TaxTMI 
TaxTMI 
2016 (6) TMI 504
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....cy Indian Oil Corporation Limited Versus The Commercial Tax Officer-1, The Union Territory of Puducherry, The Deputy Commissioner (CT)-IV, Shri Maruthi Agencies Union of India ,M/s. Sri Rajeswari Agencies Versus The Additional Deputy Commercial Tax Officer-II, Commercial Taxes For the Petitioners : Mr.S.Raveekumar For the Respondent : Mr.A.N.R.Jayapratap, G.A.(Taxes), Mrs. N. Mala, AGP (P) JUDGMENT V. Ramasubramanian, J Bharat Petroleum Corporation Limited and Indian Oil Corporation Limited have appointed several dealers in the Union Territory of Puducherry. Two of those dealers by name M/s.Shri Maruthi Agencies and M/s.Amurtham Agencies, committed default in payment of the local value added tax under the Puducherry Value Added Tax Act, 2007 (hereinafter referred to as the Puducherry VAT Act, 2007). Therefore, the Appropriate Authority under the Central Sales Tax Act, 1956 (hereinafter referred to as the CST Act), (who naturally happens to be an Officer of the Union Territory of Puducherry), refused to issue 'C' Forms to the dealers. This resulted in the Assessing Officers in the State of Tamil Nadu, demanding a higher rate of tax under Section 8(2) of the CS....
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....emanded due to non production of 'C' Forms. Therefore, the BPCL filed three writ petitions in W.P.Nos.127 to 129 of 2015, either challenging the order of assessment of the year 2012-13 or seeking a Declaration that 'C' forms cannot be withheld or seeking a Mandamus to direct the respondents to issue 'C' forms. Similarly, the IOCL came up with three writ petitions in W.P.Nos.4515 to 4517 of 2015 either seeking a Declaration that the Puducherry Authorities cannot withhold 'C' forms or challenging the orders of assessment for the assessment years 2012-13 and 2014-15. 6. In view of the fact that the issues raised in the writ appeals and the writ petitions are common, the writ petitions were directed to be tagged along with the writ appeals and they were taken up together for disposal. 7. We have heard Mr.C.Natarajan, learned Senior Counsel appearing for the two Oil Corporations, Mr.S.Raveekumar, learned counsel appearing for the authorised dealers, Mr.A.N.R.Jayaprathap learned Government Advocate (Taxes) appearing for the State of Tamil Nadu and Mrs.N.Mala, learned Additional Government Pleader (Pondicherry), appearing for the Union Territory of Pu....
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....rry Dismissed Writ of Certiorarified Mandamus to call for & quash the records relating to the proceedings of the respondent in TIN : 34590004067/ 2009-10/23 dated 16 March 2010 and consequently forbear the respondent from denying to issue the statutory C-Forms to the petitioner WRIT PETITIONS S. No WP NO. PETITIONER RESPONDENTS PRAYER DETAILS 1 21556 of 2014 M/s Shri Maruthi Agencies, Pondicherry CTO, Pondicherry Writ of Mandamus directing the Respondent to issue Form C to the Petitioner Petitioner is a dealer of Indian Oil Corporation Ltd. Petitioner had made representations to the respondent for issue of Form C on 14.09.2012, which has not been issued till date and hence this writ petition. 2 15804 of 2014 M/s Amurtham Agencies, Pondicherry Additional DCTO--IW, Pondicherry Writ of Mandamus directing the Respondent to issue form C to the Petitioner Petitioner is a dealer of Bharat Petroleum Corporation Ltd. Petitioner had made representations on 17.03.2014 to the Respondent to issue form C . 3 127 of 2015 M/s Bharat Petroleum Corporation Ltd., Chennai 1. Additio....
