Sales tax exemption claims: declaration forms shift the burden, and later cancellation does not defeat earlier transactions.

Production of declaration forms under rule 27A creates a strong presumption in favour of exemption under section 5(2)(a)(ii) of the Bengal Finance (Sales Tax) Act, 1941, and the burden shifts to the revenue to rebut the genuineness of the transactions. Subsequent cancellation of the purchasing dealers' registration does not retrospectively invalidate earlier sales. Cash payment, by itself, is not sufficient to justify rejection of the exemption claim, and non-production of supporting records cannot displace the presumption unless the revenue makes a lawful determination on the available material.

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Issues: Whether exemption under section 5(2)(a)(ii) of the Bengal Finance (Sales Tax) Act, 1941 could be denied on the basis of subsequent cancellation of the purchasing dealers' registration, alleged cash nature of transactions, and non-production of supporting records, despite production of declaration forms.

Analysis: Production of the declaration forms under rule 27A raised a strong presumption in favour of the claim for exemption and shifted the burden to the revenue to rebut the genuineness of the transactions. The subsequent cancellation of the purchasers' registration certificates did not operate retrospectively so as to invalidate earlier sales. The fact that transactions were partly or wholly in cash was not, by itself, a sufficient ground to draw an adverse inference against genuineness. On the record, the respondents had not displaced the presumption created by the declaration forms, and the age of the matter could not relieve them of the burden of making a lawful determination.

Conclusion: The disallowance of the exemption claim was not sustainable, and the assessee succeeded.

Ratio Decidendi: Once declaration forms are produced in support of an exemption claim under the sales tax law, the burden shifts to the revenue to disprove genuineness; subsequent cancellation of the purchaser's registration does not retrospectively invalidate the transaction, and cash payment alone cannot justify rejection of the claim.

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