Commissioner of Sales Tax vs Rajjulal Motilal, Guna

K.K. Dube, J.—This reference u/s 44 of the Madhya Pradesh General Sales Tax Act, 1958 is made by the Board of Revenue at the instance of the Commissioner of Sales Tax referring for opinion of the High Court the following question namely:--

(1) Whether under the facts and circumstances of the case the submission of Form E.I. was sufficient for the purpose of exemption or the subsequent inter-State sale from tax u/s 6(2) of the Central Act?

(2) Whether production of declaration Form ''C'' from the purchasing dealer in addition to the declaration a Form E-I was necessary for claiming exemption on the subsequent inter-State sale as provided under rule 8-D of the M. P. Sales Tax (Central) Rules, 1957?

The dispute in this case arises in respect of a turnover being sale of oil seeds for a sum of Rs. 19, 833 15. The oil-seeds were booked from Vidisha by M/s Rajmal Gulabchand and consigned to self at Raniganj. The same consignment was negotiated and sold to the assessee dealer. The non-applicant dealer furnished a declaration in Form C and M/S Rajmal Gulabchand furnished a declaration in Form E-I. The dealer while the goods were still in transit, transferred the goods to Krishna Flour and Oil Mill, Raniganj, Krishna Flour and Oil Mill has not furnished the declaration in Form C to its seller, the assessee.

It is not disputed that the oil-seeds sale in question is an inter-State sale and sale to Krishna Flour and Oil Mill is a subsequent sale u/s 6(2) of the Central Sales Tax Act. The Sales Tax Officer assessed the said turnover to Central salts tax as a declaration in Form-C had not been submitted by the non applicant assessee. The first appeal before the Deputy Commissioner, Sales Tax was also rejected and the sale of said oil seeds was held to be not exempted from tax. In Second Appeal, the Tribunal was of the view that the production of Form C was not a condition necessary for claiming exemption under Central Sales Tax Act and only a declaration in Form E-I was required to be furnished. The production of Form-C was directory and not mandatory. On these facts, the Commissioner has moved the Board for referring the two questions to this Court.

In Commissioner of Sales Tax, M.P. Shivnarain Jagat Narain [Misc Civil Case No. 22 of 1972 3.04.1978] Divisional Bench of this High Court considered the effect of omission to afurnish a declaration in Form ''C'' obtained from the purchasing dealer by the selling dealer effecting the subsequent sale when such dealer had furnished a certificate in Form E-I. The Bench, ageeing with the view taken by the Madras High Court State of Madras v. P. Subbiah Pillai [ (1967) 20 STC 263] and State of Gujarat v. Yakubbhai [ (1969) SS 3 STC 117] held that form C is not a condition precedent for grant of exemption prescribed in sub section (2) of section 6 or the proviso therein as also in the rules framed by Central Government prescrbing the manner of the certificate required under rule 8 D framed by the State Government and, therefore, the furnishing ot such a declaration can not be construed to be mandatory. The requirement of furnishing declaration in Form ''C'' incase of an exemption claimed under sub section (2) of section 6 can be only for the purpose of showing that the subsequent sale was an inter-Stale sale made to a registered dealer It is further held as under:--

The proviso contained in sub-section (2) of section 6 lays down the condition precedent to be fulfilled by the dealt effecting the subsequent sale so as to entitle him to the exemption granted by subsection (2) of section 6. The only requirement ot 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 it that the selling dealer effecting the subsequent sale should furnish to the prescribed authority the prescribed certificate duly filled and signed by the registered dealer from whom he had purchased the goods, i.e. the sale to the selling dealer effecting the subsequent sale. There is no further requirement of this proviso There can be doubt that a provision granting an exemption from tax requires strict compliance with the same and there is no entitlement to the exemption claimed unless the condition laid down therein has been fulfilled by the dealer. All the same, it is implicit from what has already been staled about the contents of the proviso to sub-section (sic) of section, that it does not contain a further requirement that the selling dealer effecting the subsequent sale should also furnish to the prescribed authority a certificate obtained by him from the registered dealer 10 whom the goods are sold by him or, in other words, declaration in Form ''(sic)'' given by the purchaser to such subsequent seller The word ''prescribed'' used in this proviso undoubtedly means as provided in the rules framed under the Act.

We respectfully agree with the above decision and the above discussion fully answers the questions referred to us. As regards the first question we are of the opinion that in the circumstances of the case submission of Form E-I was sufficient for the purpose of exemption of the subsequent inter State sale from tax u/s 6(2) of the Central Act. As regards the second question, it has already been pointed out that the production of declaration in Form ''C'' from the purchasing dealer in addition to a declaration in Form E-I cannot be held to be a mandatory requirement for claiming exemption on subsequent inter-State sale as provided under rule 8-D of the Madhya Pradesh Sales Tax (Central) Rules, 1957. There has been a substantial compliance and even if the declaration in Form ''C'' adverted to above had not been produced, the assessee was entitled to exemption.

The reference is answered accordingly.