Declared goods deduction: assessment-stage declaration requirement read as directory; mandatory insistence would breach anti-multiple taxation limits.

Rule 27C(1) of the Bengal Sales Tax Rules, 1941 was construed as directory rather than mandatory because insisting on production of the countersigned declaration in form XXXE at assessment could defeat deduction for inter-State sales of declared goods and expose the same goods to taxation at a second stage, contrary to section 15(a) of the Central Sales Tax Act, 1956 and article 286(3) of the Constitution. The proviso to rule 27C(1)(b) was struck down as inconsistent with that reading, and the related trade circular was held not binding on quasi-judicial authorities. Dealers were left free to substantiate their claim by declaration or other admissible evidence.

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Issues: (i) Whether rule 27C(1) of the Bengal Sales Tax Rules, 1941, requiring production of the countersigned declaration in form XXXE at the stage of assessment, is mandatory or merely directory and, if mandatory, whether it is ultra vires section 15(a) of the Central Sales Tax Act, 1956 and article 286(3) of the Constitution of India; (ii) Whether the proviso to rule 27C(1)(b) can stand and what is the effect of the related trade circular.

Issue (i): Whether rule 27C(1) is mandatory or directory and whether it is ultra vires section 15(a) of the Central Sales Tax Act, 1956 and article 286(3) of the Constitution of India.

Analysis: The provision used the expression "shall" in requiring production of the countersigned declaration at assessment. On its plain language, the requirement operated as a condition for claiming deduction in respect of inter-State sales of declared goods. The effect of insisting upon the declaration at assessment was that, if it could not be produced, the claim for deduction could be rejected and the same declared goods could be brought to tax again at a second point. That consequence would offend the statutory restriction that declared goods shall not be taxed at more than one stage and would also be inconsistent with the constitutional limitation under article 286(3).

Conclusion: Rule 27C(1) could not be treated as mandatory; the word "shall" had to be read as "may", and the provision was held to be directory in favour of the assessee.

Issue (ii): Whether the proviso to rule 27C(1)(b) can stand and what is the effect of the related trade circular.

Analysis: The proviso conferred a wide discretion on the assessing authority to exempt production of the declaration, but its continued presence was inconsistent with the reading down required to save the main provision. It could not be harmonised so as to remove the constitutional defect. The trade circular merely reflected the procedural scheme of the impugned rules and had no independent binding force on quasi-judicial authorities.

Conclusion: The proviso to rule 27C(1)(b) was struck down, and the trade circular was held not to be binding on quasi-judicial authorities.

Final Conclusion: The impugned assessment-stage declaration requirement was saved by reading it as optional for dealers of declared goods, while the offending proviso was invalidated, leaving dealers free to prove their claim by declaration or by other admissible evidence.

Ratio Decidendi: A documentary requirement for tax deduction on declared goods must be construed as directory, and any mandatory operation that exposes the same goods to tax at more than one stage is unconstitutional and contrary to section 15(a) and article 286(3).

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