TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>'H' Form valid despite multi-quarter turnover; complies with Rule 12(10)(b) of CST (R & T) Rules</h1> <h3>M/s. Kathare Enterprises Versus The Additional Commissioner of Commercial Taxes, (Zone-3), The Joint Commissioner of Commercial Taxes (Appeals), Davanagere, The Deputy Commissioner of Commercial Taxes (Audit Bellary), Bellary.</h3> HC allowed the appeal, holding the 'H' Form valid despite containing turnover from more than one quarter. The Court found Rule 12(10)(b) adopts Rule 12(1) ... Validity of the ‘H’ Form when issued containing the turnovers of two quarters - rejection of explanation offered by the assessee on the ground that the ‘H’ Form combined the invoices of the first and third quarters of 2009-10, which was held to be in contravention of Rules 12(1) and 12(10)(b) of the Central Sales Tax (Registration & Turnover) Rules, 1957 - levy of additional tax without rejecting the books of accounts - HELD THAT:- Rule 12(10) mandates the declaration of transactions referred to in Section 5(4) of the Act in the ‘H’ Form and their submission to the prescribed authority. Clause (b) of sub-rule (10) of Rule 12 adopts the procedure regarding the manner of the form, custody, maintenance of records, and certification, as applicable to declarations in the ‘C’ Form prescribed under these Rules. Rules 12(1) and 12(10)(b) regulate the issuance of ‘C’ and ‘D’ Forms - The second proviso to Rule 12(1) states that a single declaration may cover all transactions of sale which took place in a quarter of a financial year between the same two dealers. A plain reading of this proviso, prima facie, indicates that a declaration in the ‘C’ Form can cover all transactions of sale in a quarter of a financial year between the same two dealers. The Andhra Pradesh High Court in Mahabaleshwarappa [2011 (4) TMI 1237 - ANDHRA PRADESH HIGH COURT], while dealing with Rule 12(10)(a), held that the Rule does not, in any manner, support the view that the assessee is required to file declarations for quarterly periods only, and not for the entire year. It was held that a plain and literal reading of the Rule does not admit the interpretation that a dealer must submit declarations in the ‘H’ Form on a quarterly basis. Be that as it may, in view of the Circular dated 11.04.2014, the stand of the authorities is not sustainable. Rule 12(10) does not mandate that the ‘H’ Form record transactions of sale for a single quarter of a financial year only. By virtue of sub-clause (b) of sub-rule (10) of Rule 12, the provisions of Rule 12(1) are made applicable by adoption. The circular, in relaxation of the requirement of the second proviso to Rule 12(1), allows declarations covering transactions of sale that take place over more than one quarter of a financial year. Although the circular refers specifically to the ‘C’ Form, a conjoint reading of Rule 12(1) and Rule 12(10) indicates that the circular issued regarding the ‘C’ Form applies mutatis mutandis to the ‘H’ Form under Rule 12(10). Hence, the Circular dated 11.04.2014 equally governs the ‘H’ Form under Rule 12(10). It is well settled that, where ambiguity exists in the provisions, the same is to be interpreted in a manner that advances the object intended to be achieved. There is no dispute regarding this settled position of law. The prescribed authority, in its order dated 21.03.2017, has categorically held that the turnover of deemed exports declared in the returns or as recorded in the books of accounts corresponds with each other, and there is no dispute in that regard. Accordingly, the entire transactions and the eligibility for exemption are not in dispute before the prescribed authority, except for the technical objection regarding the entries in the ‘H’ Form. In view of the findings of this Court and the correctness of the ‘H’ Form as discussed hereinabove, it is held that the ‘H’ Form is in conformity with Rule 12(10)(b) of the CST (R & T) Rules. The appeal is allowed. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether a declaration/certificate in Form H that aggregates transactions covering more than one quarter of a financial year is valid under Rule 12(10)(b) read with Rule 12(1) of the Central Sales Tax (Registration & Turnover) Rules? 2. Whether the departmental Circular dated 11.04.2014, which relaxes the quarterly restriction in respect of Form C (and F), applies mutatis mutandis to Form H under Clause (b) of sub-rule (10) of Rule 12? 3. Whether the exercise of suo motu revisional jurisdiction was warranted where the appellate authority adopted a view that is tenable and the only dispute was a technical objection to entries in Form H? 4. Whether authorities or Courts can decline to apply a circular or analogous precedent to Form H when Rule 12(10)(b) expressly adopts procedural provisions applicable to Form C? 