Judgment :- 1. The Revenue is the revision-petitioner in this Tax Revision Case. The respondent-firm is a registered dealer under the Kerala General Sales Tax Act. We are concerned with the assessment year 1983-84. Amongst others, the assessing authority disallowed the exemption to the turnover of Rs. 14,25,172.78 relating to the sale of pepper and betel nuts to four other registered dealers in Mattancherry. The said goods are taxable at the last purchase point. The assessee claimed exemption on the ground that the said goods were sold to registered dealers within the State and so the assessee is not the last purchaser of the said goods in the State liable to tax. The assessee also produced declarations in Form No. 25 obtained from the local purchasers of pepper M/s. Oscar Spices, Jyothi Spices, Amrit Spices, Vanitha Spices. The assessing authority declined to grant the exemption holding that the said local purchasers were only name lenders with bogus registration and that their registrations were cancelled with retrospective effect (in 1989?). The exemption claimed towards sale of pepper in the sum of Rs. 10,19,460.55 and sale of betel nuts amounting to Rs. 4,05,712.23 were disallowed. The plea of the assessee, that the Revenue has no authority to cancel tile-registration certificate of the purchasing dealers with retrospective effect, that the cancellation of the certificates of registration cannot in any way deprive the assessee from getting the exemption pleaded, that the assessee acted bona fide on the basis of declarations and other documents issued by the purchasing dealers at the time when the certificates of registration issued were valid and had not been cancelled and so the exempt ion cannot be denied on the ground of the cancellation of the registration of the purchasing dealers with retrospective effect, were negatived. In the opinion of the assessing authority when the certificates of registration issued to the purchasing dealers were found to be bogus or fictitious and the certificates were cancelled, that will ipso facto deny the plea of exemption pleaded by the selling dealers like the assessee. The said decision was affirmed in appeal by the Deputy Commissioner (Appeals). In the opinion of the assessing authority when the certificates of registration issued to the purchasing dealers were found to be bogus or fictitious and the certificates were cancelled, that will ipso facto deny the plea of exemption pleaded by the selling dealers like the assessee. The said decision was affirmed in appeal by the Deputy Commissioner (Appeals). In further appeal, the Sales-tax Appellate Tribunal, by a majority, held that the only requirement under the K.G.S.T. Act and the Rules for a seller to obtain exemption from tax for goods for which tax is leviable at the last purchase point is the production of Form No. 25 declarations issued by the purchasing dealers and that in the instant case the assessee has produced such declaration Forms issued by the purchasing dealers. It was also found that the Revenue has not established any collusion between the assessee and the purchasing dealers and the denial of exemption for the sole reason that the certificates of registration of the purchasing dealers were cancelled with retrospective effect cannot in any manner act to the prejudice of the assessee, who bona fide obtained Form No. 25 declarations as soon as the various transactions took place. It was found that all the purchasing dealers were having registration under the K.G.S.T. Act, 1963 when the disputed sales were effected. The registration of the purchasing dealers were subsequently cancelled. There is no material that at the time when the assessee sold the goods to the said purchasers, as against Form No. 25 declarations, there was any proceeding against the said purchasers. In the light of the above facts, the Salestax Appellate Tribunal held that exemption cannot be disallowed and the assessee is entitled for the exemption claimed by them being not the last purchaser of the goods taxable at the last purchase point. It is thereafter, the Revenue has filed the above Tax Revision Case assailing the order passed by the Salestax Appellate Tribunal dated 13-2-1990. 2. We heard counsel for the Revenue - Special Government Pleader (Taxes) Shri. N.N. Divakaran Pillai. It was argued that the burden of proof to claim exemption is on the assessee, and if at the time when the assessment is taken up for consideration it is evident that the declarations in Form No. 25 were given by bogus dealers, the assessee is not entitled to the exemption pleaded. It was argued that the burden of proof to claim exemption is on the assessee, and if at the time when the assessment is taken up for consideration it is evident that the declarations in Form No. 25 were given by bogus dealers, the assessee is not entitled to the exemption pleaded. It is for the assessee to prove that Form No. 25 declarations were genuine and the effect of cancellation of the certificates of registration of the purchasing dealers will ipso facto deprive the assessee of the exemption provided by the Act. Form No. 25 declarations filed should be true declarations and if it turns out subsequently that the said declarations are untrue, the assessee is entitled to exemption. The taxing authority is not estopped from challenging the validity of the certificate of registration. Reliance was placed on the bench decision of the Orissa High Court in Nowranglal Agarwal v. State of Orissa [(1965) 16 S.T.C. 271)]. 