Statutory form reliance protects selling dealer from exemption denial when purchaser's later misrepresentation is unauthorised.

Exemption under the Sales Tax Rules could not be denied to a selling dealer merely because the purchasing dealer was later alleged to be bogus. The department had already issued the statutory form to the purchasing dealer, which meant the requisition was accepted as genuine; in the absence of any warning or disqualifying declaration against acceptance of that form, the selling dealer was entitled to rely on it. Any misrepresentation or misuse of the form by the purchasing dealer could not be fastened on the selling dealer, who had no role in the alleged wrongdoing.

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Issues: Whether exemption could be refused to the selling dealer on the ground that the purchasing dealer was alleged to be bogus and that the statutory form had been misused.

Analysis: Rule 12-A of the Sales Tax Rules, 1948 regulated issue and receipt of form 3-A. A form could be issued only to a registered dealer on satisfaction of genuineness and reasonableness of the requisition, and both the purchasing dealer and the selling dealer were required to ensure that the form was duly obtained and not obsolete or invalid. Since the form had admittedly been issued by the department to the purchasing dealer, the department had accepted the requisition as genuine. In the absence of any declaration by the department warning selling dealers against acceptance of that form, the selling dealer was entitled to act on the form received from the purchasing dealer. Any misrepresentation by the purchasing dealer to the department could not be visited on the selling dealer, who had no role in it.

Conclusion: Exemption could not be denied to the selling dealer merely because the purchasing dealer was later alleged to be fictitious or because the form had been misrepresented by that dealer.

Ratio Decidendi: Where a statutory form has been duly issued by the department to the purchasing dealer and no disqualifying declaration exists, the selling dealer cannot be denied exemption for a subsequent misrepresentation attributable only to the purchasing dealer.

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