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.... and quash the same; and directing R3 to keep pending the finalization of demand against sales to R4 pending issue of form C declarations. 9. As we have indicated earlier, the BPCL and the IOCL, effected sales of petroleum products both within the State of Tamil Nadu as well as to dealers outside the State. The sales that they effected in the course of Inter-State trade and commerce, were to registered dealers and hence the sales are taxable under section 8(1) of the CST Act, 1956, provided the dealers furnish 'C' Forms. The CST Act, 1956 is a legislation enacted in terms of Entry 92A of the Union List in the 7th Schedule to The Constitution. 10. Under Section 6(1) of the CST Act, 1956, every dealer shall be liable to pay tax under the Act on all sales effected in the course of Inter-State trade and commerce. The rate of tax payable by a dealer, who sells goods in the course of Inter-State trade or commerce, to another registered dealer, is stipulated at the concessional rate of 2% under Section 8(1) of the Act, if the goods are of the description contained in Sub-Section (3) of Section 8. In so far as the goods that do not satisfy t....
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....e BPCL and the IOCL, the Assessing Officers of the BPCL and the IOCL in the State of Tamil Nadu, have started demanding central sales tax at 30%, instead of 2%. Therefore, though the actual default in payment of tax was by Shri Maruthi Agencies and Amurtham Agencies and that too, in relation to the Puducherry Value Added Tax, it is the BPCL and the IOCL, which are affected by such default. Therefore, the BPCL and the IOCL have also joined issues with their registered dealers, though not actually supporting the default committed by them. 15. The sum and substance of the grievance of the BPCL and the IOCL is that for the default committed by Shri Maruthi Agencies and Amurtham Agencies in the payment of Puducherry Value Added Tax, these Corporations should not be deprived of the benefit statutorily conferred upon them under Section 8(1) of the CST Act, 1956. 16. Advancing the cause of the BPCL and the IOCL, it is contended by Mr.C.Natarajan, learned Senior Counsel - (i) that once the twin requirements of Section 8(1) are satisfied by these Corporations, the Prescribed Authority in Puducherry should not deprive the benefit of a reduced rate of tax to the Corporations, especial....
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....s to seek a Mandamus to direct the Commercial Tax Officer, Puducherry to issue 'C' Form Declaration. PRELIMINARY OBJECTIONS REGARDING LOCUS: 20. Mrs.N.Mala, learned Additional Government Pleader appearing for the Government of Puducherry contended that BPCL and the IOCL are not registered dealers under the Puducherry VAT Act, 2007 and that they are not the persons aggrieved in so far as the refusal of the Prescribed Authority of the Government of Puducherry to issue 'C' Form Declarations in favour of the registered dealers under the Act. According to the learned Additional Government Pleader, these Oil Corporations do not even have a contractual relationship with the Union Territory of Puducherry. If at all, the Oil Corporations should proceed against their authorised dealers, who are bound, as per the terms and conditions of the contract that they have mutually entered into, either for recovery of damages or for any other relief. 21. To test the above contentions, it is necessary to take note of the provisions of the CST Act, 1956 and two sets of Rules issued thereunder. 22. Section 6(1) of the CST Act, 1956 imposes an obligation upon every dealer....
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.... prescribed particulars in prescribed form obtained from the prescribed authority, the role of the Prescribed Authority goes hand in glove with that of the registered dealer. Unless the registered dealer and the Prescribed Authority come together, the declaration contemplated in Sub-Section (4) cannot be issued. 27. Section 13(4) of the Act empowers the State Government to make rules, prescribing - (i) the Authority from whom (ii) the conditions subject to which and (iii) the fees, subject to payment of which, any form prescribed under Sub-section (4) of Section 8 may be obtained. The rules so framed by the State Government may also prescribe the manner in which, any such form may be used and any such certificate or declaration may be furnished. 28. Therefore, despite fulfilling the conditions stipulated in Sub-section (1) of Section 8, a dealer under the CST Act, 1956 has necessarily to rely upon his purchaser (if he is a registered dealer of the concerned State) and also upon the Prescribed Authority of the concerned State, to get a declaration under Sub-section (4) of Section 8. Since the State Government is empowered by Section 13(4) of CST Act, 1956, to presc....
