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PETITIONER: THE STATE OF MADRAS

       Vs.

RESPONDENT: M/S. RADIO AND ELECTRICALS LTD.  ETC.

DATE OF JUDGMENT: 19/04/1966

BENCH: SHAH, J.C. BENCH: SHAH, J.C. WANCHOO, K.N. SIKRI, S.M.

CITATION:  1967 AIR  234            1966 SCR  198  CITATOR INFO :  RF         1986 SC1966  (29)

ACT: Central  Sales  Tax  Act 1957, ss. 7.  8-Central  Sales  Tax (Registration  & Turnover) Rules, 1957-Rules  3-8,  12-Soope of.

HEADNOTE: The assessees carried on business in the State of Madras and were  registered  dealers under the Central Sales  Tax  Act, 1956.   In proceedings for assessment for central sales  tax for  the year 1957-58 the assessees claimed that  they  were liable  to  pay tax at the concessional rate of tax  on  the turnover under sec. 8(1) of the Act where sales were made by them   to  registered  purchasing  dealers   who   furnished declaration in Form ’C". The common question considered in these appeals was: When a purchasing dealer in one State furnishes in Form  ’C’ prescribed  under  the  Central Sales  Tax  (Registration  & Turnover)  Rules,  1957, to the selling  dealer  in  another State  a  declaration, certifying that  the  goods  ordered, purchased  or  supplied are covered by  the  certificate  of registration  obtained by the purchasing dealer in Form  ’B’ prescribed  under r. 5(1) of the Central Sales  Tax  (Regis- tration  & Turnover) Rule.-,, 1957, and that the  goods  are intended for resale, or for use in manufacture of goods  for sale,  or  for  use in the execution of  contracts,  or  for packing  of  goods  for  resale,  and  that  declaration  is produced by the selling dealer, is it open to the Sales  Tax authority  under  the Central Sales Tax Act to deny  to  the selling  dealer the benefit of concessional rates  under  s. 8(1)  of the Central Sales Tax Act, 1956, on the  view  that the certificate in Form ’C’ mentions more purposes than  one for  which  the goods are intended to be used, or  that  the goods are incapable of being used for the purpose for  which they  are  declared to be purchased, or that the  goods  are applied  for  some  other  purpose  not  mentioned  in   the certificate in Form ’C’? HELD:     The Act and the Rules do not impose an  obligation upon  the purchasing dealer to declare that goods  purchased by  him are intended to be used for one purpose  only,  even

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though under his certificate of registration in Form ’B’  he is entitled to purchase goods of the classes mentioned in s. 8(3)  (b) for more purposes than one.  When  the  purchasing dealer  furnishes a certificate in Form C  without  striking out  any  of the four alternatives, it is  a  representation that  the goods purchased are intended to be usedfor all  or any  of the purposes, and the certificate complies with  the requirements  of  the  Act and the  Rules.   The  Sales  Tax Officer  may scrutinise the certificate to find out  whether it  is  genuine  and  may  also  examine  the   registration certificate  of the purchasing dealer. to see if  the  goods are covered by it.  But it is not for him to hold an enquiry whether   the   goods  specified  in  the   certificate   of registration of the purchaser can be used by the  purchasing dealer  for  any of the purpose mentioned in  Form  ’C’.  or whether   they   should  have  been     specified   in   the registration  certificate or even that the  goods  purchased have  in fact not been used for the purpose declared in  the certificate. [2O6 B-D] 199 It  is  contemplated  in  sec. 7  and  the  Rules  that  the certificate  of  registration may only be  issued  after  an objective  satisfaction by the notified authority  that  the specified  goods are likely to be needed for the purpose  of business of the registered dealer, and that satisfaction  is open  to challenge in an appropriate proceeding  before  the High  Court  and  even before this  Court.   Correctness  or propriety  of  satisfaction  of the  notified  authority  in issuing  the  certificate  in Form ’E’ that  the  goods  are likely to be required for the purpose of the business  would not however be again open to challenge before another taxing authority  in proceedings for assessment of tax. [206  G-207 B]. Indian Copper Corporation Ltd. v. Commissioner of Commercial Taxes, Bihar & Others 16 S.T.C. 259 and J.K. Cotton Spinning JUDGMENT: Another 16 S.T.C. 563, referred to.

