Exemption claim fails without prescribed Form III-C(2) when tax liability is admitted and the purchase turnover is unsupported.

Exemption under rule 12-B of the U.P. Sales Tax Rules, 1948 depended on production of the prescribed declaration in Form III-C(2) showing payment of tax by the selling dealer. Because the assessee admitted tax liability on part of the turnover and produced no Form III-C(2) before either the assessing authority or the appellate authority for the purchase turnover, the exemption claim could not be maintained. The text also notes that the Tribunal did not properly account for the legal effect of that omission together with the admitted liability, so non-taxability could not be accepted in law.

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Issues: Whether the assessee could be declared non-taxable despite admission of tax liability on part of the turnover and failure to produce the prescribed form III-C(2) required to claim exemption on the purchase turnover.

Analysis: The exemption under rule 12-B of the U.P. Sales Tax Rules, 1948 depended upon production of the prescribed declaration or certificate in form III-C(2) evidencing payment of tax by the selling dealer. The assessee had admitted liability and payment of tax on a separate turnover, yet no form III-C(2) was produced before the assessing authority or the appellate authority in respect of the purchase turnover. In the absence of the prescribed form, the claim for exemption could not be sustained, and the Tribunal failed to consider the legal consequence of that omission together with the admitted tax liability.

Conclusion: The assessee could not be declared non-taxable in law, and the Revenue's challenge succeeded.

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