3. We shall first advert to the relevant statutory provisions, regarding registration, as they stood after Act 19/80. They are: 14. Procedure for registration. (1) An application for registration shall be made to such authority, in such manner and within such period as may be prescribed and shall be accompanied by a fee of one hundred rupees. (2) If the prescribed authority after making such enquiries as it may consider necessary is satisfied (a) that the application is in order; (b) that the particulars furnished therein are correct; and (c) that the security, if any, required to be furnished under sub-section (2A) has been furnished, it shall register the applicant and issue to him a certificate in the prescribed form. (4) The prescribed authority shall have power for good and sufficient reasons to demand from any dealer, who has been registered or has applied for renewal of registration security, or if the dealer has already furnished any security in pursuance of an order under sub-section (2A) additional security, for the proper payment of tax, by him for an amount not exceeding one-half of the tax payable on the turnover of the dealer for the year as estimated by the prescribed authority or three months' compounded rate in the case of applicants who have opted to pay tax under S.7: (7) The prescribed authority shall have power, for good and sufficient reasons, to cancel, modify or amend any registration certificate issued by it." Rule 5(1) of the K.G.S.T. Rules, 1963: "5. Application for registration-(1) Every dealer carrying on business before the commencement of the Act, whose total turnover during the previous year is not less than seven thousand five hundred rupees shall submit to the registering authority of the area in which his principal place of business is situated an application for registration within thirty days from the date on which these rules come into force. (13) The registering authority receiving the application, after making such enquiries as it may consider necessary and after satisfying itself that the prescribed fee has been paid, that the application is in order, that the particulars furnished therein are correct and complete, and that the security, if any, demanded has been paid, register the dealer and grant him a certificate of registration in Form No. 4. (14) If the said authority finds that, the application is not in order or that the particulars contained in the application are incorrect and incomplete or that the security demanded has not been paid, it shall refuse the application: Provided that such refusal shall not be made before giving the applicant an opportunity of being heard: 32(14). Every dealer in goods taxable at the point of last purchase in the State, shall if he is not liable to tax on such goods by reason of his not being the last purchaser in the State obtain a declaration in Form 25 from the person to whom he has sold the goods. Every purchaser shall issue such a declaration to the seller. Every purchaser shall issue such a declaration to the seller. The declaration so obtained shall be submitted to the assessing authority on or before the twenty-fifth of the month succeeding that to which the sales relate along with a statement of such declarations showing the name and address of the dealers to whom the goods were sold within the particulars of the sale bill, quantity, and value, and the total turnover covered by such declarations. THE KERALA GENERAL SALES TAX RULES, 1963 FORM No. 25 Form of declaration to be furnished by a purchasing dealer when goods taxable at the point of last purchase in the State are purchased by him. (See R.32(14) 1. I/We (here enter the name and full postal address of the purchaser) dealer/s in goods taxable at the point of last purchase in the State, have purchased goods of the description given below from Sri. Messers (Here enter the name and full postal address of the seller/s). 2. I/We have included the value of the goods so purchased in our total turnover of the year and my/our turnover in respect of such goods is not less than Rs. 10,000 turnover in respect of tapioca is not less than Rs. 35,000 total turnover is not less than Rs. 25,000 (strike out which is not applicable). 3. My/Our registration certificate number is (here enter R.G. No.). 4. I/We am/are registered dealer(s) on the rolls of the Sales Tax Office (Here enter the name of the Sales Tax Office). Table:#1 Place: Date: Name, Signature and status of the person signing the declaration." 4. In Rehmath Trading Co. v. Sales Tax Officer [1980 KLT 357 = (1980)46 S.T.C. 25), dealing with the above provisions Kochu Thommen, J. observed, at pages 27, 28 & 30, as follows: "Registration is thus the best evidence to indicate whether a person is a dealer who is liable to pay tax under S.5. It is only in respect of sales in favour of such a dealer can the dealer who sells the goods claim the exemption under entry 72. This entry thus postulated only a class of dealers, namely, registered dealers. The absence of registration negatives any claim for exemption on the basis of sales in favour of dealers who are liable to tax. This entry thus postulated only a class of dealers, namely, registered dealers. The absence of registration negatives any claim for exemption on the basis of sales in favour of dealers who are liable to tax. The purpose of the impugned sub-rule (14) of R.32 is to make sure that he who claims exemption as per entry 72 of the First Schedule has complied with