Court rules refusal of C forms for unpaid tax dues illegal, directs generation by specified date.

The court concluded that the refusal to issue C forms for inter-State purchases based on unpaid self-assessed tax dues was illegal. The circular imposing conditions for C form generation lacked statutory backing and was deemed unenforceable. The court directed the authorities to allow the petitioner to generate C forms by a specified date, subject to other conditions.

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Issues Involved:
1. Refusal to issue C form for inter-State purchases.
2. Legality of the condition requiring payment of self-assessed tax before generating C form.
3. Validity of the circular dated 16.11.2009 imposing conditions for C form generation.

Issue-wise Detailed Analysis:

1. Refusal to issue C form for inter-State purchases:
The petitioner, an authorized dealer registered under the Gujarat Value Added Tax Act (VAT Act) and the Central Sales Tax Act (CST Act), challenged the respondent authorities' refusal to issue C form for inter-State purchases of vehicles. The petitioner argued that this refusal, based on unpaid VAT dues, was causing hardships for the petitioner and the selling dealers by preventing them from benefiting from the reduced tax rate on inter-State sales.

2. Legality of the condition requiring payment of self-assessed tax before generating C form:
The court examined whether it was legally permissible for the department to refuse the issuance of C form based on unpaid self-assessed tax dues. The petitioner had not deposited the collected VAT for the period between 01.04.2015 and 31.03.2016, amounting to more than Rs. 6 crores. The department's system, based on a circular dated 16.11.2009, did not permit the generation of C forms if the dealer had not paid the self-assessed tax. The court noted that the VAT Act contains detailed provisions for the assessment, reassessment, and collection of tax, and there is no specific rule linking the issuance of C forms to the payment of VAT dues.

3. Validity of the circular dated 16.11.2009 imposing conditions for C form generation:
The court scrutinized the circular dated 16.11.2009, which mandated that dealers must have paid all self-assessed taxes as per their quarterly returns to generate C forms online. The court observed that this circular was an executive instruction and not a statutory provision. The rule-making powers under Section 13 of the CST Act allow the State Government to frame rules, but such rules must be consistent with the Act and cannot be substituted by executive instructions. The court held that the circular lacked the statutory backing required to enforce such a condition for C form issuance.

Conclusion:
The court concluded that the respondents' action of not allowing the petitioner to generate C forms solely on the ground of unpaid self-assessed tax under the VAT Act was illegal. The court directed the respondents to permit the petitioner to generate C forms, subject to the fulfillment of other conditions, by 31.08.2017. The petition was disposed of accordingly.

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