1980 (3) TMI 245 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of section 8(1) of the M.P. General Sales Tax Act and rule 20(4) of the Rules regarding concessional rate of sales tax.
2. Responsibility of the selling dealer to verify goods mentioned in the purchasing dealer's registration certificate.
3. Impact of Full Bench decision in Commissioner of Sales Tax, Madhya Pradesh v. Lalloobhai B. Patel & Co. Ltd. on the present case.

Detailed Analysis:
1. The High Court of Madhya Pradesh was presented with a reference under section 44 of the Madhya Pradesh General Sales Tax Act, regarding the responsibility of the selling dealer to ensure the eligibility for a concessional rate of sales tax. The main question was whether the selling dealer needed to verify that the goods sold to the purchasing dealer were mentioned in the purchasing dealer's registration certificate as raw materials for manufacture to claim the concessional rate, or if obtaining a declaration from the purchasing dealer was sufficient.

2. The case involved an assessment where the selling dealer had submitted declarations for the sale of oil-seeds to two dealers, but it was later discovered that the oil-seeds were not listed as raw materials in the purchasing dealers' registration certificates. The Board of Revenue initially allowed the concessional rate based on the declarations but later charged the full rate of tax. The Board held that the selling dealer did not need to verify the goods in the purchasing dealer's certificate. However, a Full Bench decision in a previous case established that the selling dealer must ensure that the goods are included in the purchasing dealer's certificate to claim the concessional rate.

3. The Full Bench decision clarified that the concessional rate is only applicable when the selling dealer strictly complies with the provisions of the law, including verifying that the goods for which the concessional rate is claimed are mentioned in the purchasing dealer's certificate. Based on this precedent, the High Court concluded that the selling dealer must satisfy themselves that the goods sold are included in the purchasing dealer's registration certificate to be eligible for the concessional rate of tax. Therefore, in this case, the responsibility lies with the selling dealer to ensure the eligibility criteria are met to claim the concessional rate.