Inter-State sale exemptions require strict statutory forms; absent proof, the taxing State may levy central sales tax.

Subsequent inter-State sales during movement of goods fall within section 3(b) of the Central Sales Tax Act, and exemption under section 6(2) is available only on strict compliance with the prescribed statutory conditions, including production of the required declaration form. Where the dealer fails to furnish the form, the taxing State from which the declaration could have been obtained may levy tax under section 9(1). A concessional or exempt local rate under section 8(2A) must also be supported by a valid notification or other proof of exemption; absent such proof, and without the required forms, the turnover remains taxable at the applicable rate.

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Issues: (i) Whether the State of Tamil Nadu had jurisdiction to levy tax on the subsequent inter-State sale made during movement of goods when the assessee failed to furnish C form and satisfy the conditions of section 6(2) of the Central Sales Tax Act, 1956. (ii) Whether the turnover relating to the sale to the Coimbatore Municipality was exempt or entitled to concessional treatment so as to avoid the requirement of D form and central sales tax liability.

Issue (i): Whether the State of Tamil Nadu had jurisdiction to levy tax on the subsequent inter-State sale made during movement of goods when the assessee failed to furnish C form and satisfy the conditions of section 6(2) of the Central Sales Tax Act, 1956.

Analysis: A sale effected during the movement of goods from one State to another falls within section 3(b) of the Central Sales Tax Act, 1956. Exemption under section 6(2) is available only on fulfillment of the statutory conditions, including production of the prescribed declarations. The proviso to section 9(1) localises the power to levy tax in the State from which the registered dealer could have obtained the declaration form in connection with the purchase. On the facts, the assessee was the first purchaser in Tamil Nadu and could have obtained C form from that State, but failed to do so.

Conclusion: The State of Tamil Nadu was competent to levy tax, and the Tribunal was wrong in holding otherwise. This issue is decided in favour of Revenue.

Issue (ii): Whether the turnover relating to the sale to the Coimbatore Municipality was exempt or entitled to concessional treatment so as to avoid the requirement of D form and central sales tax liability.

Analysis: Section 8(2A) applies only where the local sales tax law grants exemption or a rate below 4 per cent. The materials did not establish any valid exemption or concessional notification reducing the rate to 3 per cent or exempting the sale to the local body or its electricity undertaking. The transaction was shown to be a sale to the municipality, and the assessee neither furnished C form nor D form as required for claiming the benefit of section 6(2). In the absence of proof of exemption or the necessary statutory forms, the concessional claim could not be accepted.

Conclusion: The turnover was not exempt and remained taxable at the applicable rate. This issue is decided in favour of Revenue.

Final Conclusion: The revision by the State succeeded, the Tribunal's contrary findings were set aside, and the assessment as restored by the lower authority was upheld.

Ratio Decidendi: For a subsequent inter-State sale during movement of goods, exemption under section 6(2) of the Central Sales Tax Act, 1956 is available only on strict compliance with the prescribed statutory conditions, and in default the taxing State empowered under section 9(1) can levy tax; a concessional or exempt local rate must also be proved by a valid notification before section 8(2A) can be invoked.

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