1962 (11) TMI 35 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Eligibility for concessional rate of taxation under Section 8(1)(b) of the Central Sales Tax Act.
2. Interpretation of "use in the manufacture or processing of goods for sale" under Section 8(3)(b).
3. Compliance with the declaration requirements in Form 'C'.
4. The role and responsibility of the selling dealer in verifying the purchasing dealer's use of goods.

Issue-wise Detailed Analysis:

1. Eligibility for Concessional Rate of Taxation under Section 8(1)(b):
The primary issue revolves around whether the sales of tractors by the assessee to two tea estates are entitled to the benefit of the lower rate of taxation under Section 8(1)(b) of the Central Sales Tax Act. The Tribunal found that the turnover related to these sales was eligible for the lower tax rate, which the Deputy Commissioner of Commercial Taxes contested.

2. Interpretation of "Use in the Manufacture or Processing of Goods for Sale" under Section 8(3)(b):
The assessing authority and the Appellate Assistant Commissioner initially denied the concessional rate, arguing that the tractors were not used directly in the manufacturing process of tea. They contended that tractors used for transporting tea leaves and laborers did not qualify as being used "in the manufacture of goods for sale." However, the Tribunal partially upheld the assessee's appeal, recognizing that the tractors had a direct relation to the manufacture of tea for sale for two specific factories.

3. Compliance with the Declaration Requirements in Form 'C':
The purchasing dealers provided the required declarations in Form 'C', certifying that the goods were covered by their certificates of registration and were intended for use in the manufacture or processing of goods for sale. The court emphasized that the selling dealer, having received these declarations, complied with the statutory requirements, thereby entitling them to the lower tax rate.

4. The Role and Responsibility of the Selling Dealer in Verifying the Purchasing Dealer's Use of Goods:
The court clarified that it is not the responsibility of the selling dealer to verify whether the goods sold are actually used for the purposes stated by the purchasing dealer. The selling dealer is entitled to rely on the declarations provided by the purchasing dealer. The court stated, "It is no function of the selling dealer to enter into a judicial examination of whether the goods are in fact used or usable for the manufacture or processing of goods for sale by the purchasing dealer." The selling dealer's compliance with the declaration requirements suffices to claim the concessional rate under Section 8(1).

Conclusion:
The court concluded that the selling dealer is entitled to the concessional rate of taxation based on the declarations provided by the purchasing dealers. The court dismissed the petition, affirming the Tribunal's decision that the tractors sold to the two tea estates qualified for the lower tax rate under Section 8(1) of the Central Sales Tax Act. The court emphasized that the selling dealer's entitlement to the lower rate is dependent on the production of the required declarations, not on the actual use of the goods by the purchasing dealer. The petition was dismissed with costs, and the selling dealer was found to have complied with the relevant statutory provisions.