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....Puducherry) is that what is conferred by Section 8(1), is a concession and not a right. Therefore, it is contended by the learned Additional Government Pleader that a Mandamus of the nature sought for cannot be issued. 33. But, we do not think so. A liability is imposed under Section 8(2) of the Act upon every dealer to pay tax at the rate stipulated by the local Sales Tax Law of the appropriate State, on his turnover, which relates to sale of goods in the course of Inter-State trade or commerce. But, if such sale happens to be (i) to a registered dealer and (ii) that too of goods described in Sub-Section (3), the rate of tax will only be 2%. Thus the rate of tax at least in respect of sales covered by Section 8(1) is statutorily fixed at 2% and hence, the same cannot be termed as a concession. If the statute fixes the rate of tax, the payment of the same is a statutory obligation. Every obligation shall correspond only to a right and not to a concession. 34. Moreover, the Explanation to Sub-section (2) of Section 8 is a direct answer to the contention of the learned Additional Government Pleader. Under the Explanation to Sub-section (2), a dealer will be deemed to be a deale....
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....held as follows : "We are of the view that the petition is well-founded. There is no provision in the Act which authorised the Commercial Tax Officer to refuse to provide the assessee with C forms. If the assessee misused the C form, that will be punishable under Section 10 of the Central Act. Beyond that, it has no effect, not even in tax. The Commercial Tax Officer was not constituted as a policeman to regulate and conduct the assessee along with virtuous path. If the assessee had registered himself under the provisions of the Central Act, he was, as a matter of right, entitled to get C forms from the officer, who had no authority to refuse the same. The petition is therefore allowed with costs." 38. In A.P.Gas Power Corporation Ltd. v. Assistant Commercial Tax Officer [(1998) 109 STC 625], the Andhra Pradesh High Court was concerned with a case as to whether the assessee entered into a contract with another company for the supply, erection and commissioning of gas/ steam turbines for generation of power. The contractor supplied certain equipments, parts and components, which were procured from suppliers outside the State and effected transit sales to the assessee. C-....
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....satisfied, the forms cannot be denied by the appropriate authority. In the above mentioned case, the writ petitioner was a dealer registered under the Pondicherry General Sales Tax as well as the CST Acts. In paragraph 8, it was further held as follows : "It is clear that for issuance of "C" forms, the only conditions that are to be satisfied are that the person claiming "C" form is a registered dealer and that the charges for "C" form were paid and that he produced the challans in proof of having paid the amount for obtaining the "C" form. Once these conditions are satisfied, the authorities are bound to issue "C" form. Whether the "C" forms are properly used or misused, cannot be enquired into at the initial stage of issuance of "C" forms. If any person misused the "C" form, he is liable to the penalties as contemplated under the Act. Therefore, the authorities, which issue "C" forms have to issue the forms, once they satisfy the above conditions." 41. In the case of City Tower Hotels (P) Ltd. v. The Commercial Tax Officer [(2003) 131 STC 317 (Mad.)], the petitioner, a hotel group, had earlier filed a writ petition for a direction to the Commercial Tax Officer to issu....
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.... 43. But, we do not agree with the said contention. In all the decisions referred to above, the issuance of C-Declaration Forms, was not denied on the ground of non payment of local sales tax dues. The question of default under the local Sales Tax Act, was not the issue, with which, the Courts were concerned in Chanda Paints and AP Gas Power Corporation. 44. What distinguishes the case hand is the fact that persons, who are the registered dealers under the Puducherry VAT Act, 2007, have committed default in payment of the local VAT. Therefore, the Prescribed Authority of the Government of Puducherry has refused to issue C-Declaration Forms by taking refuge under Section 43 of the Puducherry VAT Act, 2007. Hence, the first contention, based upon the above decisions, cannot be sustained. Contention-2 : 45. The second contention of the learned Senior Counsel for the Oil Corporations is that for a default committed by a registered dealer under a State Enactment, the Prescribed Authority cannot refuse to issue a declaration under a Central Enactment. 46. In order to understand the scope of the second contention raised by the learned Senior Counsel for the Oil Corporati....
