Form D sales to the State Government attract concessional inter-State tax when purchases serve a statutory duty and the declaration is genuine.

Sales of medicines against form D for Employees' State Insurance hospitals and dispensaries were treated as sales to the State Government under section 8(1) of the Central Sales Tax Act, 1956, because the purchases were made by State Government officers, funded from State resources, and undertaken in discharge of the State's statutory duty to provide medical benefit. The assessing authority could verify the genuineness of form D, but could not go behind the declaration to examine the ultimate consumption of the goods. On that basis, the higher rate of tax was not justified and the impugned assessments and demand notices were set aside.

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Issues: Whether sales of medicines made against form D for use in Employees' State Insurance hospitals and dispensaries were sales to the State Government within section 8(1) of the Central Sales Tax Act, 1956, so as to attract the concessional rate of tax, and whether the taxing authority could go behind form D to enquire into the ultimate use of the goods.

Analysis: The statutory scheme of the Employees' State Insurance Act placed the primary responsibility for providing medical benefit on the State Government, which was required to make and fund the purchases for insured persons and their families. The material on record showed that the medicines were ordered by State Government officers, paid for from State funds or consolidated funds, entered in State budgets, and supported by certificates issued in the capacity of Government officers. On that footing, the purchases were made by the State Governments in discharge of their own statutory duty and not as agents of the Corporation. The authority issuing the assessments could examine the genuineness of form D, but could not extend the enquiry to the ultimate consumption of the goods after the statutory declaration had been issued. The assessment authorities therefore erred in treating the Corporation as the purchaser and in denying the concessional rate.

Conclusion: The sales were sales to the State Governments and were covered by section 8(1) of the Central Sales Tax Act, 1956. The levy at the higher rate could not be sustained, and the impugned assessments and demand notices were quashed.

Ratio Decidendi: Where goods are purchased by the State Government in discharge of a statutory obligation and supported by the prescribed declaration, the seller is entitled to the concessional inter-State sales tax rate, and the assessing authority's enquiry is confined to the genuineness of the declaration and does not extend to the buyer's ultimate use of the goods.

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