TaxTMI 
TaxTMI 
1986 (3) TMI 297
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....Rs. 8,70,810 which he made against III-A forms though the purchaser instead of selling the said yarn in the same condition consumed the same." The Division Bench of the Allahabad High Court was of the opinion that the controversy raised in the reference was covered by the decision of the Full Bench of the said High Court in Commissioner, Sales Tax, U.P. v. Shankar Lal Chandra Prakash [1970] 26 STC 386 where it was held that the certificate in form III-A was only a Prima facie evidence of the fact that the goods had not been sold to a consumer. The Division Bench of the Allahabad High Court was further of the opinion that that certificate was not conclusive evidence and the department could go behind the certificate and if it found that the goods had not been resold in accordance with the certificate given in form III-A and had been consumed, in such a case the department could ignore the certificate and levy tax on the selling dealer. In those circumstances the revising authority was wrong, according to the High Court, in holding that the assessee was not liable to tax even if the department had found that the yarn had been consumed by the purchaser and not resold. The Division Be....
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....arn and had also paid sales tax on the sale of yarn so purchased but the dealer at serial No. 5 in the list had deposed that he had consumed the entire cotton yarn in manufacturing coarse handloom cloth. According to the Sales Tax Officer in his order under section 21 of the Act, cotton yarn worth Rs. 8,17,905.39 was sold to dealers who did not not resell the same but actually consumed the same and so the instant dealer was liable to pay sales tax on this turnover. It was contended on behalf of the dealer that he was not liable to pay sales tax as he had fulfilled all the conditions laid down under the provisions of section 3-AA of the Act read with rule 12-A of the U.P. Sales Tax Rules (hereinafter called the "Rules") inasmuch as he had sold the cotton yarn to registered dealers and had also obtained from them the certificates of resale on form III-A and it was not possible nor was it his business to find out what the purchasers of the cotton yarn subsequently did. The Sales Tax Officer found himself unable to accept this contention and after referring to the relevant provisions observed that the selling dealer had not proved beyond the shadow of doubt that sale of cotton yarn ....
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....e buyer and the appellant. The dealer had sold the goods and accepted the forms in good faith and that was so. The dealer had no control over the yarn of the purchaser. In those circumstances the question as mentioned hereinbefore was referred to the High Court after stating these facts in the statement of case. The High Court answered the question against the dealer as indicated herein before. At the outset, in view of the statement of facts narrated before, we are of the opinion that the question proceeded on misapprehension of facts. In this case though the Sales Tax Officer had held that the purchasers of yarn by giving certificates in form III-A had consumed the said yarn instead of selling the said yarn in the same condition, the said finding was not accepted and was in fact reversed by the appellate authority as well as the revising authority. Therefore, the question proceeded on a misapprehension of the factual position. In order to bring out the true controversy, we reframe the question as follows: "Whether, on the facts and in the circumstances of the case, the sale of yarn to the extent of Rs. 8,70,810 sold by the dealer against certificates in form III-A was liable ....
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.... tax payable under any law in respect of any sale or purchase of such goods inside the State shall not firstly exceed four per cent of the sale or purchase price thereof and secondly such tax shall not be levied at more than one stage. As cotton yarn is one of the goods which has been declared goods of special importance, for the State to levy sales tax on these goods, it is necessary to follow the conditions laid down in section 15 which are essential to ensure that such sales tax should not exceed 4% of the sale or purchase price and secondly that it shall be imposed at one point. This appeal is not concerned with the question of the limit. The limit in this case of 4% has been fulfilled. The second aspect is that it should not be imposed at more than one point. Law is so framed that it is collected from the consumer. In order to ensure this, the legislature has enacted section 3-AA in the Act and State Government has framed rule 12-A of the Rules. Rule 12-A as set out hereinbefore proceeds on the basis that sale of any of the goods specified in section 3-AA of the Act shall be deemed to be a sale to the consumer. The second aspect of the said rule enjoins that this will not be ....
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....n (1) be presumed to be a sale to a consumer. A sale of any of the goods mentioned in sub-section (1) to a registered dealer who does not purchase them for resale in the same condition, without processing or sale to unregistered dealer shall be deemed to be a sale to the consumer. Therefore, a registered dealer has to prove that a sale to another registered dealer or an unregistered dealer is not for consumption. In order to facilitate the working of the Act, by rule 12-A a method of proving has been provided that the sale is not a sale to the consumer. The reading of the rule along with relevant provisions of the Act leads to the conclusion that the rule 12-A method, furnishing of certificate in the form and with the particulars, is one of the methods of proving that sale by a registered dealer is not for consumption. Neither the rule nor the provision of the section suggest that this is the only method. If a dealer can prove by any way other than the way contemplated by rule 12-A then he is not so precluded. For the rule to say otherwise would be exceeding the provision of the section. The purpose for the making of the rule would, however, be frustrated if after the dealer proves....
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....or concluding that some certificates filed before him in assessment proceedings were not genuine. It was further observed that although the prescribed certificate might provide prima facie evidence protecting the selling dealer it was not conclusive. Rule 12-A specified the kind of evidence which was required for rebutting the presumption, but it did not purport to regulate the question of time at which this evidence should be admitted in the course of assessment proceedings. Nor did it deal with evidence for other purposes which might be needed for assessment. The Sales Tax Officer could only act on legally sustainable grounds in excluding or admitting evidence. Referring to sub-section (2) of section 3-AA, Pathak, J., observed that at first blush, the rule gave the impression that unless the selling dealer is armed with a certificate in form III-A from the purchasing dealer the sale made by him must be considered to be a sale to the consumer. The learned judge observed that he was unable to read the rule to mean that. This rule meant a convenient mode to the selling dealer for proving that the goods had not been sold to the consumer. It provided for no more than that. The certif....
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.... 18 STC 222 (SC); [1966] Supp SCR 198. This Court had occasion to deal with sections 7 and 8 of the Central Sales Tax Act, 1956, and Rules framed thereunder. There, Shah, J., speaking for the court, observed at page 207 of the report that the Act sought to impose tax on transactions, amongst others, of sale and purchase in inter-State trade and commerce; and explaining similar provisions in the Central Act, this Court observed that though the tax under the Act was levied primarily from the seller, the burden was ultimately passed on to the consumers of goods because it entered into the price paid by them. Parliament, with a view to reduce the burden on the consumer arising out of multiple taxation, prescribed low rates of taxation, when transactions took place in the course of inter-State trade or commerce. This Court observed that indisputably the seller could have in these transactions no control over the purchaser. He had to rely upon the representation made to him. He must satisfy himself that the purchaser was a registered dealer, and the goods purchased were specified in his certificates but his duty extended no further. If he was satisfied on these two matters on a represent....