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....ales Tax (Registration and Turnover) Rules, 1957 to mean the Authority empowered by the Central Government under Section 9(2) of the Act. 50. Therefore, it is clear that the very same officers, who are entrusted with the assessment and enforcement of the provisions of the Local Sales Tax Law of the State, are also empowered to assess, re-assess and enforce the payment of tax under the Central Enactment. 51. In other words, an officer of the State Government empowered to assess and enforce the provisions of the Local Sales Tax Law of the State, performs a dual role, one under the Local Sales Tax Law of the State and another under the CST Act, 1956. Therefore, it is not possible for him to compartmentalise his mindset and ignore the default committed under one Enactment, while dealing with the question of issuance of "C" declaration forms under another Enactment. Hence it is futile to contend that for a default committed under a State Enactment, the Prescribed Authority cannot refuse to issue a declaration under the Central Enactment. Contention-3: 52. The third contention of the Senior Counsel is that the mandate of a Parliamentary Enactment cannot be defeated by a....
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....rom Section 13(4) do not extend to the withholding of any declaration form under the CST Act, 1956. Therefore, the third contention of the learned Senior Counsel for the Oil Corporations is that withholding of the C-Forms go beyond the procedural provisions, for which, an officer of the State Government is nominated as the Prescribed Authority under the Central enactment. 56. In support of the above contention, Mr.S.Raveekumar, learned counsel for the authorised dealers - assessees placed strong reliance upon the decision of the Madhya Pradesh High court in Dawar Brothers vs State Of Madhya Pradesh [(1979) 44 STC 286 (MP)]. It is a case where the Sales Tax Authorities refused to issue C-Forms in the purported exercise of their power under Rule 8(1-A)(f) of the M.P. Sales Tax (Central) Rules, 1957. These rules had been issued by the State Government under the rule-making power conferred on it by the Central Act. The said Rule 8(1A)(f) of the M.P. Sales Tax (Central) Rules, 1957, was challenged by the petitioner to be ultra vires the rule-making power conferred on the State Government by the Central Act. The Madhya Pradesh High Court, emphasizing that the State Government was mere....
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....ance of the declaration forms either on the ground that the petitioner had defaulted in furnishing the return under the M.P. General Sales Tax Act, 1958, or that he was in arrears of tax under the said State Act. Therefore, the appellants/ assessees contend that the ratio laid down in this decision would apply with all force to the cases on hand. 58. We have carefully considered the above submissions. 59. This contention of Mr.C.Natarajan, learned Senior Counsel for the Oil Corporations actually has two facets. The first revolves around Sub-Sections (3) and (4) of Section 13 of the CST Act, 1956 that deal with the rule making power of the State Government under the Central Enactment. The second facet is the scope of Section 43 of the Puducherry VAT Act, 2007 and the question as to how the same has to be interpreted in its application to a statutory requirement under the Central Enactment. 60. As we have pointed out earlier, the CST Act, 1956 does not create a hierarchy of Authorities for the administration and enforcement of the Act. While the power and jurisdiction to levy central sales tax is retained by the Government of India under the CST Act, 1956, all procedural asp....
