S.K. Mal Lodha, J.
1. This Court by its order July 4, 1973 passed on an application Under Section 15(3A) of the Rajasthan Sales Tax Act, 1954 (No. XXIX of 1954) (for short 'the Act' herein) directed the Board of Revenue for Rajasthan, Ajmer, (which will for the sake of brevity he referred to as 'the Board') to refer the following question for decision to this Court:
Whether in the facts and circumstances of the case the turnover of castor oil amounting Rs. 33,993.22 was liable to tax at the hands of the assessee.?
2. M/s Bhoot Oil Mills which is respondent, shall be referred to as 'the Dealer' hereinafter.
3. The Dealer was assessed by the Commercial Taxes Officer, Special Circle, Jodhpur, on October 15, 1966 for the assessment period April 1, 1961 to March 31, 1962. The assessing Authority held that the Dealer had wrongfully sold castor oil worth Rs. 33,993.22 to Textile and Leather Industries on the basis of Form S.T. 17, by which the Textile and Leather Industries claimed that the items purchased then by them representing the sale are exempted from the payment of sale tax. On the basis of Form S.T. 17 the Dealer did not charge the sales tax from the purchasers. The Assessing Authority further came to the conclusion that the Textile and Leather Industries were not entitled to purchase castor oil for use in manufacture vide Govt. Notification No. F. 21 (7)SR/55 dated April 14, 1955. Being dissatisfied with the assessment order, the Dealer filed the appeal, The Dy. Commissioner (Appeals), Commercial Taxes, Udaipur, by his order Ex. 2 dated November 18, 1967, while disposing of a number of appeals concurred with the Assessing Authority regarding imposition of Sale Tax on castor oil. The Dealer filed revision before the Board. The Board, by its order dated May 3, 1971 in so far as it relates to the imposition of sales tax on the sale of castor oil, accepted the revision, and imposition of tax on castor oil was set aside. An application for making a reference was filed. But the Division Bench of the Board dismissed the application for reference holding that as it could not be decided within a period of 120 days, no orders could then be passed. The Department filed a reference application before this Court which was allowed and the Board was directed to refer the aforesaid question for decision to this Court.
4. We have heard Mr. A.K. Mathur, learned Additional Advocate General appearing for the Commercial Taxes Officer, Special Circle, Jodhpur and Mr. M.C. Bhoot, learned Counsel for the Dealer (M/s Bhoot Oil Mills, Jodhpur).
5. The Assessing Authority was of the opinion that on the basis of form S.T. 17 furnished by the Textile and Leather Industries, to whom the castor oil was sold, were not entitled to purchase castor oil for use in manufacture as per the Govt. Notification No. F.21(7)SR/55 dated April 14, 1955. The relevant items are 3 and 4 which are mentioned as under:
S. No. Name of Industry Goods (Raw material etc.)exempted3. Textile Mill (Spinning & Weaving) Silk, artificial silk yarn, che-and power loomsmicals, steam coal, jute-goodssizing materials, dye, paintsand varnishes, shuttles, bob-bins, reads and healds, bel-ting diesel oil and crude oil,cotton ginned and unginned,cotton yarn.8. Leather Industry Leather'
6. The Assessing Authority, therefore, held that the assessee was liable to pay tax on such sale at the rate of 5%. The Dy. Commissioner (Appeals) examined the arguments raised on behalf of the Dealer that under Rule 25C of the Rajasthan Sales Tax Rules, 1955, the only duty of the Dealer was that it should obtain a declaration in the prescribed form from the purchaser who is a registered dealer and that such sales are not taxable in the hand of the Selling Dealer. The Dy. Commissioner, (Appeals) was of the opinion that the castor oil is not a raw material for Textiles and Leather industries and it could not have been sold as raw material. According to him the precise and pertinent question in such cases is 'to follow the provisions of law and notifications issued thereunder' and 'not to examine the Registration Certificate of Dealer'. In other words the Dy. Commissioner (Appeals) concentrated on the question whether the Dealer (Seller) could validily sell castor oil as raw material and claim exemption thereunder. He, concurred with the view taken by the Assessing Authority that the Dealer was liable pay Sales Tax on the sales of castor oil worth Rs. 33,993.22. On revision the Board, while disagreeing with the view taken by the Assessing Authority and the Dy. Commissioner (Appeals), held that when the purchasers (Textiles and Leather Industries) had produced form S.T. 17 before the dealer claiming exemption, the Dealer was not required to do anything more and if form S T. 17 had wrongly been availed of by the purchasers, they are liables to pay tax and penalty and the Dealer is not liable to pay Sales Tax. While coming to this conclusion, the Board placed reliance on Dy. Commr. of Commrl. Taxes v. Stones Motors (S.I.) Ltd. (1963) 14 STC 369.
