TaxTMI 
TaxTMI 
2006 (10) TMI 384
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....bills, yet, rejected the turnover relating to concessional rate of tax against Form XVII on a turnover of Rs. 5,78,734/- and assessed at 12% on the ground that the purchasers have not purchased the goods for the use in manufacture of other goods as either raw materials or consumables. Consequently, the assessing authority assessed the tax at Rs. 62,263/- and imposed penalty of Rs. 42,907/- under Section 12(3)(b) of the Act. The order of the assessing authority was challenged by the appellant in a writ petition on the ground that a turnover in a sum of Rs. 14,85,636/- in respect of sale is covered by Form XVII. As the purchasing dealer has contravened the condition of Form XVII, tax and penalty could be imposed in respect of that turnover only against the purchasing dealer and not against the appellant, who is the selling dealer, as per Section 3(3) of the Act. 3. Before the learned single Judge, in support of his submission, the appellant placed reliance on the decision of a Division Bench of this Court in State of Tamil Nadu v. Madras Petro Chem Ltd. 89 STC 438, an unreported order of a Division Bench of this Court dated 4.12.2001 rendered in Writ Petition No. 10610 of 2000 (St....
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.... in Sub-section (2), but subject to the provisions of Sub-section (1), the tax payable by a dealer in respect of sale of any goods including consumables, packing material and labels, but excluding plant and machinery, to another dealer for use by the latter in the manufacture and assembling, packing or labeling in connection with such manufacture inside the State, for sale by him of any goods other than ethyl alcohol, absolute alcohol, methyl alcohol, rectified spirit, neutral spirit and denatured spirit, goods falling under Part A of the Third Schedule, goods falling under item 1 of the Sixth Schedule and arrack shall be at the rate of only three per cent on the turnover relating to such sale: Provided that the provisions of this sub-section shall not apply to: (a) any sale of (high speed diesel oil, light diesel oil and molasses; and (b) any sale, unless the dealer selling such goods furnishes to the assessing authority in the prescribed manner and within the prescribed period, a declaration duly filled in and signed by the dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority....
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....tion on the part of the selling dealer and he will automatically be entitled to the concessional rate. If the declaration turns out to be false, in the sense that the goods purchased have not been used as declared in the prescribed form, the purchaser is exposed to the penalties provided by Section 23 and Section 45(2)(e). But on that account, the selling dealer is not deprived of the concessional rate. 6. In State of Tamil Nadu v. Madras Petro Chem Ltd. (cited supra), a Division Bench of this Court (Dr. A.S. Anand, C.J and Kanakaraj, J.) considered the various amendments effected to Section 3(3) of the Act and held as follows: - The legislative history of Section 3 of the Tamil Nadu General Sales Tax Act, 1959 (under Sub-section (3) of which a dealer selling goods to another for use by the latter as component parts in the manufacture of other goods for sale in the State is entitled to be taxed at a concessional rate on the strength of declarations in Form XVII given by the purchasing dealer), shows that the Legislature had taken care of any wrong declaration by the purchasing dealer by making the purchasing dealer liable for the difference of tax payable on the turnove....
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....fied in his form of registration granted by the sales tax authorities. It is not the function of the selling dealer to enquire whether the requirement of the purchasing dealer is bona fide or even is or is not within the certificate of registration of that dealer. 9. Again in Chunni Lal Parshai Lal v. Commissioner of Sales Tax, U.P: [1986] 1 SCR 891, it has been observed as follows: - The purpose for the making of the rule would, however, be frustrated if after the dealer proves in the manner indicated in Rule 12-A he has to prove again how the purchasing dealer has dealt with the goods after he obtains the certificate from a registered dealer. That would make the working of the Act and rule unworkable. On the question of liability of the seller, the Supreme Court in its judgment at pages 120 and 121 held as follows: 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 certificate but his duty extended no further. If he was satisfied on....
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.... 10.8.2006) following the earlier decisions of this Court and the Supreme Court, this Bench has categorically held that how the purchasing dealer has dealt with the goods is not the concern of the seller and liability can be fastened only upon the purchasing dealer and not the seller. 11. The provisions of Section 10(3) of the Act relied upon by the learned single Judge provides that where any dealer knowingly produces a false bill, vouchers, declaration, certificate or other document with a view to support or make any claim that a transaction of sale or purchase effected by him is not liable to be taxed or liable to be taxed at a lower rate, the assessing authority shall on detecting such production direct the dealer producing such document to pay as penalty a sum mentioned in that Section. It is not the case of the Revenue that the seller has produced a false bill, vouchers, declaration, certificate or other document with a view to support or makes any claim that the transaction is not liable to be taxed or liable to be taxed at a lower rate. We fail to appreciate as to how Section 10(3) of the Act would be applicable to the facts of the present case. In fact, the assessing of....