STATE OF MADRAS Vs. P SUBBIAH PILLAI

JUDGEMENT

(1.) A turnover of Rs. 14, 025 was charged to tax at 7 per cent., the revenue being of the view that the assessee failed to file along with the returns declarations in "C" Forms. The assessee claimed exemption of the entire turnover from tax under section 6(2) of the Central Sales Tax Act and had duly filed the "E-I" Forms. The Tribunal accepted the assessee's contention that sub-rules (2) and (5) of rule 9-B of the Central Sales Tax (Madras) Rules, 1957, are in excess of the rule-making power of the State Government and allowed the appeal. The State is the petitioner in this Court. Under section 6(1), every inter-State sale is liable to tax. But this is subject to the other provisions of the Act. Second inter-State sales to registered dealers, by transfer of documents during movement of goods are, however, exempted from tax by sub-section (2) of section 6, provided the requirements of the proviso to the sub-section are satisfied. The proviso is as follows : "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."

(2.) THE Central Sales Tax (Registration and Turnover) Rules, 1957, prescribe that the certificate for purposes of section 6(2) should be in Form "E-I". THEre is no dispute that the assessee did file "E-I" Forms in respect of the turnover in dispute. But the revenue insisted upon the assessee producing declarations in Form "C", which the assessee resisted and declined. Apparently, the revenue relied on rule 9-B(2) and (5) of the Madras Rules. Sub-rules (2) and (5) read : "(2) THE purchasing registered dealer who received the certificate in Form E-I as aforesaid shall, if he sells the goods to a registered dealer by transfer of documents of title to the goods, furnish to the assessing authority the original of the Form E-I received by him from the dealer from whom he purchased the goods and the original of the declaration Form 'C' received from the registered dealer to whom he sold the goods." (5) THE exemption provided in section 6, sub-section (2) of the Act, shall not be granted unless the dealer making the sale furnishes to the assessing authority the original of the declaration in Form 'C' obtained from the registered dealer, making the purchase together with the certificate in Form E-I or E-II as the case may be."