2025 (3) TMI 61 - HC - VAT / Sales Tax

Court Grants 2% Concessional Tax Rate for Inter-State Tendu Leaves Sale Despite Missing Form-C Declaration

M/s. N.P. Trading Company Versus Deputy Secretary, Government Of West Bengal And Ors.

The HC ruled in favor of the petitioner, a selling dealer, granting them the concessional tax rate of 2% for an inter-State sale of Tendu Leaves with the ... Entitlement to concessional rate of tax - inter-state sale - Rejection of application filed by the writ petitioner on the ground that the tribunal cannot issue the direction sought for - HELD THAT:- It is required to be seen as to what remedy the petitioner is entitled to. Form-C declaration have been held to be documents when produce by the dealer, they will be entitled to benefit of the concessional rate of tax or reduced rate of tax. There are several decisions which have been pointed out and even if there is a defect in Form-C declaration issued in respect of an inter-State sale the same can be rectified and if there is a delay in issuance of Form-C declaration by the assessing officer of the purchasing dealer and if the Form-C declaration is issued belatedly, such declaration can be produced before the jurisdictional assessing officer of the selling dealer and the assessment for the relevant period can be revised. In the instant case, the factual position is much better as the respondent/department does not dispute the fact that the transaction done by the writ petitioner with the 7th respondent is a case of inter- State sale. There may be cases where the purchasing dealer might have faced action by the department including that of cancellation of registration and there are decisions which have held that if the registration of the selling dealer is valid during the period when the inter-State sale took place, then the selling dealer would be entitled to the concessional rate of tax. More or less an identical issue was decided by the Division Bench of this court in the case of Commissioner of Commercial Taxes and Another v. Tata Steel Limited and Others [2022 (11) TMI 1274 - CALCUTTA HIGH COURT] - It is informed the said decision though the appeal was filed against the said order before the Hon’ble Supreme Court, subsequently, the State Government accepted the decision and the concessional rate of tax was extended to the assessee therein, namely, Tata Steel Limited. Though this writ petition arises out of a challenge to an order passed by the learned tribunal yet this court is not denude of jurisdiction to do substantial justice in the instant matter in exercise of its powers under Article 226 of the Constitution of India, particularly when facts are not in dispute, that the transaction between the writ petitioner and the 7th respondent is a case of inter-State sale. Conclusion - The petitioner was entitled to the concessional tax rate of 2% for the inter-State sale based on the admitted facts and the 6th respondent's acknowledgment. The writ petition is disposed of by directing the 6th respondent to address a letter to the writ petitioner to the effect that the subject sale transaction is admittedly an inter-State sale, and Form-C declaration is not being able to be issued as the 7th respondent has not filed any application for issuance of Form-C declaration. The writ petition challenged an order by the West Bengal Taxation Tribunal rejecting an application filed by the petitioner, seeking a direction that the tribunal could not issue. The High Court considered the jurisdictional limits of the tribunal and the petitioner's entitlement to relief under Article 226 of the Constitution.The key issue revolved around the petitioner, a selling dealer involved in an inter-State sale of Tendu Leaves with the 7th respondent. While the petitioner obtained Form-C declarations for other inter-State transactions, they could not secure one for the sale with the 7th respondent. Consequently, the assessing officer taxed the petitioner at 5% instead of the concessional rate of 2%. The petitioner's challenge to this assessment before the Revisional Authority was unsuccessful.The Court noted that the 6th respondent, the Assistant Commissioner of Revenue, confirmed the inter-State nature of the sale with the 7th respondent but stated that no Form-C declaration could be issued due to the 7th respondent's failure to apply for it. The Court cited precedents allowing rectification of defects in Form-C declarations and the submission of contemporaneous records to establish the genuineness of inter-State sales for concessional tax rates.In a similar case involving Tata Steel Limited, the State Government accepted a decision granting concessional tax rates. Despite the challenge being against the tribunal's order, the Court invoked its powers under Article 226 to ensure substantial justice where undisputed facts indicated an inter-State sale.The Court directed the 6th respondent to confirm the inter-State nature of the transaction with the 7th respondent and instructed the petitioner's assessing officer in Chhattisgarh to extend the concessional tax rate of 2%. While a direct order to the assessing officer was not feasible due to jurisdictional constraints, the Court mandated compliance within eight weeks.In conclusion, the High Court held that the petitioner was entitled to the concessional tax rate of 2% for the inter-State sale based on the admitted facts and the 6th respondent's acknowledgment. The judgment emphasized the importance of ensuring fair treatment for genuine taxpayers and rectifying procedural hurdles to prevent undue tax burdens.