Concessional sales tax applies when a registered dealer furnishes Form XVII for manufacturing use of purchased goods.

A registered dealer purchasing sandalwood chips for use as raw material in manufacturing sandalwood oil within the State could claim concessional sales tax under section 3(3) of the Tamil Nadu General Sales Tax Act, 1959 by furnishing the prescribed Form XVII declaration. Rule 22 requires that declaration to be obtained and duly filled, and a valid declaration binds the selling dealer to accept the concessional treatment. Where those statutory conditions are satisfied, the transaction falls within the concessional scheme rather than an ordinary sale taxed at the higher rate, and any excess tax collected is refundable.

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Issues: Whether the petitioner, being a registered dealer purchasing sandalwood chips for use as raw material in the manufacture of sandalwood oil within the State, was entitled to clear the goods on payment of concessional sales tax under section 3(3) of the Tamil Nadu General Sales Tax Act, 1959 on furnishing Form XVII, instead of being compelled to pay tax at the higher rate applicable to a simpliciter sale.

Analysis: Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959 grants a concessional rate of tax on sales to another dealer for use in manufacture inside the State, subject to the statutory declaration in the prescribed form. Rule 22 of the Tamil Nadu General Sales Tax Rules, 1959 requires the purchasing dealer to obtain and furnish Form XVII containing the requisite declaration, and the selling dealer is bound to accept it if duly obtained and validly filled. On the facts, if the petitioner is a registered dealer and furnishes the prescribed declaration showing that the goods are intended as raw material for manufacture of sandalwood oil for sale, the transaction falls within the concessional scheme and not within a normal sale attracting the higher rate.

Conclusion: The petitioner was entitled to the concessional rate under section 3(3) on compliance with the prescribed declaration requirements, and any excess tax collected was liable to be refunded.

Final Conclusion: The writ petition was disposed of in the petitioner's favour by recognising the statutory concessional levy and the consequential right to refund of excess collection.

Ratio Decidendi: Where a purchasing dealer satisfies the statutory conditions for the concessional sales tax regime by furnishing the prescribed declaration for goods used as raw material in manufacture within the State, the taxing authority cannot insist on the higher rate applicable to an ordinary sale.

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