Form 32 evidence under exemption rules does not require proof of actual tax payment by the selling dealer.

A dealer seeking exemption or reduction under Explanation II of the Fourth Schedule must furnish a proper declaration in form 32 from the registered selling dealer, together with particulars or other acceptable evidence showing that the goods had already become liable to tax in the hands of an earlier dealer. Actual proof that the seller paid tax is not required, and a purchaser cannot be burdened with establishing the seller's tax payment. Form 32, if duly completed, satisfies the primary evidentiary requirement, though the assessing authority may seek supporting purchase records or similar proof to verify the claim.

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Issues: Whether, for claiming exemption or reduction under Explanation II of the Fourth Schedule, the dealer was required to produce proof of payment of tax by the previous or earliest seller in addition to declarations in form 32, and whether the assessing authority was justified in rejecting the claim for want of such proof.

Analysis: The statutory scheme of section 6A and rule 26(9) places the burden on the dealer claiming exemption to furnish a declaration in form 32 obtained from the registered selling dealer, together with particulars sufficient to enable the assessing authority to verify that the goods had suffered tax in the hands of an earlier dealer. The earlier decisions of the Court recognised that the assessee need not prove actual payment of tax by the seller; it is enough to establish that the goods had already become liable to tax in the hands of an earlier dealer. Form 32, when properly filled with the relevant particulars of the seller, fulfils the primary evidentiary requirement, though the authority may call for additional acceptable evidence such as purchase bills. Requiring the purchaser to prove actual tax payment by the selling dealer would go beyond the statutory burden.

Conclusion: The insistence on proof of actual payment of tax by the selling dealers was not justified. The declarations in form 32, along with other acceptable evidence, were sufficient for the assessee's claim, and the rejection of exemption on the basis adopted by the assessing authority was unsustainable.

Ratio Decidendi: Under section 6A and rule 26(9), a dealer claiming exemption satisfies the burden by producing a proper declaration in form 32 and supporting evidence showing that the goods had already become liable to tax in the hands of an earlier dealer; actual proof of tax payment by the selling dealer is not mandatory.

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