& CIVIL  APPELLATE JURISDICTION: Civil Appeals Nos.  334,  335 and 338 of 1965. Appeals by Special Leave from the judgment and orders  dated January  1, 1963, November 7, 1962 and November 4,  1963  of the  Madras  High Court in Tax Case No. 170  of  1961  Civil Revision  Petition No. 105 of 1961 and Tax Case No.  153  of 1963 respectively. Bishan Narain and A. V. Rangam, for the appellants (in C.As. Nos. 334 and 335 of 1965). A.V. Rangam, for the appellant (in C.A. No. 338/1965). K.R. Chaudhuri, for the respondent (in C. A. No 334/1965). N.   D. Karkhanis, O.C. Mathur, J.B. Dadachanji and Ravinder Narain,for the respondents (in C.As. Nos. 335 and 338/1965). The Judgment of the Court was delivered by Shah,  J. This is a group of appeals filed by the  State  of Madras against orders passed by the High Court of Judicature at  Madras which raises the following common question as  to applicability   of  concessional  rate  of  sales   tax   to transactions  of  inter  State sale and  taxable  under  the Central Sales Tax Act, 1956:               "When   a  purchasing  dealer  in  one   State               furnishes  in  Form ’C’ prescribed  under  the               Central  Sales Tax (Registration  &  Turnover)               Rules, 1957, to the selling dealer in  another

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             State a declaration, certifying that the goods               ordered, purchased or supplied are covered  by               the  certificate of registration  obtained  by               the  purchasing dealer in Form ’B’  prescribed               under  r.  5(1)  of  the  Central  Sales   Tax               (Registration  &  Turnover) Rules,  1957,  and               that the goods are intended for resale, or for               use  in manufacture of goods for sale, or  for               use  in  the execution of  contracts,  or  for               packing   of  goods  for  resale,  and   that,               declaration is produced by the selling dealer,               is  it open to the Sales Tax  authority  under               the  Central  Sales  ax Act  to  deny  to  the               selling  dealer  the benefit  of  concessional               rates  under s. 8(1) of the Central Sales  Tax               Act, 1956.               200               on  the view that the certificate in Form  ’C’               mentions more purposes than one for which  the               goods  are  intended to be used, or  that  the               goods  are  incapable of being  used  for  the               purpose  for  which they are  declared  to  be               purchased,  or that the goods are applied  for               some other purpose not mentioned in the certi-               ficate in Form ’C’?" We may briefly set out the facts which give rise to two  out of the appeals: Civil Appeals Nos. 334 & 335 of 1965. Civil Appeal No. 334 of 1965.  M/s Radio & Electricals Ltd., respondents  in  this  appeal on business in  the  State  of Madras in electrical equipment and are registered as dealers under   the  Central  Sales  Tax  Act.   The  Bombay   State Electricity Board, Saurashtra Division, which is engaged  in the production of electric energy purchased transformers and other  goods of the total value of Rs. 1,42,020/- from  M/s. Radio   &  Electricals  Ltd.  and  the  latter  claimed   in proceeding for assessment for Central sales-tax for the year 1957-58  that they were liable to pay tax at the rate  of  1 per cent on the turnover under S. 8(1) of the Central  Sales Tax  Act.   The Deputy Commercial Tax Officer  rejected  the claim on the ground that the Bombay State Electricity  Board was not a dealer engaged in selling goods and merely because they held a registration certificate, the goods sold to  the Board could not be admitted to the concessional rate of  tax under  S.  8(1)  of  the Act.   The  Appeal  late  Assistant Commissioner of Commercial Taxes confirmed the order on  the ground  that transformers and other goods purchased  by  the Electricity  Board for use in the production  of  electrical energy  were not intended, to be used in the manufacture  of goods  for  sale within the meaning of S. 8(3)  (b)  of  the Central Sales Tax,’ Act, because electricity was not at  the material  time "goods" within the meaning of the  Act.   The order  passed  by the Appellate Assistant  Commissioner  was confirmed by the Sales Tax Appellate Tribunal, Madras.   The High   Court,  following  an  earlier  judgment  in   Deputy Commissioner  of  Commercial  Taxes,  Madras  Division,   v. Manohar  Brothers(1) modified the order holding that if  the selling  dealer within the State produces a  certificate  in Form  ’C’  setting  out one or more of the  purposes  in  S. 8(3)(b)  of  the Act, and if the Sales  Tax  authorities  on behalf  of the State do not deny that the purchasing  dealer is  a  registered  dealer, the selling dealer  will  not  be denied  the concessional rate of tax under the Act, even  if it  transpires that the purchasing dealer has  utilised  the goods  for  purposes  other  than  those  mentioned  in  the certificate of registration.  The High Court then held  that

