Validity of purchaser declarations governs sales tax exemption; authority cannot genuine forms based on suspected end use.

A selling registered dealer is entitled to exemption in computing taxable turnover where the purchasing registered dealers furnish declarations in the prescribed form, and the taxing authority's scrutiny is limited to the genuineness of those declarations. It cannot reject valid declarations merely on a suspicion that the purchasers may have used the goods for some other purpose, absent material showing the forms were forged, fabricated, or otherwise invalid. A belated allegation of collusion was not accepted on the facts. The rejection of the declarations was therefore unjustified, the exemption was upheld, and the assessment and consequential penalty were quashed, with the matter remitted for fresh assessment.

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Issues: Whether the selling dealer was entitled to exemption in computing taxable turnover on the strength of declarations furnished by the purchasing registered dealers, and whether the taxing authority could reject those declarations on the ground that the purchasers may not have used the goods for the declared purpose.

Analysis: The declarations were stated to have been furnished in the prescribed form by duly registered purchasing dealers. The governing rule prohibited a selling registered dealer from refusing to accept a declaration or certificate furnished in accordance with the Act or the rules. The scope of verification by the taxing authority was confined to the genuineness of the declaration and not to the truthfulness of the statements as to subsequent use of the goods. In the absence of material showing that the declarations were forged, fabricated, or otherwise shown to be invalid, the selling dealer could not be denied the benefit merely because the department suspected a different use by the purchasers. The belated plea of collusion was also not accepted on the facts.

Conclusion: The rejection of the declarations was unjustified, and the assessee was entitled to the exemption claimed on the relevant sales. The assessment and consequential penalty based on refusal to accept the declarations were quashed, and the matter was remitted for fresh assessment in accordance with the Court's directions.

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