1. The Deputy Commissioner of Commercial Taxes, Coimbatore Division, is the petitioner. The petition prays for a revision of the order of the Appellate Tribunal, the finding of the Tribunal which is attacked as erroneous being that in respect of the sales of tractors by the assessee, M/s. Stanes Motors (South India) Limited to two tea estates, the turnover in respect of those sales was entitled to the benefit of the lower rate of taxation under Section 8(1)(b) of the Central Sales Tax Act. The facts in brief are these : The assessee sold tractors to four factories in Kerala State between December, 1957, and February, 1958. The assessee is a registered dealer ; so also are the tea factories under the Central Sales Tax Act. These are admittedly inter-State sales. The Joint Commercial Tax Officer who made the order of assessment conceded that the sales of these tractors to the four factories are covered by 'C' forms so that, according to him, there was compliance with the relevant provisions of the Act to that extent. But he stated :-
It was however found that these sales cannot claim assessment at the concessional rate in vie of the fact that the tractors were not for resale or used in the manufacture of goods for sale ; this turnover was therefore proposed to be assessed at 2 per cent.
2. The view was taken by the assessing authority that goods which are not directly relatable to the manufacturing process cannot get the concession. Observing that 'tractors cannot by any stretch of imagination be construed to be directly related to tea manufacture', the relevant turnover was assessed at 2 per cent. The assessee appealed to the Appellate Assistant Commissioner, before whom it contended that the vie taken by the assessing authority was very narro and that the use of the tractors for the purpose of transporting tea leaves from the tea garden to the factory and also labourers from one place to another brought the tractors within the scope of the expression used 'in the manufacture of goods for sale'. Whatever validity that argument might or might not have, the Appellate Assistant Commissioner took the vie that though the lower rate of taxation provided by Section 8(1) of the Central Sales Tax Act would extend not only to ra materials but also machinery etc., intended for use in the manufacture of goods, in these cases the tractors were used only in the tea gardens and not actually in the tea factories and that therefore they cannot be deemed to be goods directly relatable to the process of manufacture of tea. He accordingly confirmed the order of assessment.
3. On further appeal to the Tribunal, the Tribunal upheld the assessment in part in respect of the sale of tractors to two factories in which cases it took the vie that tractors would not fall within the scope of the class of goods entered in the relevant certificates of registration of those factories. In the case of the sale of the tractors to Haileyburia Tea Estate Ltd., and to the Indian Bare Earths Ltd., it thought that the use of the tractor had direct relation to the manufacture of tea for sale. To the extent of the turnover of the goods sold to these factories, the Tribunal admitted the claim of the assessee to the lower rate of taxation. It is this order of the Tribunal that is canvassed in the present revision petition, the contention of the department being that in the circumstances of the case, the vie of the Tribunal, that the tractors sold to these two tea factories should be treated as machinery intended for use in the manufacture or processing of tea, is incorrect.
4. It is necessary to examine the relevant provisions of the Act and the Rules before the above point can be dealt with. Section 8(1) of the Act, in so far as it is relevant to our present purposes, provides for the rate of tax of 1 per cent. on the turnover of a dealer '(b) who in the course of inter-State trade or commerce sells to a registered dealer other than the Government goods of the description referred to in Sub-section (3).' Turning no to Sub-section (3) it reads :
The goods referred to in Clause (b) of Sub-section (1)-
(b) in the case of goods other than 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 or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power.
5. This Sub-section is the result of an amendment effected by Act 31 of 1958 which came into force on the 1st of October, 1958. The section as it stood previously was not materially different. But it is worth- while extracting the section as it stood.
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.
6. That this clause refers to goods other than declared goods is admitted and the goods in the present case are also of that description. A bare reading of these two Sub-sections shows that a dealer is liable to tax at one per cent. on his inter-State turnover when he sells to a registered dealer (purchaser) goods other than declared goods which are of the class or classes specified in the certificate of registration of the purchasing dealer.
7. Sub-section (4) is also important. It is obvious that where a dealer of one State sells goods to a registered dealer of another State, whether or not the goods that he sells are of the description that comes within the scope of Sub-section (3) of the Act, would not be a matter within the knowledge of the selling dealer, that is to say, the seller would not be in a position to kno whether the goods which he sells are goods which are specified in the certificate of registration of the purchasing dealer. If the goods are of that description, the selling dealer would be liable to pay 1 per cent. as tax whereas if the goods are not of that description he has to pay 2 per cent. In order to meet this contingency Sub-section (4) of Section 8 as it previously stood provided thus :
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 on a prescribed form obtained from the prescribed authority.