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out of the certificates in Form ’C’ produced by the  selling dealer,  certificates  in  respect  of  a  turnover  of  Rs. 42,080/-  set out the purpose as "manufacture of  electrical energy" and since this was not one of the purposes mentioned in  S. 8(3)(b) of the Act as it stood at the relevant  time, the Sales Tax authority was right in denying the benefit  of the rate under S. 8 (1) to the assessee, but with regard  to a turnover of (1)  13 S.T.C. 686. 201 Rs. 47,340/- the Sales Tax authority was bound to accept the certificates  in  Form  ’C’ produced by  the  assessee  even though the certificates contained all the purposes mentioned in the prescribed form, and no purpose was struck out. The facts which give rise to Civil Appeal No. 335 are these; M/s  Stanes  Motors (South India) Ltd.-respondents  in  this appeal are  dealers  in automobiles,  tractors  and  spare parts.   For  the  year  1957-58  they  claimed  benefit  of concessional  rates  under  s. 8(1) on  a  turnover  of  Rs. 1,38,572/12/-  resulting from sale of tractors  supplied  to certain  "tea  factories"  in  the  State  of  Kerala.   The purchasing dealers who were four "tea factories"  registered as  dealers  under  the Act  delivered  to  the  respondents certificates  in  Form  ’C’  declaring  that  the   tractors purchased by them were in. tended for use in the manufacture of tea for sale.  In the view of the Tax Officer benefit  of the  concessional  rate could not be claimed in  respect  of those sales, since the tractors were not for resale and  the tractors  "were not directly relatable to the  manufacturing process".   In appeal, the order passed by the  Tax  Officer was  confirmed by the Appellate Assistant Commissioner.   He held that the tractors which were used for transporting  tea leaves from the plantations to the factories cannot be  said to be used in the manufacture of goods for sale.  In  appeal to  the Sales Tax Appellate Tribunal, it was held  that  the respondents  were  entitled  to  the  concessional  rate  in respect  of  sales to two out of the four  factories,  which held  certificates  of registration in Form  ’B’  specifying "machinery" as one of the items under s. 8(3)(b).  The  High Court  of Madras confirmed the order passed by the  Tribunal in exercise of its revisional jurisdiction. Counsel for the State of Madras contends that the Commercial Tax  Officer  is invested with authority under  the  Act  to scrutinise the transactions in respect of which the claim to concessional  rate  of tax is made, and he is  competent  to ascertain  not only whether the certificate in Form  ’C’  is genuine,  but  whether  the certificate  is  valid  in  law, whether  the purchasing dealer holds a valid certificate  of registration in Form ’B’, whether the goods specified in the purchasing dealer’s certificate can be used for the  purpose mentioned  in the certificate in Form ’C’, and  whether  the goods  were  applied  for the purpose for  which  they  were purchased. Counsel also submitted that a certificate in Form ’C’  which  specifies more purposes than one for  which  the goods  are intended to be used by the purchasing  dealer  is invalid. We may in the first instance set out the relevant Provisions of  the Act and the Rules.  The Central Sales Tax Act 74  of 1956  was enacted by the Parliament to formulate  principles for determining when a sale or purchase of goods takes place in the course of inter.  State trade or commerce or  outside a  State  or  in the course of import into  or  export  from India.  By Ch. 11 principles for determining when a sale  or purchase of goods takes place in the course of 202

