued certificates of intended use. The Court treated those certificates as sufficient evidence of the statutory purpose and held that the seller could not be burdened with monitoring how the goods were ultimately applied, absent collusion or other disqualifying circumstances. On that basis, the disallowance was not justified and the assessee was not required to prove further actual use of the cement.

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Issues: Whether, under section 5(2)(a)(iv) of the Punjab General Sales Tax Act, 1948, the selling dealer was required to prove that the goods sold to the electricity undertaking were actually used in the generation or distribution of electrical energy, despite certificates issued by responsible officers of the undertaking.

Analysis: The provision allowed deduction where sales were made to an undertaking supplying electrical energy for use by it in generation or distribution of such energy. The Court treated the issuance of certificates by responsible officers of the electricity board as sufficient representation of the intended use. It held that the selling dealer could not be required to monitor the actual application of the cement after sale, unless collusion was proved. The burden could not be extended to requiring the seller to ensure actual end-use merely because some of the goods might ultimately have been used for construction not directly connected with generation or distribution.

Conclusion: The assessee was not required to further prove actual use of the cement, and the disallowance was not justified.

Ratio Decidendi: Where a statutory exemption depends on sale to a specified undertaking for a stated purpose and the purchasing undertaking issues a competent certificate of intended use, the seller is not obliged to prove actual end-use in the absence of collusion or other disqualifying circumstances.

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