Form XVII concessional tax misuse shifts liability to the purchasing dealer, not the seller, under the sales tax scheme.

Sales made against Form XVII under section 3(3) of the Tamil Nadu General Sales Tax Act attracted concessional treatment only when the declaration conditions were satisfied. Where the Form XVII conditions were contravened or misused, the liability to tax and penalty fell on the purchasing dealer, not the selling dealer. Recovery of the differential tax from the seller under the proviso to section 3(3)(b) was inconsistent with the statutory scheme and binding precedents. The demand raised against the seller was therefore unsustainable.

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Issues: Whether, on sales effected against Form XVII declaration under section 3(3) of the Tamil Nadu General Sales Tax Act, 1959, the seller could be fastened with liability to pay the differential rate of tax when the declaration condition was found to be not satisfied.

Analysis: Section 3(3) provides concessional taxation on sales made to another dealer for specified use against a declaration form. The Court noted that the consistent view in the precedents relied on was that where there is a contravention or misuse of Form XVII conditions, the liability to tax and penalty falls on the purchasing dealer and not on the selling dealer. The respondent's attempt to recover differential tax from the seller under the proviso to section 3(3)(b) was therefore inconsistent with the statutory scheme and the binding precedents.

Conclusion: The seller was not liable to pay the differential tax, and the impugned demand against the petitioner was unsustainable.

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