2011 (6) TMI 543 - HC - VAT and Sales Tax

Court denies concessional tax rate on inter-State sales by public sector oil company due to defective C forms.

Bharat Petroleum Corpn. Ltd. Versus State of Kerala

Bharat Petroleum Corpn. Ltd. Versus State of Kerala - TMI, [2011] 45 VST 544 (Ker) Issues Involved:1. Disallowance of concessional rate of tax on inter-State sales due to defective C forms.2. Validity and acceptability of C forms with erasures, substitutions, and manipulations.3. Settlement of tax liability under the amnesty scheme.4. Petitioner's entitlement to relief and refund based on appellate or revisional orders post-amnesty settlement.5. Compliance with statutory provisions for corrections in C forms.Detailed Analysis:1. Disallowance of Concessional Rate of Tax on Inter-State Sales Due to Defective C Forms:The petitioner, a public sector oil company, challenged the orders of the Sales Tax Appellate Tribunal which confirmed the disallowance of a concessional rate of tax on inter-State sales of diesel and other petroleum products for the years 1999-2000 and 2000-01. The C forms filed by the company were found defective and unacceptable. The appellate authority found minor defects in 83 C forms for 1999-2000 and directed their correction, but confirmed disallowance for 155 C forms due to serious defects such as erasures, substitutions, and manipulations. For 2000-01, the situation was similar with variations in the number of C forms and turnover involved.2. Validity and Acceptability of C Forms with Erasures, Substitutions, and Manipulations:The company's contention was that the alleged defects in the C forms did not exist or were insufficient to invalidate them. However, the Tribunal, after verifying the C forms, confirmed the orders of the first appellate authority. The Government Pleader argued that the defects were manipulations by the petitioner, such as erasing original invoice values and substituting them with different figures. The court held that corrections in C forms must be made by the buyer and attested by them, not by the seller, and confirmed that the petitioner's manipulations were impermissible under the Act and Rules.3. Settlement of Tax Liability Under the Amnesty Scheme:The Government Pleader submitted that the company had settled its tax liability under the amnesty scheme, paying 50% of the dues and receiving a full waiver of interest. For 1999-2000, the company settled a liability of Rs. 74.23 crores by paying Rs. 13.547 crores, and for 2000-01, a liability of Rs. 79.70 crores was settled by paying Rs. 15.94 crores. The court noted that the petitioner could pursue revisions if they expected relief exceeding the 50% tax due before the settlement.4. Petitioner's Entitlement to Relief and Refund Based on Appellate or Revisional Orders Post-Amnesty Settlement:The petitioner argued that under section 23(3A), they were entitled to continue proceedings and claim a refund if relief was granted. The Government Pleader countered that any refund would be considered with the original demand, not the amount paid under the amnesty scheme. The court decided not to address the issue of refunds post-amnesty settlement as it did not arise in the present cases.5. Compliance with Statutory Provisions for Corrections in C Forms:The court emphasized that valid C forms must contain details of inter-State sales, such as invoice numbers, dates, and values, as per section 8(4)(a) of the CST Act and rule 12(1) of CST (Registration and Turnover) Rules. Minor defects should be corrected, but serious manipulations invalidate the forms. The court found that the petitioner's practice of filling in details on blank C forms issued in advance by buyers was impermissible. The court granted the petitioner one more opportunity to correct the C forms under strict conditions, including attestation by the issuing dealer and countersignature by the assessing officer of the issuing State, and verification of payment details.Conclusion:The court disposed of the revision cases with specific directions for the petitioner to correct and validate the C forms within three months, failing which the assessments at the full rate would be sustained subject to the amnesty benefit. The assessing officer was directed to return the rejected C forms within one month from the date of production of the judgment copy, provided the petitioner did not file an SLP against the judgment.