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inter-State  trade or commerce or outside a State or in  the course  of import or export are enacted.  Chapter III  deals with  inter-State sales tax.  By s. 6 liability  is  imposed upon  every  dealer to pay tax under the Act  on  all  sales effected  by  him  in  the course  of  interState  trade  or commerce   during   any  year.   Section  7   provides   for registration of dealers.  Section 8, as originally  enacted, provided:               "(1) Every dealer who, in the course of inter-               State trade or commerce sells to a  registered               dealer goods of the description referred to in               sub-section  (3)  shall be liable to  pay  tax               under this Act, which shall be one per cent of               his turnover:               Provided that, if under, the sales tax law  of               the appropriate State, the sale or purchase of               any  goods  by  a dealer is  exempt  from  tax               generally  and  not in specified cases  or  in               specified  circumstances or is subject to  tax               (by whatever name called) at a rate or  rates               which is or are lower than the rate               specified in sub-section (1), the tax  payable               under this Act on the turnover in relation  to               the sale of such goods in the course of inter-               State trade or commerce shall be nil or  shall               be  calculated at the lower rate, as the  case               may be.               (2)....................               (3) The    goods  referred to  in  sub-section               (1)-               (a)   in the case of declared goods, are goods               of  the  class  or classes  specified  in  the               certificate of registration of the  registered               dealer purchasing the goods as being  intended               for resale by him; and               (b)   in  any  other case, are  goods  of  the               class or classes specified in the  certificate               of  registration  of  the  registered   dealer               purchasing  the  goods as being  intended  for               resale  by  him  or  for use  by  him  in  the               manufacture  of goods for sale or for  use  by               him  in the execution of any contract; and  in               either  case include the containers  or  other               materials used for the packing of goods of the               class or classes of goods so specified.               Explanation-.               (4)   The provisions of sub-section (1)  shall               not apply to any sale in the course of  inter-               State  trade  or commerce  unless  the  dealer               selling the goods furnishes to the  prescribed               authority   in   the   prescribed   manner   a               declaration  duly  filled and  signed  by  the               registered, dealer to whom the goods are sold,               containing  the prescribed particulars  con  a               prescribed  form obtained from the  prescribed               authority.               (5)               (With  effect from October 1, 1958, by Act  31               of 1958, s. 8 was extensively amended, but  we               are, in these appeals, not concerned with  the               statute as amended).               203               Section   10  provides  for  penalties.    The               section at the material time provided: -               "If any person-

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             (a)   fails  to  get  himself  registered   as               required by section 7; or               (b)   being   a  registered  dealer,   falsely               represents when purchasing any class of  goods               that  goods of such class are covered  by  his               certificate of registration-, or               (c)   not  being a registered dealer,  falsely               represents when purchasing goods in the course               of inter-State trade or commerce that he is  a               registered dealer; or               (d)   after  purchasing any goods for  any  of               the  purposes specified in clause (b) of  sub-               section  (3)  of  section  8  fails,   without               reasonable  excuse, to make use of  the  goods               for any such purpose;               (e)   has   in   his   possession   any   form               prescribed for the purpose of sub-section  (4)               of  section 8 which has not been  obtained  by               him  or  by his principal or by his  agent  in               accordance with the provisions of this Act  or               any   rules  made  thereunder;  he  shall   be               punishable with simple imprisonment.                        . Section 14 deals with declared goods in respect of which  by s.  8(1) read with s. 8(3)(a) the concessional rate  of  tax applies  when the goods are purchased as being intended  for resale.   Reading s. 8(1) with s. 8(3)(b), it is clear  that the   Legislature   intended  to  grant   the   benefit   of concessional  rates  of  tax under  the  Act  to  registered dealers,  provided that the goods sold were of the class  or classes specified in the certificate of registration of  the purchasing dealer and the goods were intended to be used for resale  by him or, for use in the manufacture of  goods  for sale,  or  for  use in the execution of  contracts,  or  for packing of goods for resale. In exercise of the power under s. 13 the Central  Government made  rules  called "The Central Sales Tax  (Registration  & Turnover)   Rules,  1957".   Rules  3  to  8   provide   for registration and issue of certificate of registration.  Rule 5(1) provides that when the notified authority is satisfied, after  making such enquiry as it thinks necessary, that  the particulars  contained  in the application are  correct  and complete,  it  shall  register the dealer and  grant  him  a certificate  of registration in Form ’B’ and also a copy  of such  certificate  for every place of  business  within  the State  other than the principal place of business  mentioned therein.  The material part of Form ’B’ is as follows: This  is  to  certify  that.................whose  principal place  of business within the State  of................   is situated      at ................... 204 has  been registered as a dealer under section 7(1)/7(2)  of the Central Sales Tax Act, 1956. The business is: wholly mainly partly partly partly The  class(es)  of goods specified for the purpose  of  sub- section (1) of section 8 of the said Act is /are as  follows and  the sales of these goods in the course  of  inter-State trade  to the dealer shall be taxable at the rate  specified in that subsection subject to the provisions of  sub-section (4) of the said section: -

