1. The petitioner is a company incorporated under the Companies Act and carrying on its business at 20, Maharshi Debendra Road, Calcutta-7. The petitioner is a dealer in iron and steel and registered under the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as the said Act). For the period of four quarters ending 31st December, 1967, the petitioner was assessed by the Commercial Tax Officer, respondent No. 1, on the 30th September, 1971, under Section 11(1) of the said Act. In computing the taxable turnover the Commercial Tax Officer rejected the claim made by the petitioner under Section 5(2)(a)(ii) of the said Act on the basis of the declaration form supplied by the purchasers, the registered dealers. The petitioner claimed exemption of a total amount of Rs. 25,89,286.18, but the Commercial Tax Officer disallowed Rs. 1,72,905.62 with respect to sales to M/s. Laxmi Iron & Steel Co., M/s. Bansal Iron & Steel Engineering, and M/s. Krishna Commercial Engineering on the grounds that purchasing dealers' registration certificates were cancelled on 28th April, 1969, 9th November, 1970, 12th April, 1971, and 25th November, 1970, respectively. The Commercial Tax Officer was also of the opinion that no order from the purchasing dealer was produced and payments were made partly in cheque and partly by cash. The declaration forms produced by the petitioner were incomplete inasmuch as the words "used in the generation and distribution of electrical goods, etc." had not been struck out. Being aggrieved by the said order of assessment and disallowance thereunder, the petitioner preferred an appeal before the Assistant Commissioner of Commercial Taxes (North Circle), Calcutta. The said Assistant Commissioner of Commercial Taxes dismissed the appeal by an order dated 28th October, 1972, and confirmed the order of assessment and the views taken by the Commercial Tax Officer. The appellate authority was of the opinion that all the declaration forms were produced by the petitioner did not indicate the purpose for which the purchases had been made. The Assistant Commissioner observed that in the absence of any purchase order and in the context of subsequent course of conduct of all the alleged transactions, it cannot but be doubted that the transactions were not made bonafide with such alleged parties.

2. With respect to four quarters ending 31st December, 1968, the Commercial Tax Officer similarly disallowed the exemption claim under Section 5(2)(a)(ii) of the Act with respect to sales to M/s. Hindusthan Commercial & Engineering Co., 'M/s. Gupta Steel Engineering Co., and M/s. Tarakeswar Steel Supply Co. on the grounds that the registration certificates were cancelled on 25th November, 1970, 20th July, 1972, and 28th September, 1972. The petitioner claimed deduction for Rs. 12,97,029.29. The Commercial Tax Officer disallowed a sum of Rs. 3,26,671.66. The Commercial Tax Officer was of further opinion that the payment received was partly in cash and partly by cheque. In the declaration forms, number of challans and dates were not mentioned. No appeal was preferred against the said order of assessment. With respect to the assessment for four quarters ending 31st December, 1969, the petitioner duly filed returns. The petitioner apprehended that respondent No. 1 will reject the claim made by the petitioner under Section 5(2)(a)(ii) of the Act and thereby a huge demand will be raised against the petitioner and, in that event, the petitioner will suffer substantial loss and irreparable injury. Being aggrieved, the petitioner moved this court in an application under Article 226 of the Constitution and obtained the present rule. An ad interim order of injunction restraining the respondents from proceeding with the impugned order of assessment for the year 1967-68, and not to give any effect to the notice issued for the four quarters ending 31st December, 1969, till the disposal of the rule was issued. By an order of this court the petitioner was directed to furnish security deposit to the extent of Rs. 8,000 by way of bank guarantee and in compliance of the said order the petitioner furnished security on 26th March, 1973.

3. Mr. Chakraborty, appearing on behalf of the petitioner, contended that the respondent acted illegally and arbitrarily in disallowing the claim made under Section 5(2)(a)(ii) of the Act.

4. It is contended by Mr. Chakraborty that in view of the fact that sales were effected during the period when the purchasers were registered dealers under the Act, respondents Nos. 1 and 2 have no authority or jurisdiction to impose any tax on the sales supported by the declaration forms issued by the registered dealers. In the present case, the form of declaration had been properly filled in but challan numbers were not written on the declaration form and the purpose of the purchase had not been stated. Reliance was placed by Mr. Chakraborty on a Bench decision of this Court in Anil Kumar Dutta v. Board of Revenue [1967] 20 S.T.C. 528.

5. In that case it has been held by Banerjee, J., sitting with K. L. Roy, J., that the provisions of Section 5(2) (a) (ii), proviso, read with Rule 27A and the prescribed form should be treated as directory, which need be substantially complied with. It has also been further held that the subsequent cancellation of registration certificate does not invalidate the declaration form given in respect of a purchase prior to such cancellation.

6. My attention was also drawn to the case of Durga Sree Stores v. Board of Revenue [1964] 15 S.T.C. 186, wherein it is held that where the certificate of registration is issued to a registered dealer it contemplates that the purpose of purchase might well be either the purpose of manufacture or resale or any of the alternatives mentioned in the foot-note of the Act, the mere non-striking of any of the alternatives in the declaration form would not be a fatal defect, as all the alternatives taken together, might very well be purpose of purchase.

