TaxTMI 
TaxTMI 
1966 (4) TMI 59
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....g dealer in one State furnishes in Form 'C' prescribed under the Central Sales Tax (Registration and Turnover) Rules, 1957, to the selling dealer in another State a declaration, certifying that the goods ordered, purchased or supplied are covered by the certificate of registration obtained by the purchasing dealer in Form 'B' prescribed under rule 5(1) of the Central Sales Tax (Registration and Turnover) Rules, 1957, and that the goods are intended for resale, or for use in manufacture of goods for sale, or for use in the execution of contracts, or for packing of goods for resale, and that declaration is produced by the selling dealer, is it open to the Sales Tax Authority under the Central Sales Tax Act to deny to the selling dealer the benefit of concessional rates under section 8(1) of the Central Sales Tax Act, 1956, on the view that the certificate in Form 'C' mentions more purposes than one for which the goods are intended to be used, or that the goods are incapable of being used for the purpose for which they are declared to be purchased, or that the goods are applied for some other purpose not mentioned in the certificate in Form 'C'." We may briefly set out the fac....
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....of a turnover of Rs. 42,080 set out the purpose as manufacture of electrical energy" and since this was not one of the purposes mentioned in section 8(3)(b) of the Act as it stood at the relevant time, the Sales Tax Authority was right in denying the benefit of the rate under section 8(1) to the assessee, but with regard to a turnover of Rs. 47,340, the Sales Tax Authority was bound to accept the certificates in Form 'C' produced by the assessee even though the certificates contained all the purposes mentioned in the prescribed form, and no purpose was struck out. The facts which give rise to Civil Appeal No. 335 are these M/s. Stanes Motors (South India) Ltd.-respondents in this appeal- are dealers in automobiles, tractors and spare parts. For the year 1957-58 they claimed benefit of concessional rates under section 8(1) on a turnover of Rs. 1,38,572-12-0 resulting from sale of tractors supplied to certain "tea factories" in the State of Kerala. The purchasing dealers who were four "tea factories" registered as dealers under the Act delivered to the respondents certificates in Form 'C' declaring that the tractors purchased by them were intended for use in the manufacture of tea f....
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....ealer to pay tax under the Act on all sales effected by him in the course of inter-State trade or commerce during any year. Section 7 provides for registration of dealers. Section 8, as originally enacted, provided: ''(1) Every dealer who, in the course of inter-State trade or commerce sells to a registered dealer goods of the description referred to in sub-section (3) shall be liable to pay tax under this Act, which shall be one per cent. of his turnover: Provided that, if under the sales tax law of the appropriate State, the sale or purchase of any goods by a dealer is exempt from tax generally and not in specified cases or in specified circumstances or is subject to tax (by whatever name called) at a rate or rates which is or are lower than the rate specified in sub-section (1), the tax payable under this Act on the turnover in relation to the sale of such goods in the course of inter-State trade or commerce shall be nil or shall be calculated at the lower rate, as the case may be. (2) * * * (3) The goods referred to in sub-section (1)- (a) in the case of declared goods, are goods of the class or classes specified in the certificate of registration of t....
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....section 8(3)(b), it is clear that the Legislature intended to grant the benefit of concessional rates of tax under the Act to registered dealers, provided that the goods sold were of the class or classes specified in the certificate of registration of the purchasing dealer and the goods were intended to be used for resale by him or for use in the manufacture of goods for sale, or for use in the execution of contracts or for packing of goods for resale. In exercise of the power under section 13 the Central Government made rules called "The Central Sales Tax (Registration and Turnover) Rules, 1957 ". Rules 3 to 8 provide for registration and issue of certificate of registration. Rule 5(1) provides that when the notified authority is satisfied after making such enquiry as it thinks necessary, that the particulars contained in the application are correct and complete, it shall register the dealer and grant him a certificate of registration in Form 'B' and also a copy of such certificate for every place of business within the State other than the principal place of business mentioned therein. The material part of Form "B" is as follows: This is to certify that.............................
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.............. Amount.................... "Strike out whichever is not applicable. (Note: To be retained by the selling dealer.)". The scheme of the Rules read with the Act is that the purchasing dealer as well as the selling dealer must register themselves under the Central Sales Tax Act. If declared goods are specified in the certificate of registration of the purchasing dealer and if it be certified that the goods are intended for resale by him, the sale is subject to concessional rate of tax under section 8(1). In respect of sales of other classes of goods specified in the certificate of registration of the purchasing dealer, if the goods are purchased either for resale by him, or for use in the manufacture of goods for sale, or for use in the execution of contracts, the concessional rate of tax is available, provided the selling dealer obtains from the purchasing dealer the declaration in the prescribed form duly filled in and signed by the latter containing the particulars that the goods are ordered, purchased or supplied under a certain specific order, bill or cash memo or chalan, for all or any of the purposes mentioned and that the goods are covered by the registrati....
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.... to scrutinise the certificate to find out whether the certificate is genuine. He may also, in appropriate cases, when he has reasonable grounds to believe that the goods purchased are not covered by the registration certificate of the purchasing dealer, make an enquiry about the contents of the certificate of registration of the purchasing dealer. But it is not for the Tax Officer to hold an enquiry whether the goods specified in the certificate of registration of the purchaser can be used by him for any of the purposes mentioned by him in Form 'C', or that the goods purchased have in fact not been used for the purpose declared in the certificate. The authority issuing the certificate under rule 5(1), as expressly stated in the rule, has, before issuing a registration certificate, to be satisfied after making such enquiry as it thinks necessary that the particulars contained in the application are correct and complete. The enquiry would obviously be made in the light of the nature of the business and goods which are likely to be needed either for resale, or for use in the manufacture of goods for sale, or, for use in the execution of contracts. Satisfaction which is contemplated....
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....by them. Parliament with a view to reduce the burden on the consumer arising out of multiple taxation has provided in respect of sales of declared goods which have special importance in inter-State trade or commerce, and other classes of goods which are purchased at an intermediate stage in the stream of trade or commerce, prescribed low rates of taxation, when transactions take place in the course of inter-State trade or commerce. Indisputably the seller can have in these transactions no control over the purchaser. He has to rely upon the representations made to him. He must satisfy himself that the purchaser is a registered dealer, and the goods purchased are specified in his certificate: but his duty extends no further. If he is satisfied on these two matters, on a representation made to him in the manner prescribed by the Rules and the representation is recorded in the certificate in Form 'C' the selling dealer is under no further obligation to see to the application of the goods for the purpose for which it was represented that the goods were intended to be used. If the purchasing dealer misapplies the goods he incurs a penalty under section 10. That penalty is incurred by th....