Declared goods taxation: prescribed declaration requirement read as directory to preserve single-point levy and constitutional validity.

Section 5(2)(a)(vd) of the Bengal Finance (Sales Tax) Act, 1941 was examined in relation to declared goods, iron and steel, and the constitutional limits on State taxation under the Central Sales Tax Act, 1956 and article 286(3). The declaration in the prescribed form was treated as necessary to support deduction, but a mandatory construction was found problematic because it could expose the same goods to more than one stage of tax. Applying reading down, the provision was sustained only if the declaration requirement operated as directory evidence rather than an absolute condition, so deduction could still be established by other satisfactory material.

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Issues: (i) Whether section 5(2)(a)(vd) of the Bengal Finance (Sales Tax) Act, 1941, requiring a declaration in prescribed form for deduction in respect of sales of iron and steel, was unconstitutional for violating the Constitution and the Central Sales Tax Act, 1956. (ii) Whether the requirement of furnishing the declaration was mandatory or capable of being treated as directory.

Issue (i): Whether section 5(2)(a)(vd) of the Bengal Finance (Sales Tax) Act, 1941, requiring a declaration in prescribed form for deduction in respect of sales of iron and steel, was unconstitutional for violating the Constitution and the Central Sales Tax Act, 1956.

Analysis: Iron and steel were declared goods under section 14(iv) of the Central Sales Tax Act, 1956, and the incidence of State tax had to conform to section 15(a) of that Act and article 286(3) of the Constitution. The provision was examined in the context of single-point taxation and the risk that non-production of the declaration could expose the same goods to tax at more than one stage. The Court also considered the challenges based on articles 14, 19(1)(g), 301 and 304(b), and found that the classification of registered dealers in iron and steel was not inherently discriminatory, but the mandatory declaration requirement created the constitutional difficulty.

Conclusion: The provision was not sustained in its mandatory form and was held valid only if the declaration requirement was treated as directory, not mandatory.

Issue (ii): Whether the requirement of furnishing the declaration was mandatory or capable of being treated as directory.

Analysis: The words requiring the dealer to "furnish" the declaration were construed in light of the statutory object and the need to preserve the validity of the provision. The Court applied the principle of reading down and held that the declaration could function as a mode of evidence, while the dealer could also establish the claim by other satisfactory material. Non-production of the declaration was not to result automatically in denial of deduction, provided the assessing authority was satisfied on the evidence that the goods were purchased in the same form from a registered dealer in West Bengal.

Conclusion: The declaration requirement was read as directory and not mandatory.

Final Conclusion: The provision was upheld only after reading it down so that compliance with the declaration requirement was not absolute, and the writ petitions were allowed only to that limited extent.

Ratio Decidendi: A taxing provision affecting declared goods must be construed so as to preserve single-point taxation and constitutional validity, and a prescribed declaration requirement may be treated as directory where a mandatory construction would create the possibility of multi-point levy or contravene the governing constitutional and statutory limits.

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