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(a)  For resale, (b) For use in manufacture, (c)  For use in the execution of contracts. The   dealer’s  year  for  the  purpose  of  accounts   runs from............       day      of ..........       to the .......It.................." Rules  9  & 10 deal with cancellation of  registration,  and Rules  1 1 & 12 deal with determination of turnover.  By  r. 12 the declaration referred to in sub-s. (3) of s. 8 of  the Act  has  to be in Form ’C’ consisting of  three  sections-a counterfoil,  a duplicate and the original.   The  duplicate section  of the Form (which in terms is identical  with  the original section) is as follows: "Form ’C’-Form of Declaration (See rule 12). (to  be  used at the time of making purchases  from  out  of State sellers). Name of issuing State.......................... Issued to holder of Registration Certificate No............ Serial No..................        To      .................................    (Seller)                              ..............      Certified that the goods      **Ordered for in our purchase order No......dt......      *Purchased from you as per bill/cash memostated below. Supplied under your chalan No...........dated........are for      **resale      **use  in  manufacture  of goods for  sale/use  in  the execution of contracts/packing of goods for resale. 205 and are...covered   by  my/  our  registration   certificate No.....dated  issued under the Central Sales Tax Act, 1956. (Name of the purchasing dealer in full).      ........................... (Signature   and   status   of  the   person   sigming   the declaration). *Particulars           of           Bill/Cash           Memo Dated.......No.....Amount.... **Strike out whichever is not applicable. (Note-To be retained by the selling dealer)". The  Scheme of the Rule read with the Act is that  the  pur- chasing  dealer as well as the selling dealer must  register themselves  under  the Central Sales Tax Act.   If  declared goods  are specified in the certificate of  registration  of the purchasing dealer and if it be certified that the  goods are  intended  for  resale by him, the sale  is  subject  to concessional rate of tax under S. 8(1).  In respect of sales of  other classes of goods specified in the  certificate  of registration  of  the purchasing dealer, if  the  goods  are purchased   either  for  resale  by  him,  or  for  use   in manufacture  of goods for sale, or for use in the  execution of  contracts,  the concessional rate of tax  is  available, provided  the  selling dealer obtains  from  the  purchasing dealer the declaration in the prescribed form duly filled in and signed by the latter containing the particulars that the goods  are  ordered, purchased or supplied under  a  certain specific order, bill or cash memo or chalan, for all or  any of the purposes mentioned and that the goods are covered  by the  registration  certificate of  the  purchaser  described therein  and  issued under the Act.  If the  certificate  is defective  in that it does not set out all the  details,  or that  it contains false particulars about the  order,  bill, cash  memo  or chalan, or about the number and date  of  the registration certificate and specifications of goods covered by the certificate of the purchasing dealer, the transaction

