TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 1162
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....nt year was duly registered under the Central Sales Tax Act, 1956 (hereinafter referred to as "the Act of 1956") and is represented before this Court by one the partners. 2. For the period 2013-14, the petitioner firm made supplies of caustic soda to Hindustan Paper Corporation Ltd. namely the respondent No. 4 by way of e-way transactions and raised bills on the respondent No. 4/ Company in respect of which the said company was required to issue declaration Forms "C" under the provisions of the Act of 1956. 3. It is submitted that the petitioner received an order from the Hindustan Paper Corporation Limited for supply of caustic soda. The Petitioner purchased the said item from a registered dealer outside the State of Assam and when the goods were in course of movement in inter-state trade and commerce by transfer of documents of title to the goods, supplied the same to the Hindustan Paper Corporation Limited. Such supply is a subsequent sale in course of inter-state trade and commerce. As per Section 16 (2) of the Central Sales Tax Act, 1956, subsequent sale made in course of interstate trade and commerce is exempted from the payment of Central Sales Tax on the dealer furnishing....
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.... fund crisis and scarcity of Fuel/Coal which has arisen due to ban imposed by National Green Tribunal in extraction and transportation of Coal in and from Meghalaya, which is the main fuel source to Cachar Paper Mill. It was further stated that due to sub-optimal production and prolonged suspension of production, fund crisis has deepened and the Hindustan Paper Corporation Limited could not clear the statutory dues to the State Sales Tax Authority. Consequently the Sales Tax Department was not issuing C-Forms to the Cachar Paper Mill since November, 2015. It was further stated in the said letter that the Hindustan Paper Corporation Limited has taken up the matter to the appropriate authority for providing fund and once fund is received, the Corporation shall clear the Government dues and 'C' Form will be collected will thereafter be issued to the Petitioner. 8. It is submitted that since the Hindustan Paper Corporation Limited did not issue the 'C' Form and the assessment proceedings were taken up by the Assessing Authority, the Petitioner vide letter dated 05.08.2017 informed the Superintendent of Taxes that the Hindustan Paper Corporation was yet to issue the 'C' Forms against t....
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....ator to convene a meeting of committee of stakeholders and place the scheme for its consideration and also directed the liquidator to file the status report \containing the outcome of the meeting. The meeting of the Stakeholder Consultation Committee was held on 02.09.2020 in which meeting the proposal/scheme submitted by MCL was not found to be feasible by the financial creditors, employees/workmen and the operational creditors. The Government of Assam also submitted two letters seeking one month time as the State Government was making efforts with the Central Government for revival of closed mills and another letter dated 29.01.2020 seeking additional time to work out details of its proposal. 11. It is submitted that the National Company Law Tribunal vide order dated 26.04.2021 directed the liquidator to follow the decision of the NCLAT in Company Appeal (AT) Insolvency No. 585/2019 to sell the corporate debtor as going concern. The two units of the Respondent Corporation, namely, Nagaon Paper Mill and Cachar Paper Mill were non-operational since March 2017 and October, 2015 respectively. Accordingly the liquidator took steps to sell the Respondent Corporation as a going concern....
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....Order of Assessment is subject-matter of challenge in W.P(C) No. 6111/2022. The C-Forms were also not received for the assessment year 2015-16 and as the Orders of Assessment were getting barred by limitation, the Superintendent of Taxes, Guwahati, Unit-C completed the assessment of the petitioner company for the period 2015-16 and vide order of assessment dated 08.05.2019 imposed an amount of Rs. 36,58,393/- on account of tax, interest and penalty. The said Order of Assessment is subject-matter of challenge in W.P(C) No. 6112/2022. The C-Forms were also not received for the assessment year 2016-17 and as the Order of Assessment were getting barred by limitation, the Superintendent of Taxes, Guwahati, Unit-C completed the assessment of the petitioner company for the period 2016-17 and vide order of assessment dated 08.05.2019 imposed an amount of Rs. 1,10,94,281/- on account of tax, interest and penalty. The said Order of Assessment is subject matter of challenge in W.P.(C) No. 6113/2022. 15. All these writ petitions having been filed by the same petitioner but in respect of the transactions covered by different periods raises the similar questions of law as such these writ petit....
