Genuine declaration under concessional sales tax notification bars denial of tax benefit based on purchaser's later use

A concessional sales tax notification covering machinery, plant, tools, spare parts and accessories applied where sales were made between registered dealers against the prescribed declaration for use in manufacture or processing within the State. If the declarations were genuine and there was no collusion or fabrication, the taxing authority could verify the declaration itself but could not refuse the concession by probing the purchaser's later actual use of the goods. On the facts stated, the electrical goods fell within the notified class and the concession could not be denied for alleged non-user by the purchaser.

---

---

Issues: Whether electrical goods sold by a registered dealer under the notification were entitled to the concessional rate of tax on the strength of valid declarations, and whether the taxing authority could deny the benefit by enquiring into the purchasing dealer's actual use of the goods.

Analysis: The notification granted exemption in part to machinery, plant, tools, spare parts and accessories, subject to sale between registered dealers against the prescribed declaration for use in manufacture or processing inside the State. The declarations furnished by the purchasers were accepted as genuine, and there was no finding of collusion or that the declarations were farzi. The Court held that the taxing authority could examine the genuineness of the declaration, but not the truthfulness of the purchaser's subsequent user of the goods. The condition relating to actual use by the purchaser was therefore not a matter for denial of the concession on the facts found.

Conclusion: The assessee was entitled to the concessional rate of tax under the notification, and the question referred was answered against the Revenue.

Final Conclusion: The reference was answered in favour of the assessee by holding that the electrical goods fell within the notified class and that the concessional rate could not be denied on the ground of alleged non-user by the purchaser.

Ratio Decidendi: Where the prescribed declaration under a concessional sales tax notification is genuine and there is no collusion, the taxing authority cannot deny the concession by investigating the truthfulness of the purchaser's actual use of the goods.

---