PHOOIL CHAND GUPTA versus STATE OF ANDHRA PRADESH

Citation: [1997] 1 S.C.R. 420 · Decided: 21-01-1997 · Supreme Court of India · Bench: A.M. AHMADI, SUJATA V. MANOHAR

Judgment (excerpt)

A 
B 
PHOOIL CHAND GUPTA 
v. 
STATE OF ANDHRA PRADESH 
JANUARY 21, 1997 
[A. M. AHMADI, CJ. AND SUJATA V. MANOHAR, J.] 
Central Sales Tax Act, 1956/Central Sales Tax (Registration and Turn-
over) Rules, 1957/Central Sales Tax (Andhra Pradesh) Rules, 1957-Sections 
C 6(2), 3(b ), 8( 1)(3)(4), 13( 1)(3)(4)/Rule 12(1)/Rule 12(3)(ii)--Requirement of 
furnishing Fonn C under Rule 12(3)(ii) of the Central Sales Tax (Andhra 
Pradesh) Rules for securing exemption under Section 6(2) of the Act-Held: 
Not ultra vires the Central Act and the Central Rules--lt is within the ambit 
and scope of rnle-making power of the State under Section 13(3)(4) of the 
Act-It does not rnn counter to any provision in the Act or the Central 
D Rules--Restriction by the State Government to produce F 01111 C as the only 
mode of proof for claiming exemption-Can not be construed as direc-
tolf"Such an interpretation would destroy the ve1y pwpose of the rnle-lf the 
dealer files any other document in addition to F onn 'C', it can be treated as 
mere surplusage and not a substitute of Fonn C. 
E 
F 
The assessee firm, a dealer in oilseeds, was granted exemption on a 
turnover of Mohwa seeds for the assessment years 1971~72 and 1972-73 on 
the plea that the seeds were purchased by the firm while in transit and 
were sold to the dealers outside the State. The Deputy Commissioner 
withdrew the exemption allowed by t~ Assessing Officer holding that the 
assessee had actually purchased the Railway receipts relating to the 
Mohwa seeds from non-resident dealers while the goods were in transit 
from places outside the State and sold to non-resident dealers, and there-
fore the exemption granted was irregular since the transaction fell within 
section 3(b) of the Central Sales Tax Act, 1956 and hence was not eligible 
for exemption in view of Section 6(2) of the Act, unless the dealer furnished 
G a certificate in Form E-1 obtained from the vendor and a declaration in 
Form C received from the registered dealer to whom he sold the goods. 
Since no document in Form C was furnished, it was held that the assessee 
was not entitled to exemption .. On appeal, the Sales Tax Tribunal affirmed 
~ 
this view since the requirement of Rule 12(3)(ii) of the Central ~ales Tax 
H (Andhra Pradesh) Rules wa:> not satisfied. On appeal before the High 
420 
·""· 
P.C. GUPTAv. STATE 
421 
Court it was contended by the assessee that Rule 12(3)(ii) was merely A 
directory and not mandatory and that if it was construed to be mandatory, 
it would be ultra vires the provisions of the Act. The High Court negatived 
both these contentions and dismissed the appeals. Hence the assessee filed 
the present appeals before this Court. 
Dismissing the appeals, this Court 
HELD: 1. Exemption granted under Section 6(2) of the Central Sales 
Tax Act is available as in the case of Section 8(1) to the goods of the 
description referred to in sub-section (3) of Section 8. A conjoint reading 
B 
c 
of various sub-sections of Section 8 of the Central Sales Tax Act shows 
that unless Form C prescribed by Rule 12 (1) of the Central Sales Tax 
(Registration and Turnover) Rules, 1957 is produced as required by sub 
section (4), the concession under sub-section (1) will not be available. 
While granting exemption, certain conditions provided by the sub- section 
have to be met, namely, the sale must be a second or subsequent sale D 
effected in the course of inter-state trade, it must be effected by transfer 
of documents; it must be in respect of goods of the description in section 
8(3); it must be in favour of a registered dealer and the seller too should 
be shown to have purchased the goods from a registered dealer . Thus it 
is clear that the concessional rate under section 8(1) and the exemption 
E 
for the subsequent sale provided by section 6(2) are, in both cases, in 
respect of goods of the description referred to in section 8(3) of the Act. 
While in the case of a sale governed by section 8, sub-section ( 4) thereof 
requires the production of a certificate in Form 'C', in the case of sub-
sequent sale under Section 6(2) the benefit of exemption can be availed of 
only if the dealer effecting the sale furnishes to the prescribed authority a 
F 
certificate in Form E-1. [428-B-E] 
2. It is true that while the proviso to section 6(2) of the Act imposes 
a liability of production of Form 'E-1', Rule 12(3) (ii) of the State Rules 
imposes the additional requirement of filing Form C as well. To s

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