Concessional sales tax based on purchaser's declaration cannot be denied to the selling dealer if acted on in good faith.

A selling dealer who sells goods to a registered purchasing dealer against the prescribed declaration and on the basis that the goods are covered by the purchaser's registration certificate may rely on that declaration for concessional tax treatment. The seller's obligation is complete once the sale is made in good faith on that basis, and the seller cannot be denied the concessional rate merely because the goods are later found not to fall within the exemption notification. Any incorrect claim to exemption or concession is a matter for the purchasing dealer and the assessing authority, and recovery may be pursued against the purchaser.

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Issues: Whether a selling dealer who sells goods against a declaration furnished by the purchasing dealer and on the basis that the goods are included in the purchasing dealer's certificate of registration can be denied the concessional rate merely because the goods may not ultimately fall within the exemption notification.

Analysis: The reference turned on the effect of the declaration furnished by the purchasing dealer under the notification issued under section 12 of the Madhya Pradesh General Sales Tax Act, 1958. The sale was made to a registered dealer against the prescribed declaration, and the goods were shown as included in the purchaser's registration certificate. Once the selling dealer acted on that declaration and charged tax at the concessional rate, his obligation was treated as complete. The question whether the goods in truth fell within the notification was held to be a matter affecting the purchasing dealer and the assessing authority, not the selling dealer.

Conclusion: The selling dealer was entitled to rely on the purchaser's declaration, and his liability ended on making the sale at the concessional rate on that basis. If the goods were later found not to qualify, proceedings could be taken against the purchasing dealer.

Ratio Decidendi: Where a registered purchasing dealer furnishes the prescribed declaration and the selling dealer acts on it in good faith, the selling dealer is not liable for the purchaser's incorrect claim to concessional treatment; any recovery lies against the purchasing dealer.

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