9911796707
TMI Blog1978 (4) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.. The assessee, M/s. Shivnarayan Jagatnarayan of Raigarh, is a dealer in foodgrains, oil-seeds and forest produce, etc. During the relevant period, the assessee purchased oil-seeds and sold them by endorsing the railway receipts in favour of the purchasers. The turnover involved is about Rs. 2,00,000. It is not in dispute that this turnover represents "subsequent sale" within the meaning of section 6(2) of the Central Sales Tax Act, 1956, and, as such, is exempt from payment of Central sales tax. The relevant provisions applicable to the facts of the present case, as they then stood, read as follows: Proviso to section 6(2) of the Central Sales Tax Act, 1956: "Provided that no such subsequent sale shall be exempt from tax under this sub-section unless the dealer effecting the sale furnishes to the prescribed authority in the prescribed manner a certificate duly filled and signed by the registered dealer from whom the goods were purchased, containing the prescribed particulars." Rule 12(2) of the Central Sales Tax (Registration and Turnover) Rules, 1957: "The certificate referred to in sub-section (2) of section 6 shall be in form E-I or form E-II, as the case may be." Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubject to the other provisions contained in this Act" every inter-State sale effected by every dealer is exigible to the payment of tax. Section 8 provides for the rate of tax on these inter-State sales. Sub-section (2) of section 6 then provides for an exemption "notwithstanding anything contained in subsection (1)" in respect of any "subsequent sale" where it is to a registered dealer in the manner laid down in the sub-section, of goods of the description referred to in sub-section (3) of section 8. The proviso contained in sub-section (2) of section 6 lays down the condition precedent to be fulfilled by the dealer effecting the subsequent sale so as to entitle him to the exemption granted by sub-section (2) of section 6. The only requirement of the proviso is that the dealer effecting the subsequent sale should furnish to the prescribed authority "in the prescribed manner a certificate duly filled and signed by the registered dealer from whom the goods were purchased" containing the prescribed particulars. In short, the only requirement of the proviso is that the selling dealer effecting the subsequent sale should furnish to the prescribed authority the prescribed certificate du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealer from whom the goods were purchased" by him. The further requirement of furnishing a declaration in form C is not prescribed by the Central Sales Tax (Registration and Turnover) Rules, 1957, for the purpose of claiming exemption under sub-section (2) of section 6 of the Central Sales Tax Act, 1956. 9.. Sub-section (3) of section 13 of the Central Sales Tax Act, 1956, enables the State Government to make rules not inconsistent with the provisions of this Act and the rules made under sub-section (1), to carry out the purposes of the Act. Sub-section (4) then enumerates, without prejudice to the powers conferred by sub-section (3), certain specific purposes in respect of which the State Government may make rules. Clause (e) of sub-section (4) is one such specified purpose, viz., matters relating to "any form of declaration prescribed under sub-section (4) of section 8". The Madhya Pradesh Sales Tax (Central) Rules, 1957, have been framed by the State Government in exercise of the powers conferred on it under section 13 of the Central Sales Tax Act, 1956. Rule 8-D therein, with the construction of which we are concerned in the present case, finds place in these State Rules. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Government to prescribe the manner in which the exemption can be claimed under sub-section (2) of section 6. Assuming this rule made by the State Government as valid, it follows necessarily that the same must be construed merely as a directory provision so that its substantial compliance is sufficient. 11.. The object of furnishing a declaration in form C in the context of a claim for exemption under sub-section (2) of section 6 of the Central Sales Tax Act, 1956, has already been indicated earlier. Ordinarily, the declaration in form C prescribed by clause (1) of rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957, is in connection with subsection (4) of section 8, i.e., for getting the benefit of a concessional rate of tax. This requirement in the case of an exemption claimed under subsection (2) of section 6 can be only for the purpose of showing that the subsequent sale was an inter-State sale made to a registered dealer. Thus, the satisfaction of the assessing authority of the subsequent sale being made to a registered dealer during the course of an inter-State sale is the total requirement of rule 8-D framed by the State Government. Ordinari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee in that case was that in spite of the imperative language used in rule 27(2), that rule must be treated as directory so as to avoid any conflict with the provisions of the Act. Their Lordships accepted the assessee's contention and held that production of declaration under rule 27(2) is not always obligatory on the part of a selling dealer when claiming the exemption and it was open to him to claim exemption by adducing other evidence so as to bring the transaction within the scope of section 5(2)(a)(ii) of the Act to the satisfaction of the assessing authority. While reaching that conclusion, their Lordships observed as follows: "In our opinion, rule 27(2) must be reconciled with the section and the rule can be reconciled by treating it as directory. But the rule must be substantially complied with in every case. It is for the Sales Tax Officer to be satisfied ..... if he is satisfied from other facts on the record, it is not necessary that the selling dealer should produce a declaration in the form required in rule 27(2), before being entitled to a deduction." In Kedarnath Jute Manufacturing Co. Ltd. v. Commercial Tax Officer[1965] 16 S.T.C. 607 (S.C.)., their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivision Bench of that Court in State of Madras v. P. Subbiah Pillai[1967] 20 S.T.C. 263. construed a similar rule framed by the State Government in the context of exemption claimed under section 6(2) of the Central Sales Tax Act, 1956, requiring production of declaration in form C for claiming exemption from tax. The Madras High Court treated the rule framed by the State Government as merely directory and not mandatory in order to avoid inconsistency with section 6(2) of the Act and the Rules framed by the Central Government. In doing so, it was observed as follows: "But it is quite another matter to insist upon the dealer producing declarations in form C and to lay down a rule that unless he does so he will be disentitled to the exemption. That certainly is not the effect of subsection (2) of section 6 or of the proviso. The conditions for the exemption under the sub-section are only that the sales must be second sales and effected by transfer of documents during movement of goods to a registered dealer and that further certificates in form E-I obtained from the dealer from whom the assessee has purchased, are produced. Nowhere is any indication to be found in sub-section (2) or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omplete exemption when the certificate in form E-1 is furnished, which is the only relevant condition in the proviso to section 6(2), when all other conditions are admittedly fulfilled." 16.. Reliance was placed by the learned Government Advocate, appearing on behalf of the department, on the decision of a learned single Judge of the Andhra Pradesh High Court in Noone R.S. Govindarayulu Bros. v. Sales Tax Appellate Tribunal, A.P., Hyderabad[1974] 33 S.T.C. 580. That case is clearly distinguishable. That was a writ petition filed challenging the validity of a similar rule framed by the State Government requiring further the production of a declaration in form C for claiming the exemption under sub-section (2) of section 6 of the Central Sales Tax Act, 1956. That being so, validity of that rule was the only question which arose for decision in that case. It was held therein that there was no inconsistency between the rule framed by the State Government and the Central Act or the rule made thereunder by the Central Government on account of which validity of the rule framed by the State Government was upheld. As earlier indicated, we are not called upon to decide that question and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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