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....ction (4) of Section 13 for resolving the issue raised by the learned Senior Counsel for the appellants/assessees. Section 13(1)(d) reads as follows : "The Central Government may, by Notification in the Official Gazette, make rules providing for - (d) the form in which and the particulars to be contained in any declaration or certificate to be given under this Act, the State of origin of such form or certificate and the time, within which, any such certificate or declaration shall be produced or furnished." 64. Section 13(4)(e) reads as follows : "In particular and without prejudice to the powers conferred by Sub-Section (3), the State Government may make rules for all or any of the following purposes namely - (e) the Authority, from whom, the conditions, subject to which and fees, subject to payment of which, any form of certificate prescribed under Clause (a) of the First Proviso to Sub-Section (2) of Section 6 or of declaration prescribed under Sub-Section (1) of Section 6A or Sub-Section (4) of Section 8 may be obtained, the manner, in which, such forms shall be kept in custody and the records relating thereto maintained and th....
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....aration subject to certain conditions such as (i) that it is in a prescribed form (ii) that it is obtained from the Prescribed Authority (iii) that it contains the prescribed particulars and (iv) that it is furnished within the prescribed time. The expression 'prescribed' is repeated thrice in the substantive part of Sub-Section (4) and once in the Proviso to Sub-Section (4) of Section 8. The power to prescribe is conferred upon the State Government under Section 13(4)(e). Therefore, it is not correct to state that the mandate of a Parliamentary Enactment is sought to be defeated by the State, which is authorized only to regulate the procedure for the administration of the Act. 68. Therefore, the first facet of the third contention that the mandate of a parliamentary enactment is now defeated by a State enactment cannot hold good in the light of the interplay between Section 13(1)(d) and 13(4)(e) of the CST Act, 1956. It is not just an empowerment to prescribe the procedural provisions for the collection of tax, but also a power conferred upon the State to prescribe the conditions, subject to which 'C' Form declarations can be given. 69. The second facet of th....
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....' along with the words 'statutory or other declaration forms'. Let us take a hypothetical situation where the middle portion of Section 43(1) reads as "shall have power to withhold issue of statutory or other declaration forms under this Act". Had it been so, the contention of the appellants/assessees would have been perfectly valid and justified. 72. The law is well settled that Courts are not entitled to supply the casus omissus. Unless we supply the words 'under this Act', to follow the words 'statutory or other declaration forms', we cannot reach the same conclusion that the appellants want us to reach. Therefore, the second facet of the third contention of the learned Senior Counsel for the Oil Corporations cannot be sustained. 73. That takes us to the next part of the third contention, based upon the decision of the Madhya Pradesh High Court in Dawar Brothers. It is true that in Dawar Brothers, the vires of Rule 8(1-A)(f) of the M.P. Sales Tax (Central) Rules, 1957 was under challenge. The said rule empowered the Sales Tax Officer to withhold the issue of the declaration forms, till such time the assessee paid the tax. A Division Bench of the....
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...., had issued a rule in exercise of the power conferred by Section 13(4), prescribing a time limit for the declaration under Section 8(4) of the Central Act to be furnished, the said rule could not have been held to be ultra vires Section 8(4), as held in K.I.Abraham. The effect of the insertion of the Proviso under the Amendment Act 61 of 1972, upon the ratio laid down in K.I.Abraham was not taken note of by the Madhya Pradesh High Court in Dawar Brothers. This is why the Madhya Pradesh High Court came to the conclusion that the phrase 'in the prescribed manner' has to be understood in a restricted sense in the light of Section 8(4) of the Central Act. Therefore, the first reasoning given by the Madhya Pradesh High Court in Dawar Brothers, with utmost respect to the learned Judges, is flawed. 79. The second reasoning of the Madhya Pradesh High Court in Dawar Brothers is that by virtue of Section 9(2) of the CST Act, 1956, the role of the State Government is merely that of an agency of the Central Government to carry out the assessment, re-assessment, collection and enforcement of payment of tax and nothing more. This conclusion was reached by the Madhya Pradesh High Cour....
