JUDGMENT

SABYASACHI MUKKARJI, J.:— This is an appeal by special leave from the decision of the High Court of Allahabad in Sales Tax Reference No. 603 of 1971 under S. 11(5) of the U. P. Sales Tax Act, 1948 (hereinafter called the Act). The question referred to the High Court under S. 11(5) of the Act was as follows :-

"Whether, on the facts and in the circumstances of the case, the dealer could be declared non-taxable on sales of yam for Rs. 8,70,810/-, which he made against IIIA Forms though the purchaser instead of selling the said yarn in the same condition consumed the same?"

2. The Division Bench of the Allahabad High Court. was of the opinion that the controversy raised in the reference was covered by the decision of the Full Bench of the said High Court in Commr. Sales Tax, Uttar Pradesh v. Shankar Lal Chandra Prakash (1970) 26 STC 386 where it was hold that the certificate in Form IIIA was only a prima facie evidence of the fact that the goods had not been sold to a consumer. The Division Bench of the Allahabad High Court was further of the opinion that that certificate was not conclusive evidence and the department could go behind the certificate and if it found that the goods had not been resold in accordance with the certificate given in Form IIIA and had been consumed, in such a case the department could ignore the certificate and levy tax on the selling dealer. In those circumstances the revising authority was wrong, according to the High Court, in holding that the assessee was not liable to tax even if the department had found that the yam had been consumed by the purchaser and not re-sold. The Division Bench answered the question in the negative in favour of the Commissioner and against the assessee. The assessee has come up in appeal as mentioned hereinbefore by special leave.

3. In order to appreciate the controversy, it is necessary to refer to certain facts and findings.

4. The assessee at the relevant time was a dealer in cotton yarn at Moradabad. In the Assessment year 1960-61, the Sales-tax Officer hid granted exemption to the dealer on the turnover of cotton yarn amounting to Rs. 8,70,810/- on the basis of Form III-A filed by the assessee. The turnover of cotton yam was taxable under Section 3AA at the point of sale to the consumers. The assessee filed certificate in Form IIIA from the purchasers. Later, the Sales Tax Officer had received certain information that the purchasing dealer of cotton yarn had not actually sold it but had consumed it himself. Hence the proceedings were, taken against the assessee under section 21 of the Act to reopen the assessment for the assessment, year 1960-61.

5. In view of the nature of the findings made, it would be relevant to refer to the order under S. 21 of the Act. As mentioned hereinbefore, the assessee was a registered dealer and was originally assessed for the year 1960-61 under section 41(5) of the Act on a net turnover of Rs. 20,31,897.58 to a tax of Rs. 38,027.60 vide assessment order dated 11th January, 1963 by the Sales Tax Officer,

6. The attention of the dealer was drawn to the letter of the Sales Tax Officer, Bijnor. A list of dealers to whom sales were made was also obtained from the dealers and the Sales-tax Officer in his order under S. 21 of the Act had stated that the same was verified. In the list there were five names indicating the amount of cotton yarn sold to them. The Sales Tax Officer in his order under S. 21 had stated that on verification, it was learnt that two dealers had consumed the entire cotton yarn in manufacturing handloom cloth and another dealer had consumed the yarn of Rs. 44,676.12 only out of the amount of Rs. 55,991.87 sold to him and he had resold the balance in the same condition and paid the sales tax due thereon. It was further recorded that dealer No. 2 in the said list had purchased cotton, yarn worth Rs. 60,514.87 and not for Rs. 55,991.87 as given by the Kanth dealer. The other dealer, namely dealer No. 4 mentioned in the lis