Sales tax exemption declaration shifts liability to purchasing dealer; seller need not independently verify eligibility when declaration appears valid.

Tax liability could not be fastened on the selling dealer where the purchasing dealer furnished the prescribed declaration for exemption under the statutory scheme continuing from section 12 of the Madhya Pradesh General Sales Tax Act, 1958 into the Madhya Pradesh Commercial Tax Act, 1994. The High Court noted that the declaration showed no apparent defect or reason for the seller to doubt the purchaser's entitlement, so the seller was not required to independently verify the purchaser's eligibility. On that scheme, any liability lay on the purchasing dealer, not the seller in such circumstances, and the impugned orders were quashed as unsustainable.

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Issues: Whether tax liability could be fastened on the selling dealer for not charging commercial tax when the purchasing dealer had furnished the prescribed declaration for exemption.

Analysis: The declaration was issued by the purchasing dealer under the exemption scheme continuing from section 12 of the Madhya Pradesh General Sales Tax Act, 1958 into the Madhya Pradesh Commercial Tax Act, 1994. The selling dealer had no apparent reason on the face of the declaration to oubt its validity or the purchaser's entitlement to issue it, and was therefore not required to independently verify the purchaser's eligibility. The liability, if any, under the statutory scheme lay on the purchasing dealer and not on the seller in such circumstances.

Conclusion: The liability could not be imposed on the selling dealer; the impugned orders were unsustainable and were quashed.

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