7. The approach made by the Board appears to us to be erroneous. The sole Question in this case is whether the Dealer in view of item Nos. 3 and 8 contained in Notification No. F. 21(7) SR/SS dated April 14. 1955, castor oil sold by the Dealer to the Textile and Leather Industries could be sold as raw-material which is exampted. Goods (raw materials etc) which are exempted for the use of Textile and Leather Industries have been specified in the aforesaid Notification and if those goods are raw materials, then and then only they are exempted from sales tax. There is no dispute that castor oil is not included in those goods specified as raw material for Textile and T Leather Industries. The contentain raised on behalf of the Dealer before the Assessing Authority, Dy. Commissioner (Appeals) and Board was that after the production of Form S. T. 17 it was not the duty of the Dealer to make any enquiry whether it is specified as a raw material or whether the goods that are sold are exempted from payment of sales tax or that those goods will be put to the use for which the exemption has been allowed: He also placed strong reliance on Dy. Commr. of Commrl. Taxes's case (1963) 14 SCT 369 Our pointed attention was drawn to the following observations made there-under:
We are of the opinion that whether or not the goods were in fact used for the stated purpose 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 entiled 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 loads for sale by the purchasing dealer....
8. As stated above, the Board in its order was considerably influenced by the fact that the purchasers (Textile and Leather Industries) had produced Form S.T. 17 and that it was not required to do anything further thereafter as on the basis of that Form S. T. 17, no sales-tax was recoverable on the castor oil sold and at the most, according to the Board, it was misuse of Form S.T. 17 Sales Tax on the castor oil merely on the basis of the production of Form S T. 17 could not be avoided as on the basis of Form S. T. 17 the Dealer (Seller) is not exempted from payment of sales tax on castor oil, for, it is not a raw material for Textile and Leather Industries. The Dealer has sold castor oil to the purchasers (Textile and Leather Industries) as raw material and castor oil is not a raw material f Textile and Leather Industries, and so the Dealer could not claim exemption. So far as Dy. Commr. of Comml. Taxes's case (1963) 14 STC 369 is concerned, we have carefully examined it and are definitely of the opinion that in the facts and circumstances of the case on hand, it cannot be availed of by the Dealer. A perusal of the aforesaid decision shows that the learned Judge of the Madras High Court constituting the Division Bench mainly concentrated on the question whether or not the goods were in fact used for the stated purpose or even usable for such a purpose and on this basic promise it was opined that so long as the purchasing dealer has furnished the required declaration to the selling dealer, the selling dealer becomes under entitled to the benefit of Section 8(1) of the Act, under consideration. In that case the purchasing dealer had furnished to the selling dealer the declaration in Form C of the Central Sales Tax (Registration and Turnover) Rules, 1957. The declaration specified that the goods purchased were covered by the Certificate of Registration obtained by the purchasing dealer as required either for re-sale or for use in the manufacture or processing of goods for sale and that according to the learned Judge, was compliance with the requirements of law as envisaged by Section 8(1) of the Central Sales Tax Act, 1956. In that connection it was also observed that 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. For determining the question of payment of Sales Tax or for that matter whether castor oil sold was exempt from payment of Sales Tax what is to be seen is whether castor oil were goods of the nature regarding which exemption could be claimed or whether the castor oil could be used as a raw material by the Textile and Leather Industries. The provisions of the Act and the Notification issued thereunder have to be given effect. It is held that the turnover of castor oil amounting to Rs. 33,993.22 was liable to tax at the hands of the Dealer (Assessee).
9. For the aforesaid reasons the above question is answered in the affirmative i.e., in favour of the Department and against the Dealer.
10. In the circumstances of the case there will be no order as to costs of this reference. Action be taken in accordance with Section 15(5) of the Act.