2025 (6) TMI 1350 - HC - VAT / Sales Tax

Appellant loses appeal after failing to produce mandatory Forms C and Form-II for 20 years despite multiple opportunities

M/s. Bharat Petroleum Corporation Ltd. Versus State Of Gujarat & Anr.

Gujarat HC dismissed the appeal where appellant failed to produce statutory Form 'C' and Form-II for over 20 years despite multiple opportunities and ... Violation of principles of natural justice - failure to provide sufficient time in production of statutory Form ‘C’ even though there were attempts made by the Appellant in production of above-mentioned Statutory Form - rejection of Appeal merely on the ground of limitation in spite the Appellant had produced sufficient evidence on record at the time of the hearing of the First Appeal - HELD THAT:- On perusal of the facts emerging from the record it is not in dispute that the appellant, even after the remand made by the Tribunal in the first round, has failed to produce Form-II under the Act of 2001 as well as Form-C under the CST Act and therefore, the Tribunal has rightly recorded findings of fact that the appellant, though has been granted time, has not been able to produce the requisite forms for reduced rate of payment of tax for more than 20 years. It is apparent that it is not in dispute that the appellant has failed to produce the requisite Forms for more than 20 years and in view of such factual findings of fact, no interference is called for as the Assessing Officer has rightly passed the Assessment Order in absence of Form, by levy of higher rate of cess, tax and penalty. Conclusion - The statutory requirement of production of Form 'C' and Form-II is mandatory for concessional tax rates; failure to produce these forms justifies levy of higher tax and penalty. Thus, no question of law much less any substantial question of law arises from the impugned orders of the Tribunal - appeal dismissed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Court are as follows:A. Whether the Gujarat Value Added Tax Tribunal was justified in not providing sufficient time for the appellant to produce the statutory Form 'C' despite attempts made by the appellant to produce the same;B. Whether the First Appellate Authority was justified in rejecting the appeal solely on the ground of limitation, notwithstanding the appellant's production of sufficient evidence during the hearing;C. Whether the Tribunal was justified in confirming the order passed by the First Appellate Authority requiring payment of tax due to non-production of Form C amounting to Rs. 1,31,00,950/-;D. Whether the Tribunal was justified in confirming the levy of higher tax along with interest for non-payment related to non-production of Form No. II amounting to Rs. 2,53,07,615/- under the Gujarat Motor Spirit Cess Act, 2001;E. Whether the Tribunal was justified in reducing the penalty from Rs. 42,63,636/- to Rs. 5,55,150/- based on the circular issued by the Commissioner.2. ISSUE-WISE DETAILED ANALYSISIssue A: Sufficiency of time granted for production of statutory Form 'C'Legal Framework and Precedents: Under the Central Sales Tax (Registration and Turnover) Rules, 1957, production of statutory Form 'C' is mandatory to avail concessional tax rates on interstate sales. The non-production of Form 'C' attracts levy of higher tax. The appellant's entitlement to produce Form 'C' within a reasonable time is recognized, but the limitation period and procedural fairness are also relevant considerations.Court's Interpretation and Reasoning: The Tribunal found that the appellant had been granted sufficient time over a period exceeding 20 years to produce the statutory forms, including Form 'C'. Despite remand and opportunities, the appellant failed to produce the requisite forms. The Tribunal agreed with the Government Representative's submission that no further time should be granted considering the protracted delay.Key Evidence and Findings: The appellant's repeated failure to produce Form 'C' despite remand and notices was critical. The Tribunal's order dated 10.02.2011 condoned delay initially but subsequently found that the appellant did not appear before the appellate authority, leading to dismissal of the appeal on merits. The Tribunal's refusal to grant further time was based on the elapsed period exceeding two decades.Application of Law to Facts: The Court upheld the Tribunal's factual finding that the appellant had ample opportunity and time to produce Form 'C' but failed to do so. The prolonged delay negated any entitlement to further extension.Treatment of Competing Arguments: The appellant argued for remand and further opportunity citing procedural irregularities, including non-issuance of mandatory Form-K notice prior to assessment. The Government opposed further time due to the long delay. The Court found the Government's position persuasive, emphasizing finality and procedural compliance.Conclusion: The Tribunal was justified in refusing to grant further time for production of Form 'C'.Issue B: Rejection of appeal by First Appellate Authority on limitation grounds despite evidenceLegal Framework and Precedents: Appeals are subject to limitation periods, but courts and tribunals have discretion to condone delay if sufficient cause is shown. Evidence of attempts to produce statutory forms may constitute sufficient cause.Court's Interpretation and Reasoning: The First Appellate Authority rejected the appellant's appeal on limitation grounds without condoning delay initially. However, the Tribunal later condoned the delay and remanded the matter for merits consideration. The appellant's failure to appear before the appellate authority post-remand resulted in dismissal of the appeal on merits.Key Evidence and Findings: The appellant filed appeals with delay and applications for condonation. The Tribunal condoned delay but the appellant