Genuine declaration form protects selling dealer from exemption denial despite purchaser's later ineligibility or misuse

A selling dealer was entitled to exemption where it accepted a genuine statutory declaration form issued by the competent authority, because its duty was limited to checking apparent genuineness and defects. The seller was not required to verify exhaustively whether the purchasing dealer remained registered or was otherwise entitled to use the form. If the purchaser later obtained or misused the declaration form without authority, that consequence could not be fastened on the seller. On that basis, denial of the exemption was held unjustified and the revision failed.

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Issues: Whether the selling dealer could be denied exemption/concessional tax benefit merely because the purchasing dealer was later found not entitled to use the declaration form or not to have been registered for the relevant period.

Analysis: The assessment and appellate record showed that the declaration form relied upon by the selling dealer was genuine and had been issued by the competent authority. The liability of the selling dealer was confined to checking the form for apparent defects and genuineness; it was not required to conduct exhaustive verification of the purchasing dealer's entitlement. If the purchasing dealer wrongly obtained or misused the form, the consequence could not be fastened on the selling dealer. The statutory scheme under section 4-B and the allied rules contemplated exemption where sales were made against a valid recognition certificate and declaration form, and the dealer acting bona fide on such form was protected.

Conclusion: The denial of exemption was not justified, and the revision failed.

Ratio Decidendi: A selling dealer who accepts a genuine statutory declaration form issued by the competent authority cannot be denied exemption solely because the purchasing dealer was later found ineligible or to have misused the form; the seller's duty is limited to reasonable verification of apparent genuineness.

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