Subsequent sale exemption under the CST Act requires Form E-I only; Form C declaration is not mandatory.

For exemption on a subsequent sale under section 6(2) of the Central Sales Tax Act, production of Form E-I was treated as sufficient, and the purchasing dealer's Form C declaration under rule 8-D of the M.P. Sales Tax (Central) Rules was not required. The High Court followed its earlier view that rule 8-D is directory, not mandatory, so exemption cannot be refused merely because Form C is not furnished when the prescribed Form E-I certificate is produced. The governing principle is that the State rule cannot be applied to defeat the statutory exemption scheme under the Central Act in these circumstances.

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Issues: Whether, for claiming exemption from tax on a subsequent sale under section 6(2) of the Central Sales Tax Act, production of only Form E-I was sufficient or whether furnishing the purchasing dealer's declaration in Form C under rule 8-D of the M.P. Sales Tax (Central) Rules, 1957 was also necessary.

Analysis: The Court followed its earlier decision holding that rule 8-D is directory and not mandatory for the purpose of section 6(2) exemption. It accepted that the statutory requirement for exemption in respect of a subsequent sale is satisfied by production of the certificate in Form E-I, and that insistence on the original Form C declaration from the purchasing dealer is not warranted under the Central Act scheme as applied in the State rules.

Conclusion: Furnishing Form C was not necessary and production of only Form E-I was sufficient to grant exemption under section 6(2) of the Central Sales Tax Act.

Ratio Decidendi: Where the governing rule is directory, exemption for a subsequent sale under section 6(2) cannot be denied merely for non-production of the purchasing dealer's Form C declaration if the prescribed Form E-I certificate is produced.

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