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....anner as a provision relating to penalty is. Hence, the second reasoning of the Madhya Pradesh High Court, arrived at on the basis of a decision of the Supreme Court that related to the imposition of penalty, cannot be accepted. 83. The third reasoning given by the Madhya Pradesh High Court in Dawar Brothers is that for the entitlement of a concessional rate of tax under Section 8(1), one cannot look beyond the Central Enactment. This reasoning, in our considered view, is also not in tune with the scheme of the Act. As we have indicated earlier, Section 8(1) makes every dealer, who sells goods of the description referred to in Sub-Section (3) to a registered dealer, in the course of Inter-State trade and commerce, to pay tax at the rate of 2% of his turnover or at the rate applicable to the sale or purchase of such goods inside the appropriate State under the Sales Tax Laws of that State, whichever is lower. But, the entitlement or liability to pay tax at the rate stipulated in Section 8(1) is made subject to the fulfillment of the condition stipulated in Sub-Section (4). The condition stipulated in Sub-Section (4) of Section 8 is that a declaration should be furnished in the pr....
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....e provisions available to the State Authorities for the recovery of the dues under the State Enactment and when the State Authorities are empowered even to cancel the certificate of registration, it is not open to the State authorities to rely upon Section 43 of the Puducherry VAT Act, 2007 to withhold a 'C' form declaration under Section 8(4) of the CST Act, 1956. In support of this contention, Mr.S. Raveekumar, learned counsel for the authorized agencies/assessees relies upon a few decisions, which we shall now take up. 88. In Salvicate Bangalore Pvt. Ltd Vs. Sales Tax Officer, 4th Circle, Kochi [(1998) 109 STC 543 (Kerala)], the Authorities refused to issue C-Forms under the CST Act and delivery notes in Form 26 under the Kerala General Sales Tax Act to the petitioner, a registered dealer under both Acts, on the ground that the petitioner company was engaged in execution of works contract and that it had not paid tax for the previous years. Granting relief to the assessee, a learned Judge of the Kerala High Court held that the delivery notes, C-Forms etc., are required by every dealer in the regular course of his day to day business transactions either Intra-State or ....
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....Agencies Vs. Additional Deputy Commercial Tax Officer II Puducherry [(2011) 40 VST 249 (Mad.)]. The petitioner in that case was also a dealer of petroleum products and the dealership was granted by the Indian Oil Corporation. The petitioner was denied C-Forms on the ground that it had arrears of tax. The short question that arose for consideration was whether non-payment of arrears of tax and penalty would dis-entitle the petitioner from getting C- Form license. This Court held that when the respondent could proceed against the petitioner for non-payment of tax or the penalty by attaching the sale proceeds from the properties or even the bank account of the petitioner, the respondent had no power to deny C-Form license to the petitioners. This Court further held that Section 9(2) of the CST Act, 1956 does not contemplate refusal of C-Form license for non-payment of tax or penalty and that where there is no prohibition to issue C-Form license to the petitioner on the ground that the petitioner has not paid the tax due and penalty, the respondent cannot deny the issuance of C-Form license to the petitioner. 92. But, unfortunately, the decision in Sri Rajeswari Agencies, has not ta....
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....ules, 1957 so long as his certificate of registration remains valid. 95. But, the difference between the case before the Orissa High Court and the cases on hand is that the Government of Puducherry has incorporated a specific provision in Section 43(1). The validity of the said provision is not under challenge. On the contrary, it is contended that Section 43(1) is confined only to the forms contemplated under the local Enactment. We have found such a contention to be not borne out of Section 43(1). Therefore, the decision in Chowhan Machinery Mart cannot be followed. 96. The availability of different modes for the recovery of a tax due, is actually for the benefit of the State and not intended to benefit the assessee. Neither the assessee,nor the person to whom the assessee owes an obligation, can dictate to the State, the mode of recovery to be chosen by them. The power available to the State for the cancellation of the registration of a defaulting dealer, is actually in addition to the several modes of recovery available to the State. After all, the cancellation of registration does not result in the automatic recovery of tax due. The recourse to the revenue recovery proce....