False declaration requirement governs Section 3-B proceedings; an unrelated sales-stage precedent cannot sustain the tax demand.

Proceedings under Section 3-B of the Trade Tax Act could be initiated only where the assessee's Form III-B declaration or the underlying certificate was shown to be false or wrong. Because the recognition certificate under Section 4-B remained in force, the assessee had issued Form III-B declarations for purchases under that certificate, and there was no finding that the goods were diverted from the exempt purpose, the assessment could not be sustained on that basis. The Tribunal also misapplied a precedent dealing with taxation of a different commodity at the sales stage, which did not govern initiation of proceedings for a false or wrong declaration. The revision succeeded and the first appellate order was restored.

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Issues: Whether proceedings under Section 3-B of the Trade Tax Act could be initiated in the absence of any false or wrong Form III-B declaration, and whether the Tribunal correctly applied the decision relied upon to sustain the tax demand.

Analysis: The recognition certificate granted under Section 4-B of the Trade Tax Act was in force for the relevant assessment year, and the assessee had issued Form III-B declarations for purchases made under that certificate. Proceedings under Section 3-B were permissible only if the certificate or declaration issued by the assessee was false or wrong. There was no finding that the goods were not used for the purpose for which the exemption certificate had been granted, and the precedent relied upon by the Tribunal dealt with a different question, namely taxation of a commodity at the sales stage, not the initiation of proceedings for a false or wrong declaration.

Conclusion: Proceedings under Section 3-B were not sustainable on the facts found, and the Tribunal erred in applying the cited decision to uphold the assessment.

Final Conclusion: The revision succeeded and the assessee obtained restoration of the first appellate order.

Ratio Decidendi: Proceedings for penalty or reassessment based on a declaration can be sustained only when the declaration or certificate is shown to be false or wrong; a case concerning taxation of a different commodity at the sales stage does not govern that question.

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