2015 (9) TMI 357 - HC - VAT and Sales Tax

Court quashes tax liability, affirms set-off benefits eligibility within capex limit under Central Sales Tax Act

Indian Oil Corporation Ltd. Versus State of Haryana and others

The court allowed the petition, quashed the tax liability imposed on the petitioner for not submitting the C form, and held that the petitioner was ... Levy of tax – Non-Submission of C-Form – Grant of Exemption Certificate – Petitioner was earlier granted exemption certificate however suo moto revision was taken against said order and petitioner was denied exemption on grounds that he did not submit C form – Whether non submission of C form was valid ground for revoking exemption granted to petitioner – Held that:- As per section 8(4) of CST Act if dealer does not furnish particulars along with C form then was liable to pay tax at 10 per cent., however, if furnished, then was liable to pay tax at four per cent – Admittedly, petitioner was granted exemption from payment of tax with certain capital expenditure for period of nine years – It was held in Yamaha Motor Excorts Limited Versus State of UP [2010 (1) TMI 1060 - ALLAHABAD HIGH COURT] that even if dealer did not submit C form, then in that circumstances also he was eligible to get benefit of set off in accordance with eligibility certificate – Exemption certificate issued to petitioner grants immunity from payment of tax within capex limit for certain period – Such facility cannot be withdrawn – Impugned order hereby quashed – Decided in favour of Assesse. Issues:1. Interpretation of section 8(4) and 8(5) of the Central Sales Tax Act, 1956 regarding tax exemption.2. Eligibility of a dealer for tax exemption without submitting C form.3. Validity of exemption certificate and its impact on tax liability.4. Set-off benefits for a dealer under the exemption certificate.Analysis:1. The petitioner, a company incorporated under the Companies Act, was granted exemption initially under the Central Sales Tax Act. However, a revisional authority imposed a tax liability on the petitioner for non-submission of C form, citing an amendment in section 8(5) of the CST Act. The petitioner challenged this order, arguing that despite not submitting the C form, they were eligible for exemption as per the exemption certificate issued by the appropriate Government.2. The key question before the court was whether the petitioner, even without submitting the C form, was entitled to tax exemption within the capex limit specified in the exemption certificate. The court noted that the exemption policy aimed to encourage investment in backward districts, and the petitioner had been granted exemption based on their capital investment in fixed assets.3. The court analyzed the provisions of section 8(4) and 8(5) of the CST Act, emphasizing that while non-submission of the C form might result in a higher tax rate, it did not automatically disqualify the petitioner from the benefits of the exemption certificate. The court referred to a similar judgment by the Allahabad High Court, which upheld the eligibility of a dealer for set-off benefits under the exemption certificate even without furnishing the C form.4. Ultimately, the court allowed the petition, quashed the impugned order, and held that the petitioner was eligible for set-off benefits within the capex limit specified in the exemption certificate, despite not submitting the C form. The authority was directed to calculate the tax liability of the petitioner accordingly within the capex limit as per the exemption notification. No costs were awarded in the matter.This judgment clarifies the interplay between tax exemption provisions, submission of C form, and eligibility for set-off benefits under an exemption certificate, providing a favorable ruling for the petitioner based on the specific circumstances and legal interpretations involved.