Concessional sales tax on genuine Form D cannot be denied to an innocent seller because of purchaser-side entitlement defects.

Concessional tax under the Central Sales Tax Act was available on sales made against genuine Form D declarations where the prescribed certificate was furnished. The High Court noted that Haryana Roadways' officers described it as a Government department, and the seller was not required to verify the purchaser's internal administrative status or the issuing authority's entitlement once the form was accepted bona fide. In the absence of fraud, forgery, or collusion, any defect in the purchaser's entitlement to issue Form D could not justify denial of the concession to an innocent selling dealer, and the Tribunal's contrary view was set aside.

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Issues: (i) Whether sales made to Haryana Roadways against Form D could be denied the concessional rate of tax on the ground that Haryana Roadways was only a State undertaking and not a Government department; (ii) whether the assessee could be denied the benefit of concessional tax merely because of any alleged defect in the purchaser's entitlement to issue Form D when the form was genuine and accepted bona fide.

Issue (i): Whether sales made to Haryana Roadways against Form D could be denied the concessional rate of tax on the ground that Haryana Roadways was only a State undertaking and not a Government department.

Analysis: Under Section 8(1) and Section 8(4) of the Central Sales Tax Act, 1956, read with Rule 12(1) of the Central Sales Tax (Registration and Turnover) Rules, 1957, concessional tax is available where sales are made to the Government and the prescribed certificate is furnished. The certificates issued by the officers of Haryana Roadways stated that it was a Government department of Haryana and the Form D produced by the assessee was not shown to be forged or non-genuine. The assessee was not required to investigate the internal correctness of the purchaser's administrative status once the statutory form had been furnished in genuine form.

Conclusion: The denial of concessional rate of tax on this ground was unjustified and the issue was answered in favour of the assessee.

Issue (ii): Whether the assessee could be denied the benefit of concessional tax merely because of any alleged defect in the purchaser's entitlement to issue Form D when the form was genuine and accepted bona fide.

Analysis: The governing principle is that the tax authorities may examine whether the certificate is genuine or collusive, but the selling dealer is not bound to verify whether the issuing department was correctly entitled to issue the form. The assessee had accepted the form in bona fide belief, the certificates supported the claim, and no fraud or forgery was established. On that footing, the benefit could not be refused to the assessee for any lapse, if any, on the part of the purchaser or its issuing authority.

Conclusion: The assessee was entitled to the concessional rate of tax and the issue was answered in favour of the assessee.

Final Conclusion: The revisions succeeded to the extent that the Tribunal's denial of concessional tax on Form D was set aside and the matter was sent for consequential action consistent with the Court's findings.

Ratio Decidendi: A selling dealer cannot be denied concessional tax where the prescribed declaration or certificate is genuine and furnished bona fide, merely because the purchaser's entitlement to obtain or issue the form is disputed; responsibility for any irregularity in issuing the form lies with the competent tax authority, not the innocent seller.

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