2020 (3) TMI 303 - HC - VAT and Sales Tax

Court dismisses writ petition due to Form-C misuse and non-payment of penalties, emphasizing conduct's relevance to relief sought.

The Court dismissed the Petitioners' writ petition, citing their misuse of Form-C and failure to pay penalty installments as disqualifying factors for ... Refusal to issue Form C - imposition of penalty under section 8 of the Central Sales Tax Act, 1956 - HELD THAT:- Rule 5 of the Daman Rules, 1973 specifies the authority from whom declaration Form-C may be obtained. Rule 5(1) provides that the dealer shall obtain a declaration Form-C in a manner prescribed subject to the conditions specified in the notification. The Taxation Officer can grant a such number of blank forms as may be reasonable. Rule 4 of the Bombay Rules, 1957 specifies the Authority from which and conditions subject to which Declaration Forms may be obtained. Rule 4(1A)(b) states that if any applicant has at the time of making the application, or during the time his application is pending, defaulted in furnishing any return or returns or in payment of any tax (including any penalty) due from him under any provisions of the Act, the Sales Tax Officer may withhold the issue of such forms to him, until such time as he furnishes. Absent this condition in the Daman Rules, 1973; the Petitioners contend that Form-C cannot be withheld. In the present case, the proceedings have been initiated against the Petitioners for misuse of Form-C. In these proceedings, the Petitioners had sought to pay the penalty by way installments and accepted the order and have not paid the amount. According to the Respondents, the Petitioners have already misused Form-C and penalty is levied thereon. In this context, the Respondents have sought to withhold furnishing of Form-C till the Petitioners resumes payment of installments as undertaken. Prima facie, we find merit in the contention of the Respondents that in such circumstances inherent powers exist in the authority upon noticing an abuse to prevent further abuse. It is, however, not necessary for us to conclude this issue finally for two reasons. Firstly, that we are not inclined to exercise our equity jurisdiction and, secondly, in a pending appeal the Petitioners can take up the contentions as may be available in law - The appeal of the Petitioners in respect of penalty is pending before the Tribunal. If the Petitioner requests the Tribunal to pass an order regarding issuance of Form-C, the Tribunal shall consider the said request on its own merits as per law. Petition dismissed. Issues Involved:1. Non-issuance of Form-C.2. Misuse of Form-C.3. Penalty imposition under the Central Sales Tax Act.4. Equity jurisdiction in writ petitions.5. Conduct of the petitioner in relation to relief sought.Issue-wise Detailed Analysis:1. Non-issuance of Form-C:The Petitioners sought the issuance of Form-C from the Respondents, which was refused on the grounds of non-payment of the second installment of the penalty. The Petitioners argued that under the Central Sales Tax Act and the Central Sales Tax (Goa, Daman, and Diu) Rules, 1973, there is no provision for withholding Form-C due to arrears. They contended that the scheme for issuance of Form-C is self-contained and should not be influenced by arrears, unlike the Central Sales Tax (Bombay) Rules, 1957, which explicitly provide for such withholding. The Petitioners relied on several judgments from other High Courts to support their claim that non-payment of arrears should not affect the issuance of Form-C.2. Misuse of Form-C:The Respondents alleged that the Petitioners misused Form-C by purchasing petrol and diesel for resale but using it in their transportation business, thereby evading tax. This misuse led to the imposition of a penalty under section 10(d) of the Central Sales Tax Act. The Respondents argued that the Petitioners' conduct in misusing Form-C and evading tax justified the withholding of Form-C to prevent further abuse.3. Penalty Imposition:The Respondents imposed a penalty on the Petitioners for misusing Form-C. The Petitioners' appeal against this penalty was pending. The Petitioners had initially agreed to pay the penalty in installments but failed to continue payments after the first installment. The Respondents argued that the Petitioners' failure to honor their payment undertaking was relevant to the relief sought and justified the withholding of Form-C.4. Equity Jurisdiction in Writ Petitions:The Court emphasized that the exercise of equity jurisdiction under Article 226 of the Constitution of India is discretionary and dependent on the conduct of the party seeking relief. The Petitioners' failure to comply with their undertaking to pay the penalty installments was considered relevant to their request for the issuance of Form-C. The Court cited previous judgments to support the principle that a party's conduct is a material factor in deciding whether to grant relief in equity jurisdiction.5. Conduct of the Petitioner in Relation to Relief Sought:The Petitioners' conduct in misusing Form-C and failing to honor their payment undertaking was found to have a direct bearing on the relief sought. The Court held that the Petitioners' conduct disqualified them from invoking equity jurisdiction for the issuance of Form-C. The Court noted that inherent powers exist in the authority to prevent further abuse when misuse is noticed, even if not explicitly provided in the rules.Conclusion:The Court dismissed the Petitioners' writ petition, holding that their conduct in misusing Form-C and failing to pay the penalty installments disqualified them from seeking relief in equity jurisdiction. The Court also noted that the Petitioners could pursue their contentions in the pending appeal before the Tribunal regarding the penalty and issuance of Form-C. The writ petition was dismissed with no costs.