P. Subramonian Poti, J.
1. Section 5(3) of the Kerala General Sales Tax Act, 1963 (in short the 'Act'), provides that the tax payable by a dealer in respect of any sale of the goods mentioned in the First Schedule, by such dealer to another, for use by the latter as component part of any other goods mentioned in the said schedule, which he intends to manufacture inside the State for sale, shall be at the rate of only one per cent on the taxable turnover relating to such sale. But this will be the case only when the selling dealer furnishes to the assessing authority a declaration in the prescribed manner duly filled in and signed by the dealer to whom the goods are sold containing the prescribed particulars in a prescribed form. Rule 28 of the Kerala General Sales Tax Rules (in short the 'Rules'), in Sub-rule (1), provides for the form in which the declaration is to be made. Form 18 is the form so prescribed and this form shows that the purchasing dealer has to certify that the goods purchased are for use by him as component part of other goods specified in that schedule which he intends to manufacture inside the State for sale. A blank declaration form which is to be used by the purchasing dealer for this purpose has to be obtained from the assessing authority. This is not to be issued as a matter of course by the assessing authority on the application of the purchasing dealer. The assessing authority has necessarily to consider, when application is made to him, whether the issue of form 18 is called for, with due regard to the nature of the business of the applicant. The dealer who receives such form has a duty to keep it in safe custody and not to transfer it to any person other than by way of furnishing the declaration under Section 5(3) of the Act. The provisions indicate that an objective assessment of the need for the issue of such form has to be made by the assessing authority at the time he issues the blank form. The blank form is to be used by a purchaser only in case the goods purchased by him are intended for use in the manufacture for sale. If a dealer furnishes a declaration falsely and obtains goods on payment of the value at the concessional rate of sales tax he is committing an offence. Section 46 provides for the penalties under the Act. Section 46(2)(d) provides that any person who, after purchasing any goods in respect of which he has made a declaration under the proviso to Sub-section (3) of Section 5, fails, without reasonable excuse, to make use of the goods for the declared purpose, shall, on conviction by a Magistrate not below the rank of a Magistrate of the First Class, be liable to simple imprisonment which may extend to six months or to fine not less than the tax or other amounts due but not exceeding two thousand rupees, or to both.
2. The above being the scheme in regard to the furnishing of declaration in form 18, the question that arises in this case is whether the dealer who sells the goods taking declaration forms under form 18 is also bound to see to the use of the goods for which they are purchased by the dealer. In other words, is the selling dealer liable to pay the normal rate of tax and not the concessional rate in case he is not able to show that the goods purchased from him, for which tax at concessional rate alone has been collected on the strength of the declaration forms, are not seen to be used in the manufacture for sale of goods falling within Schedule I.
3. The petitioner in this case is dealing in paper and stationery. 'Paper (other than newsprint), cardboards, straw-boards and their products* was the entry under item 42 in the First Schedule until it was omitted with effect from 1st September, 1967. I am concerned here with the assessment year 1967-68, which takes in the period up to 1st September, 1967. During this period, paper as well as paper products were both items in the First Schedule and, therefore, any dealer in paper selling goods to a dealer purchasing paper for the purpose of making paper products need collect according to the petitioner only 1 per cent tax on the strength of declaration forms duly furnished by the purchasing dealer. The petitioner did make such sales on the strength of declaration forms furnished to him by the parties. The question whether note books, invitation cards letter heads, etc., produced by printers in their press out of paper purchased by them could be considered as paper products was a matter in controversy for sometime, until it was settled by the decision of this court on this matter. Following the decision of this court, the assessing authority in this case, apparently took a view different from that he had taken earlier at the time of assessment and, accordingly, sought to reopen the assessment under Section 19 of the Act. By exhibit P1 notice the assessing authority said:
According to the High Court decision in O. P. Nos. 441, 931 and 1450 of 1966 (Srinivasa Printing Works v. Sales Tax Officer, Kasaragod  20 S.T.C. 278), printed materials cannot be treated as 'paper products' coming under the First Schedule of the Act. As the goods so sold are not for use by the purchasers as component part of any other goods mentioned in the First Schedule, the concessional rate allowed under Section 5(3) of the Act is not in order.
The petitioner objected to this proposal, but notwithstanding this, the proposal was carried out by exhibit P3 order and that is challenged by the petitioner in this petition as unwarranted.
4. Section 5(3) requires a selling dealer to obtain the prescribed form signed by the purchasing dealer containing the particulars necessary. If the form is in order and the form is duly filled up and it is furnished to the selling dealer, whether the selling dealer would be justified in claiming that there was no further responsibility on his part is the controversy here. It is necessary here to extract Sub-section (3) of Section 5 of the Act. It runs as follows:
5. (3) Notwithstanding anything contained in Sub-section (1) or Sub-section (2), the tax payable by a dealer in respect of any sale of the goods mentioned in the First Schedule by such dealer to another for use by the latter as component part of any other goods mentioned in the said schedule, which he intends to manufacture inside the State for sale, shall be at the rate of only one per cent on the taxable turnover relating to such sale: Provided that the provisions of the sub-section shall not apply to any sale unless 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.
That sub-section only requires the selling dealer to satisfy the assessing authority that the sale by him was of the goods in the First Schedule and was to a dealer for use by the latter as component part of any other goods mentioned in the said schedule. The proviso specifies how he should satisfy himself that it is for the use by the purchasing dealer as component part of any other goods mentioned in the First Schedule. He has to obtain a declaration form the purchasing dealer and furnish it to the assessing authority. When once he complies with the proviso his responsibility in the matter must necessarily cease. He cannot be expected to see to the actual application of the goods purchased from him. It may not be in his hands to compel the purchasing dealer to use it in that manner. He is selling it to the purchasing dealer on the strength of declaration forms provided to such dealer by the assessing authority. As I have indicated, Rule 28 shows that it is not a form issued to all and sundry or as a matter of course. It is a form which, when once issued to a dealer, cannot be transferred by him and for which he holds himself responsible. It is one, the misuse of which will visit the purchasing dealer with very serious consequences. Therefore, 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.
5. A similar question arose in the matter of issue of C forms by dealers who are bound to use the goods in the method specified in their certificate of registration but who do not use the goods in that manner. Section 8(1) read with Section 8(3)(b) of the Central Sales Tax Act, 1956, was the provision which the Supreme Court had to consider in State of Madras v. Radio & Electricals Ltd.  18 S.T.C. 222 (S.G.) These sections, as it stood at the relevant time, read:
8. (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....
(3) The goods referred to in Sub-section (1)....
(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.
Dealing with this matter, Shah, J., said:
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 certificate ; 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 representations 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 Section 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 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 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, neatly may be visited upon the selling dealer.
I think what was said in connection with Section 8(1) and (3)(b) of the Central Sales Tax Act, 1956, applies with equal force to the situation before me. In that view, a selling dealer cannot be penalised for non-use of the Tads purchased from him, after furnishing him with declaration forms. He cannot be held responsible if the goods have not been actually used in the manufacture for sale of goods specified in the First Schedule. He will not be on that account, liable to pay tax more than at the concessional rate. The result is that there is no justification to reopen the assessment by exhibit P1 notice. Exhibit P3 order is bad and is liable to be quashed. It is accordingly quashed. The original petition is allowed. In the circumstances of the case, parties are directed to suffer costs.