JUDGMENT Rajes Kumar, J.
1. This is a revision filed by the Commissioner of Sales Tax under Section 11 of the U. P. Sales Tax Act, 1948 (hereinafter referred to as "the Act") against the order of Tribunal dated April 12,1991 relating to the assessment year 1972-73.
2. Brief facts of the case are that the dealer-opposite party, was a Government Company and was engaged in the business of manufacture and sale of rosin turpentine oil. During the year under consideration, the dealer had sold turpentine oil for Rs. 28,71,232 to M/s. Campher and Allied Products, Bareilly and claimed the rebate on such sale under Section 5 read with Rule 27-D. The dealer duly filed declaration in forms VII-G and VII-H before the assessing authority as required under Rule 27-D (3) after receiving them from the purchasing dealer, M/s. Campher and Allied Products. The assessing authority has disallowed the claim of rebate on the ground that M/s. Campher and Allied Products had shown the stock transfer of the finished goods manufactured out of the rosin turpentine oil and therefore, condition of the rebate as contemplated under Rule 27-D was not fulfilled. Dealer filed the appeal before the Deputy Commissioner (Appeals), Sales Tax, Bareilly and Deputy Commissioner (Appeals), allowed the claim of rebate. Commissioner of Sales Tax filed the appeal before Tribunal which was rejected. Being aggrieved by the order of Tribunal, the present revision has been filed.
3. I have heard Sri M. R. Jaiswal, learned Standing Counsel and Sri Bharat Ji Agrawal, learned Senior Counsel appearing on behalf of the dealer.
4. Learned Standing Counsel contended that under Rule 27-D rebate was eligible in case the finished product manufactured out of oil was sold inside the State of U. P. or in the course of export outside the territory of India and the rebate was not eligible in case the finished goods was stock transferred to the depot or to consignment agent outside the State of U. P. and in the present case it was found that M/s. Campher and Allied Products Ltd., to whom turpentine oil was sold, despatched the finished goods by way of stock transfer and hence the rebate was not eligible under Rule 27-D. The Deputy Commissioner (Appeals) and the Tribunal had allowed the rebate on the ground that the Rule 27-D contemplated the filing of forms VII-G and VII-H after obtaining form from the purchasing party and the dealer had filed the said forms before assessing authority in which no defect was found and hence the rebate was eligible. Learned Counsel for the dealer submitted that under Rule 27-D (3) for the claim of the rebate, the selling dealer was required to file declaration in form VII-G and form VII-H which was to be obtained from the purchasing dealer to whom the oils were consumed, duly verified by the Sales Tax Officer in whose jurisdiction industrial premises of such dealer was situated. In the present case, the dealer-opposite party had filed such forms in which no defect was found. He submitted that once the requisite declaration forms were filed the rebate was eligible notwithstanding that it is found that the dealer who had issued the form had not complied with the requirement of Rule 27-D. He submitted that it was not the obligatory on the part of the applicant to make further enquiry or verification about the activity of the purchasing dealer. In case the purchasing dealer had made the wrong declaration or disposed of the finished goods otherwise than in the manner prescribed in the rule then in such situation, the selling dealer cannot be held responsible and necessary action can be taken against the purchasing dealer. In support of its contention, he relied upon the Supreme Court judgment in the case of State of Madras v. Radio and Electricals Ltd. reported in [1966] 18 STC 222, the decision of this Court in the case of Bharat Iron Stores v. Commissioner of Sales Tax reported in [1994] UPTC 130, Indra Steels Private Ltd. v. Commissioner of Sales Tax reported in [1995] UPTC 4 and Gaurav Traders v. C.S.T. reported in [1996] NTN 262.
5. Rule 27-D read as follows:
Rule 27-D. Rebate on oils other than vanaspati and groundnut oils.--(1) On the tax levied on oils produced in Uttar Pradesh, other than vanaspati and groundnut oils sold to the registered oil-based industries within Uttar Pradesh and used by such industries as raw material in the manufacture of finished products for sale in Uttar Pradesh or in the course of inter-State trade or commerce or in the course of export outside the territory of India, a rebate at such rate as may be notified from time to time under Section 5 shall be allowed to the dealer registered in Uttar Pradesh, provided:
(a) such are actually consumed as raw material in the manufacture of finished products within the State within six months of their sale to the oil-based industries ;
(b) a proof of such consumption is obtained and furnished ; and
(c) a proof of the refund of an equal amount of tax realised from the purchaser is furnished.
(2) Any dealer claiming rebate under Sub-rule (1) may do so on furnishing to the Sales Tax Officer of his circle a declaration in form VII-G within three months of the expiry of the period referred to in Clause (a) of Sub-rule (1) above, and produce before the said officer proof of such sale.
(3) The dealer shall also submit to the Sales Tax Officer along with the declaration in form VII-G referred to in Sub-rule (2) above, declaration in form VII-H from the dealer to whom oils were sold, and by whom they were consumed, duly verified by the Sales Tax Officer in whose jurisdiction the industrial premises of such dealer is situated.