did not pursue the matter effectively on remand. The First Appellate Authority's initial rejection was remedied by the Tribunal's condonation and remand.Application of Law to Facts: The Court found no error in the Tribunal's approach to condone delay and remand. The appellant's failure to appear and prosecute the appeal on remand was critical.Treatment of Competing Arguments: The appellant contended that evidence was produced and delay condonation was warranted. The Government emphasized procedural lapses. The Court balanced these and found the Tribunal's approach appropriate.Conclusion: The First Appellate Authority's initial rejection on limitation was corrected by the Tribunal, and the ultimate dismissal on merits was justified.Issue C: Confirmation of tax payment order due to non-production of Form CLegal Framework and Precedents: Under the CST Act and Motor Spirit Cess Act, non-production of statutory forms such as Form 'C' and Form-II results in levy of tax at higher rates. The burden lies on the dealer to produce such forms to claim concessional rates.Court's Interpretation and Reasoning: The Tribunal confirmed the assessment order imposing higher tax due to non-production of Form 'C' and Form-II. The Court observed that the appellant failed to produce the forms despite ample opportunity, justifying the levy of higher tax.Key Evidence and Findings: The appellant's failure over more than 20 years to produce the required statutory forms was undisputed. The Tribunal's factual findings were consistent and supported by record.Application of Law to Facts: The Court applied the statutory provisions mandating higher tax in absence of statutory forms and found the Tribunal's confirmation of assessment correct.Treatment of Competing Arguments: The appellant argued procedural irregularities and sought remand for production of forms. The Government relied on statutory provisions and the long delay. The Court sided with the Government's position.Conclusion: The Tribunal was justified in confirming the order for payment of higher tax due to non-production of Form 'C' and Form-II.Issue D: Confirmation of levy of higher tax along with interest for non-payment related to non-production of Form No. IILegal Framework and Precedents: The Gujarat Motor Spirit Cess Act, 2001 mandates payment of cess on motor spirit sales. Non-production of Form-II results in levy of higher cess along with interest. The Assessing Officer's order is subject to scrutiny for procedural compliance and correctness of levy.Court's Interpretation and Reasoning: The Tribunal confirmed the levy of cess and interest for non-production of Form-II amounting to Rs. 2,53,07,615/-. The Court found no infirmity in the Tribunal's order as the statutory forms were not produced despite repeated opportunities.Key Evidence and Findings: The appellant's failure to produce Form-II for over 20 years was a critical fact. The Tribunal's order was based on this undisputed fact and statutory provisions.Application of Law to Facts: The Court upheld the statutory levy of higher cess and interest due to non-production of Form-II.Treatment of Competing Arguments: The appellant's plea for further time was rejected due to the long delay. The Government's objection was accepted.Conclusion: The Tribunal was justified in confirming the levy of higher tax and interest for non-production of Form-II.Issue E: Reduction of penalty from Rs. 42,63,636/- to Rs. 5,55,150/- based on Commissioner's circularLegal Framework and Precedents: Section 5(3) of the Gujarat Motor Spirit Cess Act, 2001 empowers imposition of penalty for non-compliance. The Commissioner's circular provides guidance on reduction of penalty in certain circumstances.Court's Interpretation and Reasoning: The Tribunal reduced the penalty from 75% of the tax amount (Rs. 42,63,636/-) to Rs. 5,55,150/- as per the Commissioner's circular. The reduction was agreed upon by the appellant's representative and not opposed by the Government.Key Evidence and Findings: The appellant's admission through its advocate and the Government's non-objection to the reduction were recorded by the Tribunal.Application of Law to Facts: The Court found the penalty reduction to be in accordance with the Commissioner's circular and accepted by both parties.Treatment of Competing Arguments: No objection was raised by the Government; the appellant sought reduction. The Court found the Tribunal's order reasonable and proper.Conclusion: The Tribunal was justified in reducing the penalty as per the Commissioner's circular.3. SIGNIFICANT HOLDINGS'...the appellant, though has been granted time, has not been able to produce the requisite forms for reduced rate of payment of tax for more than 20 years.''...no more time is granted for production of pending forms.''...penalty levied at the rate of 75% by assessing officer is hereby reduced to Rs. 5,55,150/-.'Core principles established include:The statutory requirement of production of Form 'C' and Form-II is mandatory for concessional tax rates; failure to produce these forms justifies levy of higher tax and penalty.Long delay (exceeding two decades) in producing statutory forms militates against granting further time to produce such forms.Tribunal's factual findings on non-production of forms and consequent levy of higher tax and penalty are entitled to deference unless perverse.Penalty reduction in accordance with Commissioner's circular is permissible and binding when agreed by parties.Procedural irregularities such as non-issuance of Form-K notice prior to assessment do not override the appellant's failure to produce statutory forms over a long period.Final determinations on each issue affirm the Tribunal's orders: refusal to grant further time, confirmation of higher tax and interest levy, and reduction of penalty as per circular. The appeals were dismissed for lack of merit.