Form 32 not required for first seller of iron ore seeking sales tax exemption under Karnataka law.

A first seller of iron ore to a registered dealer was not required to produce form 32 to claim exemption under section 5(3)(b) of the Karnataka Sales Tax Act, 1957. Rule 26(9)(a) applies to a dealer who is not liable to tax because he is not the first seller or first purchaser and who seeks exemption from purchase tax, but that condition did not fit the assessee on the facts found. The purchase tax liability, if any, lay on the purchaser, so the seller was not obliged to obtain and furnish form 32. The revisional authority had misapplied the rule, and the exemption claim was upheld.

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Issues: Whether a first seller of iron ore to a registered dealer in Karnataka is required to produce form 32 to claim exemption under section 5(3)(b) of the Karnataka Sales Tax Act, 1957.

Analysis: Rule 26(9)(a) of the Karnataka Sales Tax Rules requires a declaration in form 32 to be furnished by a dealer who is not liable to tax because he is not the first seller or first purchaser and who seeks exemption from purchase tax. On the facts found, the assessee was the seller and was not liable to purchase tax; the purchase tax liability, if any, was on the purchaser. The provision was therefore not attracted to require the seller to obtain and produce form 32 from the purchaser. The revisional authority had proceeded on an incorrect understanding of the rule and had not appreciated this distinction.

Conclusion: The assessee was not required to furnish form 32 in the circumstances of the case, and the question was answered in favour of the assessee and against the Revenue.

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