B. P. Jeevan Reddy, J. - (1.) These appeals are preferred against the judgment of a Division Bench of the Rajasthan High Court allowing a batch of special appeals filed by the respondents-assessees. The special appeals were preferred against the common judgment of a learned single Judge of that Court dismissing the writ petitions filed by them. The matter arises under the Central Sales Tax Act, 1956.
(2.) The respondents-assessees are manufacturers and/or dealers in edible oils and stainless steel sheets. During the relevant years, they effected a large number of inter-State sales to various dealers in Bombay and Gujarat. They obtained C-forms from the purchasing dealers and submitted them in their assessment proceedings. On survey and inquiry, it was found that many of the C-forms were either not valid or not genuine. Some of them were found to have been issued to dealers other than the respondents. Accordingly, anti-evasion proceeding were commenced against the respondents. Notices were issued calling upon them to show-cause why additional tax and penalty be not levied and recovered from them. It is at that stage that the respondents approached the Rajasthan High Court by way of writ petitions contending that since the inter-State sales effected by them are covered by the Exemption Notification dated 26th December, 1986/17th April, 1990, and because the said notifications do not require the production of a C-form as a condition for availing the exemption provided thereby, they were under no obligation to produce the same and no action can be taken against them for producing alleged invalid or spurious C-forms. It was, of course, their case that if the C-forms are found to be invalid or spurious, the responsibility lies upon the purchasing dealers who issued them and that they themselves were in no way responsible therefor. The learned single Judge disagreed with the legal submission (based upon Exemption Notifications) put forward by the respondents and missed their writ petitions. On appeal, however, the Division Bench has upheld the respondents' contention and allowed the special appeals (and the writ petitions) filed by the respondents.
(3.) Section 8 of the Central Sales Tax Act prescribes the rates of tax on inter-State sales. Subsection (1) provides that "Every dealer, who in the course of inter-State trade or commerce- (a) sells to the Government any goods; or (b) sells to a registered dealer, other than the Government, goods of the description referred to in sub-section (3); shall be liable to pay tax under this Act, which shall be four per cent of his turnover," Sub-section (2) says that inter-State sales not falling under sub-section (1) shall be liable to be charged at the higher rates mentioned therein. Sub-section (3) specifies the goods for the purposes of clause (b) of sub-section (1) of Section 8. It is sufficient to mention that sub-section (3) contemplates certain goods or class of goods being specified in the certificate of registration of the purchasing dealers, which are intended either for resale or for being used as raw-material for manufacturing other goods or for other purposes mentioned in the sub-section.;