Concessional sales tax relief for valid Form XVII declarations, without seller liability for the buyer's later misuse

A seller who furnishes duly completed Form XVII declarations for goods covered by the Eighth Schedule is entitled to the concessional rate under section 3(3) of the Tamil Nadu General Sales Tax Act, 1959, and the concession cannot be denied merely because the buyer later fails to use the goods as declared. The seller is not required to verify the purchaser's actual end use; if the declaration is false or not acted upon, consequences lie against the purchasing dealer. The assessing authority may only verify on record whether the turnover is supported by valid declarations and the exact extent of such turnover.

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Issues: Whether the seller, on furnishing duly completed Form XVII declarations for goods covered by the Eighth Schedule, was entitled to the concessional rate of tax under section 3(3) of the Tamil Nadu General Sales Tax Act, 1959, and whether the assessing authority could deny that concession on the ground that the buyer did not use the goods as declared.

Analysis: The concession under section 3(3) is available once the seller sells goods covered by the Eighth Schedule to another dealer for use in the factory and obtains the prescribed declaration in Form XVII duly filled in and signed. The seller is not required to investigate whether the purchaser actually used the goods in the manner declared. If the declaration is false or is not acted upon, the consequences lie against the purchasing dealer under the Act. The assessing authority therefore exceeded its jurisdiction in denying the concessional rate to the seller merely on the footing that the purchaser's subsequent use was not established. At the same time, the turnover actually covered by valid Form XVII declarations required limited verification on the record.

Conclusion: The assessee was entitled to concessional tax at three per cent on the turnover supported by valid Form XVII declarations, and the rejection of that claim was unsustainable; the matter was remitted only for the limited purpose of identifying the exact turnover covered by valid declarations.

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