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of Form H covering transactions of more than one quarter Legal framework: Rule 12(1) contains a proviso that a single declaration 'may cover all transactions of sale which take place in a quarter of a Financial Year between the same two dealers'; Rule 12(10)(b) provides that provisions applicable to declaration in Form C shall mutatis mutandis apply to certificate in Form H, including manner of custody, records and use. Precedent treatment: The Andhra Pradesh High Court in Mahabaleshwarappa held Rule 12(10)(a) does not require quarterly filing for Form H and a plain reading does not mandate quarterly-only declarations; that view was relied on by the appellate authority and accepted by the Court. Interpretation and reasoning: A plain reading of Rule 12(1) shows the second proviso permits a single declaration to cover a quarter; Rule 12(10)(b) adopts Rule 12(1) provisions for Form H mutatis mutandis. Read together, Rule 12(10)(b) makes the procedural prescriptions applicable to Form C applicable to Form H. The circular relaxing the quarterly restriction for Form C, when read in conjunction with Rules 12(1) and 12(10)(b), applies to Form H. Therefore, Form H containing turnovers of more than one quarter cannot be invalidated merely because it aggregates multiple quarters. Ratio vs. Obiter: Ratio - Form H is valid when it contains transactions of more than one quarter where Rule 12(10)(b) adopts Rule 12(1) and in view of the administrative relaxation embodied in the circular; Obiter - ancillary remarks on administrative practice and cross-verification by the Additional Commissioner. Conclusion: The Court held the Form H in question conforms to Rule 12(10)(b) and is not invalid for aggregating transactions across two quarters. Issue 2 - Applicability of Circular dated 11.04.2014 to Form H Legal framework: The circular expressly relaxes the second proviso of Rule 12(1) for Form C (and F), treating declarations covering beyond a single quarter as valid and directing cross-verification in cases of doubt. Precedent treatment: The appellate authority and Andhra Pradesh decision adopted the circular's liberal interpretation and applied it to Form H through Rule 12(10)(b). Interpretation and reasoning: Although the circular references Form C (and F) specifically, Rule 12(10)(b) imports the provisions applicable to Form C to Form H mutatis mutandis. Where the rules themselves make procedural aspects of Form C applicable to Form H, administrative relaxations addressing those procedural aspects are capable of equal application to Form H. The Court therefore treated the circular as governing Form H in view of the statutory adoption in Rule 12(10)(b). Ratio vs. Obiter: Ratio - Circular relaxation for quarterly aggregation applies to Form H by virtue of Rule 12(10)(b)'s mutatis mutandis adoption; Obiter - commentary that in case of doubt the prescribed authority may cross-verify genuineness as directed by the circular. Conclusion: The Circular dated 11.04.2014 applies to Form H under Rule 12(10)(b), validating declarations in Form H that cover transactions beyond a single quarter. Issue 3 - Scope of revisional jurisdiction where an alternative, tenable view exists Legal framework: Revisional jurisdiction under Section 9(2) of the CST Act (read with corresponding provision of the KVAT Act) permits correction of orders that are erroneous and prejudicial to revenue. Precedent treatment: Authority recognized that alternative reasonable views on statutory interpretation cannot, by themselves, justify reopening or setting aside an appellate order under revision. Interpretation and reasoning: The appellate authority's view (that Form H aggregating quarters is permissible) is one of the possible, tenable interpretations based on the conjoint reading of Rule 12(1) and Rule 12(10)(b) and the administrative circular. Where the turnover and eligibility for exemption are not in dispute and only a technical objection remains regarding entries in Form H, exercise of suo motu revisional power is not warranted merely because the revisional authority prefers the alternate view. The revisional order was therefore found to be unnecessary and prejudicially interventionist. Ratio vs. Obiter: Ratio - Revisional jurisdiction should not be exercised to supplant a legally tenable alternative view where no substantive dispute on eligibility exists; Obiter - general admonition against invoking revision for technical differences when records and declared turnover correspond. Conclusion: The suo motu revisional order was improperly invoked and was set aside; the appellate authority's order was restored. Issue 4 - Applicability of other cited authorities and limits of applying circulars/analogies Legal framework: Principles of statutory interpretation require strict compliance with conditions where exemption is subject to prescribed conditions; administrative circulars are authoritative within their scope but cannot be extended beyond intended purpose without basis in law. Precedent treatment: Several higher court judgments were cited for propositions about strict compliance and limits on extending notifications/circulars; the Court reviewed those and distinguished them on facts. Interpretation and reasoning: The Court distinguished the cited decisions on facts and applicability. Here, there was an express rule (12(10)(b)) adopting procedural provisions of Form C for Form H; that statutory adoption furnished a legal basis for applying the circular to Form H. Where ambiguity exists in statutory provisions, interpretation that advances the object of the provision and accords with adopted procedural rules is appropriate. Given that the turnover and books were not disputed, the technical non-conformity suggested by the revisional authority did not justify denying benefit. Ratio vs. Obiter: Ratio - Decisions emphasizing strict compliance are distinguishable where the rule itself adopts the procedural regime of another form and an administrative relaxation has been issued in respect of that regime; Obiter - cautionary note about not extending circulars absent statutory adoption. Conclusion: The other authorities cited do not apply to the present facts; the circular's application to Form H is supported by Rule 12(10)(b) and is therefore sustainable.
TaxTMI 
TaxTMI 