8. It will be noticed that this section is cast in the negative form. It thus appears that normally where a dealer sells goods in the course of inter-State trade, he is liable to pay tax at 2 per cent. Sub-section (4) however states that where the selling dealer furnishes the declaration duly signed by the purchasing dealer containing certain prescribed particulars, then the selling dealer is entitled to the lower rate of taxation provided by Section 8(1) of the Act. Turning no to the rules which prescribed the requirements in this regard, the relevant Rules are 12 and 13 of the Central Sales Tax (Registration and Turnover) Rules, 1957. The declaration referred to in Section 8, Sub-section (4), is in form 'C. Every purchasing dealer is required to furnish to his seller a form of declaration in form 'C duly signed by him. The purchasing dealer declares thereby that the goods he purchases are required for the purpose of-
(2) use in manufacture or processing of goods for sale etc., which ever should apply to the particular case and has also to certify that these goods are covered by his certificate of registration. This form of declaration so obtained by the selling dealer has to be submitted by the selling dealer along with his returns. The Central Sales Tax (Madras) Rules, 1957, make detailed provisions in this regard. That, in the present case, the purchasing dealer of Kerala State did furnish the required declarations in form 'C is not denied. The question therefore resolves itself into ascertaining whether, in so far as the selling dealer whose turnover is brought to tax is in question, he has complied with the requirements of the la and brought himself within the scope of Section 8(1) of the Act entitling him to the lower rate of taxation thereunder.
9. There is no doubt that in the present case when the assessee Messrs Stanes Motors sold the tractors to the tea estates in question, they were placed in possession of the declarations in form 'C and these declarations which are in the prescribed form were submitted in due course along with their returns. Is it open to the department then to say that notwithstanding that the selling dealer has complied with all the requirements, which confer upon him the benefit of Section 8(1) of the Act, the department can still examine whether the goods that were sold were in fact goods which were utilized by the purchasing dealer in the manner set out in Section 8(3) of the Act and whether, if the purchasing dealer is guilty of misuse of the goods for purposes other than those mentioned in his certificate of registration, the selling dealer can be denied the benefit of Section 8(1) of the Act ?
10. We have extracted Section 8(3). In so far as that Sub-section requires, the goods in respect of which the lower rate of taxation is made available by Section 8(1) are goods which are specified in the certificate of registration of the purchasing dealer as being intended for certain purposes. The Act and the Rules provide that a purchasing dealer may also register himself as a dealer and in the case of goods other than declared goods, the certificate of registration in form 'B' granted to him sets out the classes of goods as being intended for one or other of the purposes mentioned in Section 8(3)(b) of the Act, that is, whether such goods are intended for resale or for use in the manufacture or processing of the goods for sale etc. The learned Government Pleader does not deny that in the certificates of registration of the two tea estates as against the column 'for use in manufacture or processing of goods for sale' the following goods were set out: 'Machinery and machinery parts, Insecticides, Iron materials, Chemicals, Medicines, Surgical instruments, Diesel oil and Lubricating oils.' Whether or not machinery would include the tractor is not the question that is before us. The question lies within a much narrower compass, viz., whether when the purchasing dealer has furnished the declaration in form 'C' to the selling dealer and that declaration specifies that the goods purchased are covered by the certificate of registration obtained by the purchasing dealer as required either for resale or for use in the manufacture or processing of goods for sale, the selling dealer can yet be held not to have complied with the requirements of the la bringing him within the scope of Section 8(1) of the Act. 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 la 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 must not be forgotten that this is a sale in the course of inter-State trade, the selling dealer doing business in one State and the purchasing dealer in another. It would obviously be impossible for the selling dealer to satisfy himself of the reality of the requirement, of the purchasing dealer. It is precisely for that reason that in so far as the eligibility of the selling dealer to the concessional rate of taxation is concerned the relevant provisions of the Act and the Rules make it dependent only on the production of the declaration from the purchasing dealer. Taking this very case we can hardly imagine it possible for the selling dealer to demand to kno from the purchasing dealer ho and in what manner a tractor, which was the subject-mater of the sale, was intended to be used in the course of manufacture or processing of tea. When the purchasing dealer declares that the subject-matter of the sale is listed in his certificate of registration in form 'B' as required for that purpose and furnishes the declaration in form 'C', the selling dealer is not bound to enter into any examination of the matter. In so far as he is concerned he has placed himself fully within the relevant provisions of the statute and is entitled to the lower rate of taxation.
11. Such of those decisions as arise under the Income-tax Act which decide what is machinery or plant for the purpose of Section 10(2) of that Act have obviously no relevancy here, for, the question before us is not whether the machinery was in fact used or is capable of use for the stated purpose.
12. We may also refer to Section 10 of the Central Sales Tax Act. That provides for the prosecution of a person who 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 of a person who 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; such persons are liable to prosecution and to the punishment provided therein. This is intended to meet the case of a purchasing dealer who makes a false declaration and purchases goods on the basis of such false declaration. But no here can we see any provision in the Act which has the effect of taking the case of a selling dealer outside the scope of Section 8(1) of the Act solely for the reason that the entry of any goods in the certificate of registration of the purchasing dealer does not satisfy the purposes set out in Section 8(3)(b) of the Act.
13. In our view therefore the selling dealer is entitled to depend solely upon the declaration furnished to him by the purchasing dealer; and if that certificate brings the case within Section 8(1) of the Act, whether or not the goods really fall within Section 8(3)(b) of the Act is not a matter which will affect the right of the selling dealer to the benefit of Section 8(1) of the Act. Though we agree with the Appellate Tribunal as regards the final result, we must however observe that it was wholly unnecessary for the Tribunal to have examined the question whether the goods themselves were of the class which would come within the description of goods intended to be used in the manufacture or processing of goods for sale.
14. In the result the petition fails and is dismissed with costs. Counsel's fee Rs. 100.