Concessional tax on declared sales turns on valid form XVII declarations, not proof of the purchaser's actual end use.

Under section 3(3), concessional tax on sales of First Schedule goods is established when the sale is to another dealer and the prescribed declaration is furnished. The selling dealer need not independently prove that the purchaser actually used the goods as component parts in the manufactured product; production of the valid form XVII declaration is the statutory mode of proving entitlement. If the purchaser makes a false declaration or misuses the goods, the Act provides separate penalties against the purchaser under sections 23 and 45(2)(e). The Madras HC therefore upheld concessional treatment on the declarations produced.

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Issues: Whether the assessee was entitled to concessional tax under section 3(3) on sales of lube base stocks on production of form XVII declarations, without proving that the goods were actually used by the purchaser as component parts in the manufactured product.

Analysis: The concessional levy under section 3(3) applies where the goods sold are those in the First Schedule, the sale is to another dealer, and the prescribed declaration is furnished. The proviso makes production of the declaration the statutory mode by which the selling dealer establishes entitlement. Once the declaration in the prescribed form is filed, the seller is not required to prove that the purchaser in fact used the goods as declared. If the purchaser gives a false declaration or misuses the goods, the Act provides separate penalties against the purchaser under sections 23 and 45(2)(e). The Court also treated the earlier decisions on component parts and declarations as consistent with this position.

Conclusion: The assessee was entitled to the concessional rate on production of valid form XVII declarations, and the revision by the State failed on this issue.

Ratio Decidendi: Under section 3(3), the selling dealer's entitlement to concessional tax is established by furnishing the prescribed declaration, and the seller is not required to independently prove the purchaser's actual use of the goods as component parts; any false use by the purchaser is dealt with by the statutory penalties on the purchaser alone.

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