the requirements thereof. Sub-rule (14) is thus a rule of evidence which is statutorily prescribed. Section 13 compels the registration of all dealers who are liable to pay tax under S.5. Consequently, the exemption under entry 72 can extend only to those dealers who are in a position to establish that the sales in question were effected in favour of the dealers possessed of certificates of registration which is the best evidence to attract the exemption. Registration is the statutory proof of the status of the purchaser and Form 25 is the surest means of establishing the seller's claim to exemption. This is what is sought to be accomplished by the mandatory provision contained in R.32(14)". The said decision (46 S.T.C.25) was affirmed in appeal Rehmath Trading Co. v. Sales Tax Officer [(1990) 78 S.T.C. 324] and followed in P. Mytheen Kannu v. State of Kerala (78 S.T.C. 328). A Bench of this Court in Deputy Commissioner of Sales Tax v. Zaid and Company [(1987) 67 S.T.C. 77] explained the scope and effect of R.32 (14) of the K.G.S.T. Rules and Form No. 25 declarations, in the following words, at page 78: "The requirement of such declaration as per sub-rule (14) of R.32 is to ensure that the tax due to the Government at the last purchase point is collected from the purchaser at that point and the method of proof of the last purchase point provided for in the sub-rule itself is by the production of the declaration in form 25. Once such a declaration is produced, the incidence of taxation at the last purchase point is on the purchaser who issues the declaration." 5. It should be remembered that a certificate is granted by the prescribed authority only after making such enquiries as he may consider necessary and only if he is satisfied that the application is in order and that the particulars furnished therein are correct etc. It is not as if the certificate is granted mechanically. It should be remembered that a certificate is granted by the prescribed authority only after making such enquiries as he may consider necessary and only if he is satisfied that the application is in order and that the particulars furnished therein are correct etc. It is not as if the certificate is granted mechanically. An enquiry is contemplated, on the basis of which the concerned officer should be satisfied that the person who has applied for registration is a real person, that the particulars furnished in the application are correct, and that in the circumstances, the officer is of opinion that the certificate of registration is to be granted for the applicant. When once such a certificate is granted, it clothes the person with certain privileges. Under S.22of the K.G.S.T. Act, a registered dealer alone can collect tax payable by him on the sale of any goods from the person to whom he sells the goods. It is only a registered dealer who can give Form No.25 declaration, as envisaged by R.32(14) of the K.G.S.T. Rules, for the goods purchased by him, which are taxable at the last purchase point. In effect, by the grant of the certificate of registration, the Revenue holds out to the world at large that the person to whom the certificate is granted is a registered dealer under the Act, entitled to take advantage of all rights and privileges provided by the Act and the Rules. It is true, that it is open to the prescribed authority to cancel the registration certificate for good and sufficient reasons, after providing an opportunity to the concerned dealer of being heard. But, such cancellation of registration can take effect only from the date when the order was so passed. It cannot have any retrospective effect. It cannot in any manner affect the past transactions bonafide entered into by persons, who relying on the certificate of registration, entered into business deals and arranged their affairs. This is all the more so, in a case where no collusion between the selling dealer and the purchaser is neither alleged nor established. We are fortified in taking this view in the light of the following decisions: (1) Santumal v. Asst. This is all the more so, in a case where no collusion between the selling dealer and the purchaser is neither alleged nor established. We are fortified in taking this view in the light of the following decisions: (1) Santumal v. Asst. Commissioner of Sales Tax [(1963) 14 S.T.C.287- Bombay] (2) Chhabra Electric Stores v. The Chief Commissioner, Delhi [(1972) 30 S.T.C. 85 -Delhi]; (3) Devinder Kumar Rewal Kumar v. The State [1972) 30 S.T.C. 352 - P & H]; (4) Commercial Tax Officer v. Jasodalal Ghosal P. Ltd. [(1979) 44 S.T.C. 31-Calcutta] and (5) Suresh Trading Co. v. State of Maharashtra [(1931) 48 S.T.C. 207 - Bombay]. 6. Admittedly, in this case the purchasing dealers were having registration under the K.G.S.T. Act, 1963 when the disputed transactions were effected; the subsequent cancellation of their registration, even if stated to be with retrospective effect, cannot in any manner visit the assessee with adverse consequences. The assessee is entitled to the exemption pleaded, on the basis of Form 25 declarations, issued by the purchasing dealers, who had admittedly valid certificates, on the day when the declarations were issued. 7. In this view of the matter, we concur with the majority decision of the Salestax Appellate Tribunal. The order passed by the Salestax Appellate Tribunal does not suffer from any error of law. The Tax Revision Case is without merit. It is dismissed, in limine. Dated this the 1st day of November, 1990.