Mandatory proof for first-purchase exemption under U.P. sales tax law; failure to file prescribed form leaves purchases taxable.

Section 3-D(7) of the U.P. Sales Tax Act was held mandatory because it created a statutory presumption that every purchase within Uttar Pradesh was the first purchase unless the dealer rebutted it by furnishing the prescribed declaration or certificate in the form, manner and time required. Read with Rule 12-B, the provision was treated as the exclusive statutory method of proof, not a mere evidentiary convenience. Applying the mandatory-versus-directory test, the court held that strict compliance was necessary. In the absence of the prescribed proof, the assessee failed to displace the presumption, and the disputed foodgrain purchases remained taxable under Section 3-D(1).

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Issues: Whether the requirement under Section 3-D(7) of the U.P. Sales Tax Act to furnish the prescribed declaration or certificate in the prescribed form and manner was mandatory so as to make production of Form III-C a condition for claiming exemption from tax on first purchases of foodgrains.

Analysis: Section 3-D(7) created a deeming fiction that every purchase within Uttar Pradesh would be treated as the first purchase unless the dealer proved otherwise to the satisfaction of the assessing authority. The provision also prescribed the manner of rebuttal by requiring a declaration or certificate from the selling dealer in the form, manner and within the period prescribed. Read with Rule 12-B, the provision did not merely provide an evidentiary convenience but laid down the statutory method for displacing the presumption. The Court applied the distinction between mandatory and directory provisions and held that where a statute prescribes both the manner of doing an act and the consequence of non-compliance, the requirement is mandatory. The assessee therefore had to strictly comply with the prescribed mode of proof.

Conclusion: Section 3-D(7) was mandatory, and in the absence of the prescribed proof the assessee failed to rebut the statutory presumption. The disputed purchases of foodgrains were liable to tax under Section 3-D(1) of the Act.

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