False purchaser declarations do not automatically shift differential sales tax liability or penalty to the selling dealer.

A selling dealer cannot be fastened with differential sales tax or penalty merely because the purchasing dealer furnished a false Form XVII declaration to obtain concessional tax treatment. The Madras HC noted that the record did not show any effective enquiry against the purchasing dealer and that liability for a false declaration ordinarily rests on the purchaser, unless the purchaser is shown to be non-existent or bogus and the statutory basis for action against the seller is independently established. The Tribunal's deletion of the differential tax and penalty was therefore upheld, and the revision failed.

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Issues: Whether the selling dealer can be made liable to differential tax and penalty merely because the purchasing dealer furnished a false declaration in Form XVII to claim concessional rate of sales tax.

Analysis: The revision arose from the Revenue's challenge to the Tribunal's finding that false declarations by the purchasing dealer did not fasten liability on the selling dealer. The record did not show any effective enquiry against the purchasing dealer who issued the declarations. The legal position applied was that the consequences of a false declaration ordinarily fall on the purchasing dealer, and the selling dealer cannot be denied the concessional rate or saddled with differential tax and penalty unless the purchasing dealer is shown to be non-existent or bogus and the statutory requirements for action are otherwise satisfied.

Conclusion: The selling dealer was not liable for the purchasing dealer's false declaration, and the Tribunal's order deleting the differential tax and penalty was upheld.

Final Conclusion: The revision failed, and the assessment and penalty against the selling dealer were not interfered with.

Ratio Decidendi: A selling dealer cannot be saddled with differential tax or penalty merely because the purchasing dealer issued a false declaration, unless the statutory basis for fastening such liability on the selling dealer is independently established.

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