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will not be admitted to concessional rates. Now  in  certain certificates in Form ’C’ furnished  by  the purchasing   dealer  in  this  group  of  appeals  all   the alternatives  in  the  printed form were  retained,  and  in others  one  or  more  but not  all  the  alternatives  were retained.   Counsel  for the State of Madras  urged  that  a certificate  in Form ’C’ is defective unless  it  specifies, only one purpose for which the goods purchased are  intended to be used.  But that contention is not borne out by the Act and  the  Rules.  Goods may be sold to a  purchasing  dealer under  a, single order, bill, cash memo or chalan, one  part to  be used for resale, another to be used in the  execution of  contracts,  and the rest ill manufacture  of  goods  for sale,  but  it  is not enacted  that  separate  certificates should  be issued each relating to the quantity intended  to be  used for a specified purpose.. A purchasing  dealer  may again  be  carrying  on business as a,  manufacturer,  as  a building, installation or repair contractor, and as a dealer in  goods,  and  if  he purchases  goods  specified  in  his certificate, but without making up his 206 mind  about the precise purpose for which the goods will  be used,  provided it is one of the purposes, he will still  be complying with the statutory requirements if he declared  in Form  ’C’  that the goods are purchased for  more  than  one purpose.  The Act and the Rules do not impose an  obligation upon  the purchasing dealer to declare that goods  purchased by  him are intended to be used for one purpose  only,  even though under his certificate of registration he is  entitled to purchase goods of the classes mentioned in S. 8(3)(b) for more   purposes  than  one.   When  the  purchasing   dealer furnishes a certificate in Form ’C’ without striking out any of  the four alternatives, it is a representation  that  the goods  purchased are intended to be used for all or  any  of the   purposes,  and  the  certificate  complies  with   the requirements  of  the  Act and the  Rules.   The  Sales  Tax authority  is,  of  course,  competent  to  scrutinise   the certificate to find out whether the certificate is  genuine. He  may also, in appropriate cases, when he  has  reasonable grounds to believe that the goods purchased are not  covered by  the registration certificate of the  purchasing  dealer, make  an  enquiry about the contents of the  certificate  of registration  of the purchasing dealer.  But it is  not  for the  Tax  Officer  to  hold an  enquiry  whether  the  goods specified   in  the  certificate  of  registration  of   the purchaser  can  be  used  by him for  any  of  the  purposes mentioned  by him in Form ’C’, or that the  goods  purchased have  in fact not been used for the purpose declared in  the certificate. The  authority  issuing the certificate under  r.  5(1),  as expressly  stated  in  the  rule,  has,  before  issuing   a registration certificate, to be satisfied after making  such enquiry   as  it  thinks  necessary  that  the   particulars contained in the application are correct and complete.   The enquiry  would obviously be made in the light of the  nature of  the  business and goods which are likely  to  be  needed either  for resale, or for use in the manufacture  of  goods for  sale,  or  for  use  in  the  execution  of  contracts. Satisfaction which is contemplated by r. 5 is objective, and may be arrived at upon a quasijudicial enquiry.  This  Court has  in several cases had occasion to consider the  legality of  orders  of  the notified  authority  refusing  to  grant certificates of registration in Form ’B’ in respect of  cer- tain classes of goods which it was claimed by the  tax-payer were  necessary  for the purpose of his  business  and  were

