Concessional sales tax treatment for furnace oil sales upheld where declaration and registration endorsement were furnished, despite purchaser misuse.

Furnace oil sold against a prescribed declaration in Form I remained exempt or eligible for concessional treatment where the purchasing dealer's registration certificate specifically covered the goods. The selling dealer was not required to verify how the purchaser ultimately used the goods, and any misuse by the purchaser attracted consequences against the purchaser, not the seller. On that footing, the original deduction of the assessed turnover was upheld and reopening under section 12(8) could not be sustained. The reference was answered in favour of the assessee, and the Revenue's challenge failed.

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Issues: Whether furnace oil sold against a declaration in form I and covered by an endorsement in the purchasing dealer's registration certificate remained exempt or taxable merely because the purchasing dealer did not use it as declared.

Analysis: The proviso to section 5(1) of the Orissa Sales Tax Act, 1947 protects the selling dealer once the goods are specified in the purchasing dealer's registration certificate and the prescribed declaration is furnished. The selling dealer is not required to verify the ultimate use of the goods by the purchaser. If the purchasing dealer misuses the goods, the statutory consequence falls on the purchasing dealer and not on the seller. The assessed turnover was therefore rightly deducted in the original assessment and the reopening under section 12(8) could not be sustained.

Conclusion: The question was answered in favour of the assessee. The selling dealer was not liable to pay tax on the sale of furnace oil once the requisite declaration and registration endorsement were in place, even if the purchasing dealer used the goods contrary to the declaration.

Final Conclusion: The reference was rejected and the Revenue's challenge failed.

Ratio Decidendi: A selling dealer is entitled to concessional or nil tax treatment when the purchasing dealer furnishes the prescribed declaration and the goods are specified in the registration certificate; the seller is not responsible for the purchaser's subsequent misapplication of the goods.

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