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TMI Blog1978 (7) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... d as fuel for producing hydrogen and that the hydrogen in turn was used for manufacture of chemical fertilisers. On the view that naphtha was not used directly for the manufacture, he initiated proceedings under section 35 of the Act and set aside the orders of the assessing authority. On appeal, the Sales Tax Appellate Tribunal reversed the said decision. These three tax revision cases, filed by the revenue, raise the question whether the assessee could be denied the benefit of the concessional rate, in view of the fact that there could be no use of naphtha directly in the manufacture of chemical fertilisers. 2.. In Radhakrishna Chetty Bros. v. Assistant Commissioner of Sales Tax[1974] 34 S.T.C. 370., a learned Judge of this court held that "the scheme of the Act appears to be that in case the selling dealer obtains a declaration form in accordance with the proviso to sub-section (3) of section 5 of the Act and furnishes it to the assessing authority he cannot be called upon to pay more than the concessional rate of tax of one per cent" and that the selling dealer could claim the concessional rate even if the declaration was in the nature of fraudulent misrepresentation. In Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess the dealer selling the goods furnishes to the assessing authority in the prescribed manner a declaration duly filled in and signed by the dealer to whom the goods are sold containing the prescribed particulars in a prescribed form." Sub-rules (1) and (2) of rule 28 are in the following terms: "28. (1) The declaration referred to in the proviso to sub-section (3) of section 5 shall be furnished in form 18. (2) A dealer who wishes to purchase goods from another dealer on payment of tax at the rate specified in sub-section (3) of section 5, shall obtain from the assessing authority a blank declaration form prescribed under subrule (1), on payment of a fee at the rate of one rupee per book of 50 forms and shall furnish to the selling dealer the original and duplicate portions of the declaration in form 18 duly filled in and signed by him or by any responsible person authorised by him in this behalf and shall retain the counterfoil" Form 18, referred to in sub-rule (1), is as shown below: "Original Duplicate Counterfoil Name and address of dealer to whom issued: Registration Certificate No. of the dealer to whom issued: Officer issuing the form: Date of issue: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion certificate of the purchasing dealer, as goods included for resale or for use in manufacture. The first proviso required that in order to get the benefit of such exclusion, the selling dealer should obtain from the purchaser a declaration containing prescribed particulars. The second proviso dealt with the contingency of the purchaser misusing the facility by furnishing a false declaration; if it was found that the goods purchased "were utilised by him for any other purpose", the relatable turnover was to be included in the taxable turnover of the purchaser. The form of the declaration prescribed by the Delhi Sales Tax Rules, 1951, was as shown below: "Certified that the goods mentioned in the cash memo/bill No. ........ dated............have been purchased by me/us from M/s. ........... and are duly covered by my/our registration certificate No. ................... dated..............and are required by me/us for resale/for use as raw materials in the manufacture of goods for sale/for use in the execution of contract. Signature Dealer " 6.. The above was the position till 28th May, 1972, when section 5(2)(a)(ii) was amended so as to specify that the resale by the purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e innumerable transactions that may be entered into by the dealers, it would be well-nigh impossible for the taxing authorities to ascertain in each case whether the goods were purchased as being intended for resale or for use as raw materials in the manufacture of goods for sale and hence the first proviso was enacted qualifying the substantive provision by saying that the turnover of sales covered by the terms of section 5(2)(a)(ii) would be deductible only if 'a declaration duly filled in and signed by the registered dealer to whom the goods are sold and containing the prescribed particulars on a prescribed form......is furnished' by the selling dealer. The result is that a dealer cannot get deduction in respect of the turnover of his sales falling within section 5(2)(a)(ii) unless he furnishes a declaration containing the prescribed particulars on the prescribed form duly filled in and signed by the purchasing dealer. The form of declaration prescribed under rule 26 as it stood up to 29th March, 1973, contained an expression of intention of the purchasing dealer to resell the goods purchased or to use them as raw materials in the manufacture of goods for sale. Such declaration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the selling dealer satisfies the requirements of the statute and he is entitled to claim the concessional rate of one per cent, irrespective of the correctness of the declaration or the manner in which the declarant subsequently acts. Form 18 shows that the declarant need not even specify the goods he intends to manufacture or the nature of the use. The selling dealer is entitled to act on the meagre particulars furnished, and there is no legislative intention to put him on an impossible enquiry as to the correctness of the declaration. The taxing event is the sale to the purchasing dealer. If the purchaser misrepresents or subsequently misbehaves, the "legislative wrath" falls upon him, as section 46(2)(d) of the Act provides for his imprisonment and for fine. While the West Bengal Act provided for financial consequences, the Kerala Act provides for much more serious consequences; and this is the only substantial difference in the two legislative schemes. 8.. Nor could we accept the argument on behalf of the revenue that the Act and Rules should be so construed as to find a scope for enquiry into the question of user, at some stage, as otherwise the financial consequences for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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