TaxTMI 
TaxTMI 
2017 (7) TMI 698
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....chase by the petitioner would invite reduced tax at the rate of 2% in terms of sub-section (1) of Section 8 of the CST Act as long as the petitioner could provide to the sellers a declaration of inter-State sale in C form. The petitioner's sale of the vehicles within the State would invite the Value Added Tax under the VAT Act which we are informed presently is at the rate of 15%. 2.2 The petitioner's returns for the assessment years 2009- 10 to 2011-12 are in dispute. As per the latest position, the Value Added Tax Tribunal has set aside the order passed by the appellate authority and remanded the proceedings for fresh consideration by the State authority. We are, however, not directly concerned with these disputed tax dues of the petitioner. The dispute is with respect to the petitioner's undisputed tax dues and the mode of recovery thereof. The department alleges and the petitioner does not seriously dispute that for the period between 01.04.2015 and 31.03.2016, the petitioner had collected VAT on its local sales from the customers but had not deposited the same with the government revenue even as per the petitioner's own self assessment of the tax liability. In other words, ....
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.... from manual filing of the returns and issuance of C forms to computerized system as per the circular. Since the petitioner had not discharged his tax liabilities he was not allowed to generate the C form. In his case, the liabilities are not disputed. They arise out of self assessment. Thus, the petitioner has collected the tax from the customers which he has not deposited in the government revenue. 5. Facts as noted are not in dispute. The petitioner having made local sales of the vehicles purchased from outside State, has not deposited the self assessed tax with the government authorities. On such ground, the department does not permit the petitioner to generate the C form. Since this is one of the requirements contained in the circular dated 16.11.2009, the short question is, Is it legally permissible? 6. Section 6 of the CST Act is a charging provision creating charge on sale of goods on inter-State sales. Sub-section (1) of Section 8 of the CST Act provides that every dealer who in course of inter-State trade or commerce sells to a registered dealer goods of the description referred to in sub-section (3) shall pay tax under the said Act at the rate of 2% of his turnover....
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....rent clauses (a) to (i). Any rule so framed by the Central Government has to be placed before each House of the Parliament as provided in sub-section (2) of Section 13. Subsection (3) of Section 13 provides that the State Government may make rules not inconsistent with the provisions of the Act and the rules made under sub-section (1), to carry out the purposes of this Act. Sub-section (4) of Section 13 provides that, without prejudice to the powers conferred in sub-section 3, the State Government may make rules for all or any of the purposes contained in clauses a to g. Clause (e) which is relevant for our purpose reads as under: "(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 subsection (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 records relating thereto maintained and the manner in which any such form may be used and any such certificate or declaration may be furnished; 10. In exercise of such powe....
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....t pertains to special mode of recovery and empowers the Commissioner to make recoveries through garnishee orders. Section 45 empowers the Commissioner to provisionally attach the properties of a dealer for the purpose of protecting the interest of government revenue. Under Section 46, the tax can be recovered as arrears of land revenue. Section 47 provides that any transfer or charge created by a dealer to defraud the government revenue would be void. Section 48 provides that the tax would be the first charge on the property of the dealer. These provisions were noted to demonstrate that the VAT Act contains detailed provisions for assessment, reassessment and collection of tax, interest and penalties. In terms of Section 9 of the Central Sales Tax Act, such provisions would be applicable for assessment, reassessment and collection of tax, interest and penalties arising out of the said Act also. 12. We have noticed that in terms of sub-section (1) of Section 8 of the CST Act, a dealer on its sale of goods in the course of inter-State trade or commerce would pay reduced rate of tax as long as, as provided in sub-section (4) of Section 8, the purchasing dealer provides the C form o....
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.... Act or the Rules made by the Central Government and that the same should be framed to carry out the purposes of the Act. Whether such rule making powers would include affecting collection of unpaid VAT by the purchasing dealer before the C form can be generated by him and he could request to the prescribed authority to authenticate the same is a question which we need not answer in the present writ petition. This is so because no rule has been brought to our notice which provides for such a requirement or a pre-condition. Only source of such insistence by the State Government is a circular dated 16.11.2009. The circular lays down a procedure that the dealer would have to follow for obtaining C form. The circular was necessitated mainly for the reason that the department wanted to discontinue the practice of filing physical copies of the C forms to be authenticated by the prescribed authority. Henceforth, the department would permit the concerned dealers to generate such C forms online. While doing so, certain conditions have been prescribed in the said circular. One of the conditions being that the dealer should have paid all the taxes as per the self assessment in terms of the qu....