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....ving been taken over by the State of Assam pursuant to orders passed by the NCLT/NCLAT during the insolvency proceedings, the Taxation Department of the State of Assam is liable to be directed to exempt the Petitioner, by issuing an appropriate Notification under Section 8 (5) of the Central Sales Tax Act, 1956, from the liability of submission of the 'C' Forms in respect of the transaction of sales made to the Hindustan Paper Corporation Limited in respect of which the Hindustan Paper Corporation Limited could not supply the 'C' Forms. 19. It is further submitted that on the one hand the Petitioner had not received the sales consideration in respect of the supply of goods made to the Hindustan Paper Corporation Limited and on the other hand, the sales made to the Hindustan Paper Corporation Limited has been treated to be sales made to unregistered dealers and tax have been imposed at the rate as applicable to the unregistered dealers and interest also levied on the same. It is submitted that as per the provisions of the Central Sales Tax Act, 1956, a dealer can avail the concessional rate of tax for supply of goods during the inter-state trade or commerce to a registered dealer o....
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....ounsel submits that the Notification under Section 8 (5) of the Central Sales Tax Act, 1956 is to be issued in public interest and in the present case, public interest will be better served if the said Notification is issued inasmuch as on the one hand the Petitioner had not received the sale consideration for the sale of the products to the Respondent Corporation including the concessional rate of tax charged by it and on the other hand the Petitioner has been made liable to pay huge amount of tax calculated to the rate applicable to the un-registered dealers for no fault of the Petitioner inasmuch as the Respondent Corporation expressed not to supply the 'C' Forms and sought for some time as the said 'C' Forms were not supplied to the Respondent Corporation by the Taxation Department for the non- payment of dues by the Respondent Corporation. Under such circumstances, the State of Assam, who is the owner of the Respondent Corporation now is liable to be directed by the Court to take necessary steps for granting exemption to the petitioner from furnishing of the 'C' Forms in respect of the sales made by the Petitioner to the Respondent Corporation. 22. It is submitted that the pe....
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....tted by the respondents that the reference to Section 8 (2) (A) and Section 8 (2) (B) in the writ petitions are misplaced as the same has already been omitted from the statute and has no relevance in respect of the facts of this case. It is submitted that reference to Sections omitted from the statute are nothing but an attempt to mislead the Court. The respondents dispute the case projected by the petitioner and further dispute the contention of the petitioner that the transaction of sale was covered under the provisions of Section 6 (2). It is stated that the petitioner had admitted that it had received order for supply of caustic soda from the Hindustan Paper Corporation and thereafter it had purchased the said item from the registered dealer outside the State and when the goods were in the course of movement in the inter-State Trade and Commerce, by transfer of document title to the goods, the same were supplied to Hindustan Paper Corporation and therefore this transaction cannot be said to be covered under Section 6 (2). Referring to Section 6 (2), it is submitted by the respondents that the facts narrated in the present case make it amply clear that the instant transaction ca....
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.... petition in support of his contentions that the letter and E- mails have already been issued to the corporation and the Corporation in turn had assured for furnishing the 'C' Forms as early as possible. It is submitted that only through the communication dated 14.06.2017 issued by the Hindustan Paper Corporation that the petitioner came to be aware about the non-payment of taxes by the Corporation resulting in non-issuance of 'C' forms by the Department to the Corporation and in turn the same could not be supplied to the petitioner. This information was not known to the petitioner prior to the communication dated 14.06.2017. It is further submitted that the assessments for the Financial Year 2013-14, 2014-15, 2015-16 and 2016-17 were completed almost after five years. There was no pre-assessment communication or reminder issued by the Tax Department for submission of pending 'C' forms. As such, the department also appeared to have been sitting over the matter. It is further submitted that as on date the assets and liabilities of the respondent No. 4 Corporation have already been taken over by the State and therefore they are required to exempt furnishing of the 'C' forms by the pe....