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therefore  requested to be specified in the  certificate  of registration:   e.g.  Indian  Copper  Corporation  Ltd.   v. Commissioner  of Commercial Taxes, Bihar & Others(1) and  J. K.  Cotton  Spinning & Weaving Co. Ltd., v.  The  Sales  Tax Officer, Kanpur & Another(1).  On the plain words used in s. 7 and the Rules, it is contemplated that the certificate  of registration   may  only  be  issued  after   an   objective satisfaction  by the notified authority that  the  specified goods  are  likely  to  be needed for  the  purpose  of  the business of the registered dealer, and that satisfaction  is open  to challenge in an appropriate proceeding  before  the High Court and even before this Court.  Correctness or (1) S.T.O. 259. (2) [1965] 11.  S.C.R. 900, 16 S.T.C. 563. 207 propriety  of  satisfaction  of the  notified  authority  in issuing  the  certificate  in Form ’B’ that  the  goods  are likely to be required for the purpose of the business  would not however be again open to challenge before another taxing authority in  proceedings  for  assessment  of  tax.    If therefore   goods  are  specified  in  the  certificate   of registration  in  Form ’B’ it is not open, when a  claim  is made  in  respect of the purchases of those  goods  for  the application  of concessional rate of tax, to the  Sales  Tax Officer  to  deny to the selling dealer of those  goods  the benefit  on  the ground that the goods specified  cannot  be used  by the purchasing dealer for the purpose of his  busi- ness.   It is open to the Tax Officer to  ascertain  whether the goods in respect of which a claim for concessional  rate is  made are specified in the certificate  of  registration, but if the class of goods is included in the certificate  of registration  in  Form ’B’ he cannot say that the  class  of goods should not have been specified. The  Act,  seeks  to impose  tax  on  transactions,  amongst others,  of  sale  and purchase  in  inter-State  trade  and commerce.  Though the tax under the Act is levied  primarily from  the  seller, the burden is ultimately  passed  on  the consumers of goods because it enters into the price paid  by them.   Parliament with a view to reduce the burden  on  the consumer arising out of multiple taxation has, in respect of sales  of  declared goods which have special  importance  in inter-State  trade or commerce, and other classes  of  goods which  are purchased at an intermediate stage in the  stream of trade or commerce, prescribed low rates of taxation, when transactions  take place in the course of inter-State  trade or  commerce.   Indisputably the seller can  have  in  these transactions no control over the purchaser.  He has to  rely upon  the  representations  made to him.   He  must  satisfy himself  that the purchaser is a registered dealer, and  the goods  purchased are specified in his certificates  but  his duty  extends no further.  If he is satisfied on  these  two matters,  on  a  representation made to him  in  the  manner prescribed by the Rules. and the representation is  recorded in  the certificate in Form ’C’ the selling dealer is  under no further obligation to see to the application of the goods for the purpose for which it was represented that the  goods were  intended  to  be  used.   If  the  purchasing   dealer misapplies the goods he incurs a penalty under s. 10.   That penalty  is incurred by the purchasing dealer and cannot  be visited  upon  the selling dealer.  The  selling  dealer  is under  the  Act authorised to collect  from  the  purchasing dealer the amount payable by him as tax on the  transaction, and  he  can collect that amount only in the  light  of  the declaration  mentioned in the certificate in Form  ’C’.   He cannot  hold an enquiry whether the notified  authority  who

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issued  the certificate of registration acted  properly,  or ascertain   whether  the  purchaser,   notwithstanding   the declaration, was likely to use the goods for a purpose other than  the purpose mentioned in the certificate in Form  ’C’. There is nothing in the Act or the Rules 208 that  for infraction of the law committed by the  purchasing dealer  by  misapplication of the goods after  he  purchased them,  or  for  any  fraudulent  misrepresentation  by  him, penalty may be visited upon the selling dealer. Counsel for the appellant contended that the view  expressed by  the High Court in the judgments under appeal was in  any case   erroneous,  because  they  held  that  a   ’C’   Form certificate produced by the selling dealer is conclusive  of the  right  to the concessional rate of tax,   and  that  no enquiry whatever may be made by the assessing authority.  He invited  our  attention to the following  passage  from  the judgment  which is under appeal in Civil Appeal No.  335  of 1965:               "  We are of the opinion that whether  or  not               the  goods  were in fact used for  the  stated               purposes or even usable for such a purpose, so               long  as the purchasing dealer  has  furnished               the   required  declaration  to  the   selling               dealer,  the selling dealer becomes under  law               entitled to the benefit of section 8(1) of the               Act.  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 purchasing               dealer  declares  that they are  required  for               such a purpose and are further so specified 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." It  is implicit in the context in which  these  observations occur   that  if  the  purchasing  dealer  holds   a   valid certificate specifying the goods which are to be  purchased, and  furnishes  the  required  declaration  to  the  selling dealer,  the  selling dealer becomes on  production  of  the certificate  entitled to the benefit of S. 8(1).  It  is  of course  open to the sales tax authority to  satisfy  himself that the goods which are purchased by the purchasing  dealer under   certificate  in  Form  ’C’  are  specified  in   the purchasing dealer’s certificate in Form ’B’.  Observation of the  High  Court  that the selling dealer  may  not  enquire whether the requirement is not within the certificate of re- gistration  of the purchasing dealer is not  accurate.   But whether the goods specified in the registration  certificate in  From  ’B’  can be used for the purpose is  not  for  the selling  dealer  to determine.  That is a matter  which  has already  been determined by the notified  authority  issuing the certificate of registration. Appeal No. 334 therefore fails and is dismissed with  costs. In  Appeals  Nos.  335  & 338 the  respondent  is  the  same assessee,  and  common questions for different  periods  are raised.   These  appeals also fail and  are  dismissed  with costs.  One hearing fee.                       Appeals dismissed. 209

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