6. Rule 27-D contemplates the rebate on tax levied on oil produced in U. P. sold to the registered oil-based industry and used by such industry as raw material in the manufacture of finished product for sale in U. P. or in course of export outside the territory of India subject to the condition (a) that such goods is actually consumed as raw material in the manufacture of finished product within six months of their sale, (b) proof of such consumption is obtained and furnished, and (c) a proof of refund of equal amount of tax realised from the purchaser is furnished, (d) any dealer claiming rebate under Sub-section (1) was required to furnish to the Sales Tax Officer of circle a declaration in form VII-G within three months of the expiry of the period referred to in Clause (a) of Sub-rule (1), i.e., six months. By Sub-rule (3) the dealer was also required to submit to the Sales Tax Officer along with declaration in form VII-G a declaration in form VII-H obtained from the dealer who had consumed the oils duly verified by the Sales Tax Officer in whose jurisdiction industrial premises of such dealer were situated. Form VII-G and form VII-H were to be issued by the dealer who had purchased oil and was required to consume it in the manufacturing of the finished product duly verified by the Sales Tax Officer. Apart from the aforesaid conditions required to be satisfied by the selling dealer no other condition was required to be satisfied. The rule does not contemplate that the selling dealer was required to satisfy that the manufactured finished goods were actually sold inside the State of U.P. or in the course of export outside the territory of India.
7. In the case of State of Madras v. Radio and Electricals Ltd. , the dealer had sold the goods against form C. The claim of concessional rate of tax was refused against such form C on the ground that the purchaser had not used the goods in the manufacturing of the goods for sale within the meaning of Section 8(3)(b) of the Central Sales Tax Act. The honourable Supreme Court held as follows:
The Act and the Rules do not impose an obligation upon the purchasing dealer to declare that goods purchased by him are intended to be used for one purpose only, even though under his certificate of registration he is entitled to purchase goods of the classes mentioned in Section 8(3) (b) for more purposes than one. When the purchasing dealer furnishes a certificate in form C without striking out any of the four alternatives, it is a representation that the goods purchased are intended to be used for all or any of the purposes and the certificate complies with the requirements of the Act and the Rules. The sales tax authority assessing the selling dealer is competent to scrutinise the certificate to find out whether the certificate is genuine. He may also, in appropriate cases, when he has reasonable grounds to believe that the goods purchased are not covered by the registration certificate of the purchasing dealer, make an enquiry about the contents of the certificate of registration of the purchasing dealer. But it is not for the tax officer to hold an enquiry whether the goods specified in the certificate of registration of the purchaser can be used by him for any of the purposes mentioned by him in form C, or that the goods purchased have, in fact, not been used for the purpose declared in the certificate.
The seller can have, in transactions of sale and purchase in the course of inter-State trade and commerce, no control over the purchaser. He has only 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 representation is 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. Whether the goods specified in the registration certificate in form B can be used for the purpose is not for the selling dealer to determine.
8. In the case of Bharat Iron Stores v. Commissioner of Sales Tax reported in [1994] UPTC 130 held that "the selling dealer is expected to act only as a careful businessman and the Act does not place on the selling dealer the burden of making all sorts of verification. If there is nothing in form III-A raising a doubt about its genuineness or the genuineness of the purchasing dealer or the fact that the purchasing dealer is a registered dealer, the selling dealer having acted on such a form III-A cannot be burdened with any liability if later on it is found that the purchasing dealer was non-existent or its registration certificate had already been cancelled. What is to be remembered is that form III-A is not a unilateral certificate/declaration prepared by the purchasing dealer itself."
9. In the case of Indra Steels Private Ltd. [1995] UPTC 4 , this Court held that the liability of the selling dealer who accepts form III-A is only to check the forms to ensure that there is no defect on them which can be reasonably detected by an intelligent person. It is not his duty to ensure by all possible means that the form is genuine or is not being misused.
10. In case of Gaurav Traders v. Commissioner of Trade Tax [1996] NTN 262, it was held that "In the present case the assessing authority did not probe deep into the matter and has acted merely on the information that the forms in question were not issued by the sales tax department to the two purchasing dealers referred to above. What was further required to be established was that the present dealer acted in a manner lacking bona fides or that he was in collusion with the purchaser and knowingly accepted fictitious forms. A dealer acting bona fide may be cheated by a purchasing dealer by issue of forms that were not genuine for one reason or the other but merely because some one had cheated the selling dealer, the later cannot be subjected to liability for sales tax without showing that he acted in a manner that lacks the care and caution of a reasonable man".
11. In the present case, the declaration form in form Nos. VII-G and VII-H were found genuine and no defects were found. Therefore, so far as the dealer was concerned, it had complied with the requirement of Rule 27-D and accordingly entitled for benefit of rebate under Rule 27-D. It was not for the dealer to further enquire and to satisfy that the purchasing dealer had sold the manufactured goods inside the State of U.P. or in course of export. In case the purchasing dealer had not sold inside the State of U.P. or in the course of export the finished goods which were manufactured out of the oil and in respect of which declaration in forms VII-G and VII-H were given, the necessary action may be taken only against the purchasing dealer who had issued the wrong declaration.
12. For the reasons stated above, I am of the view that there is no error in the order of Tribunal.
13. In the result, the revision is dismissed.