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....on was in extreme financial crisis for the last few years and that the mill production has been suspended since October, 2015 due to fund crisis and scarcity of fuel/coal which had arisen due to ban imposed by the National Green Tribunal in extraction and transportation of coal in and from Meghalaya, which was the main source of fuel to the paper mill. Since Form 'C' could not be submitted by the petitioner in support of the sales stated to have been made, the assessment proceedings were initiated by the authorities concerned and the benefit claimed by the petitioner stood rejected by the impugned order passed for the respective assessment years. 32. In order to appreciate the submissions made before this Court, it will be necessary to refer to the provisions of the Act. 33. Section 3 of the Central Sales Tax Act, 1956 provides for levy of taxes when sale and purchase takes place in the course of inter- state trade and commerce. Section 3 of the CST Act, 1956 formulates the principles for determining when sale and purchase of goods is said to take place in course of interstate trade and commerce. Section 3 is reproduced below for the sake of convenience: "Section 3. When is a s....
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....r-State trade or commerce has either occasioned the movement of such goods from one State to another or has been effected by a transfer of documents of title to such goods during their movement from one State to another, any subsequent sale during such movement effected by a transfer of documents of title to such goods to a registered dealer, if the goods are of the description referred to in sub-section (3) of section 8, shall be exempt from tax under this Act: Provided that no such subsequent sale shall be exempt from tax under this sub-section unless the dealer effecting the sale furnishes to the prescribed authority in the prescribed manner and within the prescribed time or within such further time as that authority may, for sufficient cause, permit,- (a) a certificate duly filled and signed by the registered dealer from whom the goods were purchased containing the prescribed particulars in a prescribed form obtained from the prescribed authority; and (b) if the subsequent sale is made to a registered dealer, a declaration referred to in sub-section (4) of section 8: Provided further that it shall not be necessary to furnish the declaration referred to in clause (b) of ....
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....urther time as that authority may, for sufficient cause, permit, a declaration, duly filled and signed by the principal officer of the other place of business, or his agent or principal, as the case may be, containing the prescribed particulars in the prescribed form obtained from the prescribed authority, along with the evidence of despatch of such goods 1 [and if the dealer fails to furnish such declaration, then, the movement of such goods shall be deemed for all purposes of this Act to have been occasioned as a result of sale]. (2) If the assessing authority is satisfied after making such inquiry as he may deem necessary that the particulars contained in the declaration furnished by a dealer under sub-section (1) are true he may, at the time of, or at any time before. the assessment of the tax payable by the dealer under this Act, make an order to that effect and thereupon the movement of goods to which the declaration related shall be deemed for the purpose of this Act to have been occasioned otherwise than as a result of sale." 35. Section 8 of the CST Act, 1956 deals with rates of tax on sales in the course of inter state trade and commerce. Relevant part of section 8 is ....
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....urnishes to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed Form obtained from the prescribed authority. Provided that the declaration is furnished within the prescribed time or within such further time as that authority may, for sufficient cause, permit. 5) Notwithstanding anything contained in this section, the State Government may [on the fulfillment of the requirements laid down in sub- section (4) by the dealer] if it is satisfied that it is necessary so to do in the public interest, by notification in the Official Gazette and subject to such conditions as may be specified therein direct,- (a) that no tax under this Act shall be payable by any dealer having his place of business in the State in respect of the sales by him, in the course of inter-State trade or commerce, [to a registered dealer from any such place of business of any such goods or classes of goods as may be specified in the notification, or that the tax on such sales shall be calculated at such lower rates than those specified in sub-section (1) as may be mentione....
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.... goods, occasioned as a result of the sale, takes place from one State to another, not only has the original sale taken place in the course of inter- State trade or commerce but also every connected transaction shall be deemed to be in the course of inter-State trade or commerce if it is effected by transfer of the railway receipt or other document of title to the goods at a time after the goods have been delivered to the common carrier or other bailee for transmission and before the same are taken delivery of, from such common carrier or other bailee. It may be noted that while section 3(a) concerns a sale effected before actual despatch of the goods, section 3(b) applies to a sale effected after such despatch but before actual delivery of the goods. 37. Therefore as discussed above, there are two types of inter- State sales which are charged to tax under the Central Sales Tax Act, one, coming under section 3(a) thereof, that is, sale occasioning movement of goods from one State to another, and the other, coming under section 3(b) of the Central Act, being sales effected by transfer of documents of title to the goods during their movement from one State to another. The first cate....
