Court dismisses application due to pending VAT demands, upholds CST rule validity. Further hearing scheduled.

The court dismissed the application, finding the denial of 'F' Forms justified due to pending VAT demands. The respondents complied with procedural requirements by issuing a reasoned order. The challenge to the validity of Rule 5(4)(ii) of the CST (Delhi) Rules was rejected as the court found it consistent with the CST Act. The main petition was scheduled for further hearing, with parties directed to submit written submissions and relevant judgments within four weeks.

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Issues Involved:

1. Issuance of 'F' Forms for interstate stock transfers.
2. Pending VAT demands and their impact on issuance of 'F' Forms.
3. Compliance with Rule 5(4)(ii) of the CST (Delhi) Rules.
4. Validity of Rule 5(4)(ii) of the CST (Delhi) Rules.

Analysis:

1. Issuance of 'F' Forms for Interstate Stock Transfers:

The petitioner sought an interim relief to direct the respondent to issue 'F' Forms for interstate stock transfers of 'Bullion' from April 2016 to June 2017. The petitioner argued that these transactions were not sales but transfers between branches, qualifying for benefits under Section 6-A of the CST Act. Despite accessing the online platform and uploading necessary documents, the petitioner was denied 'F' Forms due to pending VAT demands.

2. Pending VAT Demands and Their Impact on Issuance of 'F' Forms:

The petitioner contended that the VAT demands were primarily due to the sale of repossessed vehicles, which were under challenge in various courts, including the Supreme Court and High Court. The Supreme Court had restrained coercive action for certain financial years, and some demands were stayed by the Objection Hearing Authority. The petitioner argued that these pending demands should not obstruct the issuance of 'F' Forms.

The respondents presented a chart detailing the pending demands for various financial years, which the petitioner did not deny. The respondents argued that, as per Circular No. 13 of 2013-14, no forms, including 'F' Forms, could be issued if dues were pending. They maintained that the refusal to issue 'F' Forms was justified due to the pending demands.

3. Compliance with Rule 5(4)(ii) of the CST (Delhi) Rules:

The petitioner argued that the respondents failed to comply with Rule 5(4)(ii) of the CST (Delhi) Rules, which mandates a hearing and a reasoned order before denying 'F' Forms. The petitioner relied on past judgments where the court held that denial without a reasoned order was non-compliant. However, the respondents had issued an order on June 16, 2021, giving reasons for the denial. The court noted that this order was not challenged and thus, the past judgments cited by the petitioner did not apply.

4. Validity of Rule 5(4)(ii) of the CST (Delhi) Rules:

The petitioner challenged the validity of Rule 5(4)(ii), arguing it was ultra vires the CST Act. The court, however, found no merit in this challenge. It noted that Section 13(3) and 13(4)(e) of the CST Act empowers State Governments to make rules, including conditions for obtaining 'F' Forms. Therefore, Rule 5(4)(ii) was within the legal framework and not inconsistent with the CST Act.

Conclusion:

The court dismissed the application, finding no merit in the petitioner's arguments. The pending VAT demands justified the denial of 'F' Forms, and the respondents had complied with procedural requirements by issuing a reasoned order. The challenge to Rule 5(4)(ii) was also found to be without substance. The main petition was scheduled for further hearing, with parties directed to file short-written submissions and relevant judgments within four weeks.

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