Judgment

SHAH, J. : This is a group of appeals filed by the State of Madras against orders passed by the High Court of Judicature at Madras which raises the following common question as to applicability of concessional rate of sales tax to transactions of inter State sale and taxable under the Central Sales Tax Act, 1956 :

"When a purchasing dealer in one State furnishes in Form C prescribed under the Central Sales Tax (Registration and Turnover) Rules, 1957, to the selling dealer in another State a declaration, certifying that the goods ordered, purchased or supplied are covered by the certificate of registration obtained by the purchasing dealer in Form B prescribed under R. 5 (1) of the Central Sales Tax (Registration and Turnover) Rules, 1957 , and that the goods are intended for resale, or for use in manufacture of goods for sale or for use in the execution of contracts, or for packing of goods for resale, and that declaration produced by the selling dealer, is it open to the Sales Tax authority under the Central Sales Tax Act to deny to the selling dealer the benefit of concessional rates under S. 8. (1) of the Central Sales Tax Act, 1956, on the view that the certificate in Form C mentions more purposes than one for which the goods are intended to be used, or that the goods are incapable of being used for the purpose for which they are declared to be purchased, or that the goods are applied for some other purpose not mentioned in the certificate in Form C ?"

2. We may briefly set out the facts which give rise to two out of the appeals : Civil Appeals Nos., 334 and 335 of 1965.

3. Civil Appeal No. 334 of 1965: M/s Radio and Electricals Ltd.-respondents in this appeal-carry on business in the State of Madras in electrical equipment and are registered as dealers under the Central Sales Tax Act. The Bombay State Electricity Board, Saurashtra Division, which is engaged in the production of electric energy purchased transformers and other goods of the total value of Rs. 1,42,020 from M/s. Radio and Electricals Ltd.; and the latter claimed in proceeding for assessment for Central sales tax for the year 1957-58 that they were liable to pay tax at the rate of 1 per cent on the turnover under S. 8 (1) of the Central Sales Tax Act. The Deputy Commercial Tax Officer rejected the claim on the ground that the Bombay State Electricity Board was not a dealer engaged in selling goods and merely because they held a registration certificate, the goods sold to the Board could not be admitted to the concessional rate of tax under S. 8 (1) of the Act. The Appellate Assistant Commissioner of Commercial Taxes confirmed the order on the ground that transformers and other goods purchased by the Electricity Board for use in the production of electrical energy were not intended to be used in the manufacture of goods for sale within the meaning of S. 8 (3) (b) of the Central Sales-Tax Act, because electricity was not at the material time "goods" within the meaning of the Act. The order passed by the Appellate Assistant Commissioner was confirmed by the Sales Tax Appellate Tribunal, Madras. The High Court, following an earlier judgment in Deputy Commissioner of Commercial Taxes, Madras Division v. Manohar Brothers, 1962-13 STC 686: modified the order holding that if the selling dealer within the State produces a certificate in Form C, setting out one or more of the purposes in S. 8(3)(b) of the Act, and if the Sales Tax authorities on behalf of the State do not deny that the purchasing dealer is a registered dealer, the selling dealer will not be denied the concessional rate of tax under the Act, even if it transpire" that the purchasing dealer has utilised the goods for purposes other than those mentioned in the certificate of registration. The High Court then held that out of the certificates in Form C produced by the selling dealer, certificates in respect of a turnover of Rs. 42,080 set out the purpose as "manufacture of electrical energ