7. In Phanindra Nath Manna & Co. (P.) Ltd. v. Commercial Tax Officer [1974] 33 S.T.C. 292, this court observed that the subsequent cancellation of certificates of registration of the purchasing dealers cannot have retrospective effect so as to invalidate the declaration forms duly given in respect of purchases effected prior to such cancellation. In order to claim deduction under Section 5(2)(a)(ii) of the Act, the sales of goods must be to a registered dealer. The seller must satisfy himself that the purchaser is a registered dealer and the goods purchased are specified in the certificate. Once he is satisfied on these two matters, his duty is complete.

8. Mr. Roy Choudhury appearing on behalf of the respondents relied upon a Bench decision of this Court in Hindusthan Stationery Works (P.) Ltd. v. Board of Revenue, West Bengal [1971] 27 S.T.C. 394, and contended that when the declaration forms issued by the purchaser did not clearly indicate the purpose for which the purchases were made and the assessee could not produce any purchase order for sales, the petitioner's claim has been rightly disallowed by the Commercial Tax Officer.

9. In Hindusthan Stationery Works (P.) Ltd.'s case, the certificate of registration of the purchasing dealer was cancelled on 7th January, 1957, but the purchaser issued the supporting declaration form up to 23rd February, 1957. The declaration forms which were produced in respect of sales did not indicate the purpose for which the purchases were being made. At page 398 of the Reports, S.P. Mitra, J. (as he then was), observed that when declaration forms of this nature are issued by a dealer whose registration admittedly has been cancelled, the omission to mention the purposes of purchase cannot be treated lightly or considered negligible, particularly in the context of the transactions prior to cancellation which have already been considered by us. In these premises, the authorities, in our opinion, had justifiably refused to entertain the claim of deduction. In my view that decision has not laid down that unless the purpose is mentioned in the declaration form, exemption cannot be granted to the selling dealer. Only in cases where sales have been made subsequent to the cancellation of registration, omission to mention purpose cannot be considered negligible. It is not expected that in each and every transaction of sale, there shall be a purchase order for sale. In the instant case, challans in support of delivery of the goods have been shown in the declaration form. So substantial compliance of declaration form has been made in this case.

10. In the case of State of Madras v. Radio & Electricals Ltd. [1966] 18 S.T.C. 222 (S.C.), provisions similar to Section 5(2)(a)(ii) of the Act as provided in the Central Sales Tax Act, 1956, were considered. A concessional rate of tax is granted to a registered dealer provided that the goods sold are of the classes specified in the certificate of registration of the purchasing dealer and the goods are intended to be used for resale by him or for use in the manufacture of goods for sale, or for use in execution of contracts or for packing of goods for sale. It is held by the Supreme Court that the Act and the Rules did not impose any obligation on the purchasing dealer to declare that the 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 ; and that when the purchasing dealer furnishes certificate in form C without 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.

11. Considering the decisions referred hereinabove, in my view, when a dealer claims exemption under Section 5(2) (a) (ii) of the Act by filing declaration form in support of his claim, he has discharged his onus under Rule 27A. The onus of proving genuineness of the transaction is shifted to the Commercial Tax Officer. There is no obligation on the part of the asses-see and the law does not cast any responsibility upon the assessee to satisfy about the correctness of the declaration. It is true that the mere production of declaration form will not be conclusive, but at the same time it raises a strong presumption in support of the claim for deduction. At the same time it will be open to the Commercial Tax Officer to rebut that presumption. In the instant case, the Commercial Tax Officer did not come to a finding upon evidence that the transactions made by the petitioner were not bona fide. The mere fact that the certificate of registration of the purchasing dealers had been cancelled subsequent to the date of the transactions, could not have any retrospective effect so as to affect the legality or validity of the transaction of sales of earlier dates. If the purpose of the purchase has not been scored out in the declaration form, only for that reason it cannot be said that the declaration form was defective and on the basis of the said declaration no exemption could be granted. Both the Commercial Tax Officer and the Assistant Commissioner of Commercial Taxes proceeded on the basis of mere suspicion. Neither the Commercial Tax Officer nor the Assistant Commissioner of Commercial Taxes came to any firm finding that those impugned transactions were not genuine. In a business transaction sales are often made partly in cash and partly by cheque. Simply because the transaction was in cash, an adverse inference should not be drawn against the genuineness of the transaction. Moreover, "sale" as defined in Section 2(g) of the Act, means any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods involved in the execution of a contract, but does not include a mortgage, hypothecation, charge or pledge. Accordingly, sale can be made either by cash or deferred payment as provided in Section 2(g) of the Act. Therefore, considering the facts and circumstances of the case, in my opinion, the impugned order of the Commercial Tax Officer dated 30th September, 1971, and the order of the Assistant Commissioner dated 28th October, 1972, for the period of four quarters ending 31st December, 1967, and order dated 16th November, 1972, passed by the Commercial Tax Officer for the period of four quarters ending 31st December, 1968, must be quashed. As no order has yet been passed with respect to four quarters ending 31st December, 1969, no relief can be granted to the petitioner in the present writ petition.

12. In the result, this rule is made absolute. The impugned orders are set aside. There will be no order as to costs.

13. The petitioner would be at liberty to withdraw the security which has been furnished with the Registrar, Appellate Side, in pursuance of the order of this court.