False declaration requirement under trade tax law limits liability; later stock transfer of finished goods does not by itself trigger Section 3B.

Section 3B of the U.P. Trade Tax Act applies only where a false or wrong declaration or certificate at the time of purchase causes tax otherwise leviable to be avoided or reduced. A recognition certificate under Section 4B(2) permits purchase of raw material for manufacture of notified goods intended for sale in the State, inter-State trade, or export. Where raw material was purchased against Form 3B for manufacture of notified goods, a subsequent stock transfer of part of the finished goods did not by itself prove a false declaration at the time of purchase. The demand was therefore not sustainable and the assessee succeeded.

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Issues: Whether liability under Section 3B of the U.P. Trade Tax Act could be fastened on a recognition certificate holder who purchased raw material against Form 3B for manufacture of notified goods but transferred part of the finished goods by way of stock transfer.

Analysis: Section 3B is attracted only where a false or wrong certificate or declaration is issued, with the result that tax otherwise leviable is avoided or reduced. The recognition certificate under Section 4B(2) is available only where the manufactured notified goods are intended to be sold in the State, in inter-State trade or commerce, or in export. A stock transfer of finished goods may show that the dealer did not comply with the sale-condition attached to the recognition certificate, but that circumstance by itself does not establish that the dealer made a false or wrong declaration when purchasing raw material for manufacture. The purchases were made for the stated manufacturing purpose, and the issue was covered by binding precedent holding that such a situation does not attract Section 3B.

Conclusion: Liability under Section 3B was not attracted on the facts, and the assessee was entitled to succeed.

Final Conclusion: The Tribunal's order setting aside the demand was upheld, and the revision was dismissed.

Ratio Decidendi: Section 3B is attracted only when a false or wrong declaration at the time of purchase causes tax to cease or become concessional; mere subsequent stock transfer of finished goods does not, by itself, establish such wrong declaration where the raw material was purchased for manufacture of notified goods.

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