Form AF declarations protected the seller's tax concession, and purchase tax liability stayed with the purchaser.
Where the prescribed declaration in Form AF was furnished under the relevant notification, the selling dealer was entitled to the concessional rate of tax on sales to the Zilla Parishad and was not required to investigate beyond the declaration produced by the purchasing authority. Liability for purchase tax under section 41(2) rested on the person not entitled to issue the declaration, and the purchaser's failure to discharge that obligation could not be shifted to the seller. The reference was therefore answered in favour of the assessee, and the Revenue's challenge failed on both issues.
Issues: (i) Whether the respondent was entitled to claim concessional rate of tax on sales effected to Zilla Parishad on the strength of declarations in Form AF under Entry No. 70 of the notification issued under section 41 of the Bombay Sales Tax Act, 1959. (ii) Whether the selling dealer could be fastened with liability for tax merely because the purchaser was not the State Government and was liable to purchase tax under section 41(2) of the Bombay Sales Tax Act, 1959.
Issue (i): Whether the respondent was entitled to claim concessional rate of tax on sales effected to Zilla Parishad on the strength of declarations in Form AF under Entry No. 70 of the notification issued under section 41 of the Bombay Sales Tax Act, 1959.
Analysis: Entry No. 70 allowed exemption to the extent specified where the authorised officer furnished the prescribed declaration in Form AF. The record showed that such declarations had been issued and the goods were sold against them. The Court held that the selling dealer was not required to go beyond the declaration produced by the purchasing authority and that the question whether the purchaser was authorised to issue the declaration did not defeat the concession claimed by the seller on these facts.
Conclusion: The respondent was entitled to claim the concessional rate of tax.
Issue (ii): Whether the selling dealer could be fastened with liability for tax merely because the purchaser was not the State Government and was liable to purchase tax under section 41(2) of the Bombay Sales Tax Act, 1959.
Analysis: Section 41(2) placed the burden on the dealer or person who was not entitled to issue the declaration and made that person liable to pay purchase tax. The provision did not shift that liability to the seller merely because the purchaser was a Zilla Parishad or because the purchaser failed to discharge its own statutory obligation. The seller's liability could not be created by treating the purchaser's statutory default as the seller's tax liability.
Conclusion: The selling dealer was not liable to pay the tax on that ground.
Final Conclusion: The reference was answered in favour of the assessee, and the Revenue's challenge failed on both questions.
Ratio Decidendi: Where the prescribed declaration under the relevant notification is furnished, the selling dealer is entitled to the concession, and liability for purchase tax under section 41(2) rests on the person who was not entitled to issue the declaration, not on the selling dealer.
TaxTMI 
AI Drafter ✕
TaxTMI 