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....or (ii) to registered dealer other than Government, in whose certificate of registration the same have been specified and who furnish the prescribed Form C' Declarations are to be taxed at four per cent; [Sec. 8 (1)] (e) sales, other than the above, when the State rate is equal to or less than 10 percent are to be taxed at 10 per cent; [Sec. 8 (2) (b)] and (f) sales, other than the above, when the State-rate is higher than 10 per cent are to be taxed at the higher State- tax rate; [Sec. 8 (2) (b)] The concessional rate of 4% is provided for (when the goods sold are taxable under the State sales tax law at a rate of 4% or more than 4 %) on inter-state sales made to (i) the Government; or (ii) a registered dealer other than the Government- (a) if the class or classes of goods purchased are specified in the purchasing dealer's certificate of registration and the goods under such purchase are intended for resale by him; or, subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale; or, subject to any such rules, for use by him in mining or in the generation or distribution of electricity or ....
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....the declaration and certificate referred to in section 8 (4) shall be in Forms C and D. Therefore, to get the benefit of reduced rate of tax under the Central Act, a dealer has, to furnish a C Form duly filled and signed by the dealer to whom the goods are sold. 42. Upon due examination of the provisions as extracted above what is seen is that there is a power on the State Government to issue a Notification exempting the 'C' Forms or 'D' Forms as the case may be in public interest where the State Government feels that such a notification is required. The writ petitioner claims that such exemption is called for in the facts of the present case as there is no dispute that the sale has been effected to the respondent No. 4 and the respondent No. 4 inspite of assurances given, failed to furnish the 'C' Forms as the same were not issued by the Department for the failure of the respondent No. 4 to meet its outstanding tax liabilities towards State Government. A plain reading of the provisions of exemption as prescribed under Section 8 makes it clear that such exemption is to be issued by the State Government in public interest. In so far as the writ petitioner is concerned, the denial o....
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.... this period as per returns amounting Rs. 12140393.00 and out of its only Rs. 4093069.00 covers by required valid Form "C". Hence balance amounts Rs. 8047324.00 taken as sales to Lin-registered dealer. The sales figure in the monthly returns tally with books of accounts. The dealer made E-1 transactions purchase amounting Rs. 58596987.00 against 11 Nos. E-1 form and sold to HPC, Nagaon, submitted 08 Nos. Form "C" amounting Rs. 74248275.00. The balance amounts Rs. 1065510.00 count as sales to others. The dealer sold goods to registered dealer inclusive of 2%, 5%, 13.5% & 14.5% tax elements and hence per centum is allowed US 8A(1)(a) of CST Act'56. In absence of any other information assessment is completed US 9 (2) of CST Act'56 as follows- 1. Gross Turnover Rs. 92554189.00 2. Less Us 6-A 1 i.e Stock transfer Rs. 0 3. Balance sales Rs. 92554189.00 4. Less U/s 6(2) (E-1 sales) [75313785-1065510]= Rs. 74248275.00 5. Balance sales Rs. 0 6.Less U/s 5 4 i.e. Export Rs. 0 7.Net Inter State turn over Rs. 17240404.00 7 A 2% sales to registered dealer Rs. 4093069.00 Less U/s 8A 1 a Rs. 80256.00 B. Sales to Others i. 5% tax with 2% tax elements. Less U/s 8A (1) (a) ....
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....d manner, declaration duly filled and signed by the registered dealer to whom the goods are sold. This form is described under Rule 12 of the CST Rules of 1957 to be Form 'C'. The format in which the 'C' Forms are to be issued by the purchaser and submitted to the prescribed authority are also appended to the Rules of 1957. The Form 'C' is to be submitted in triplicate. These 'C' Forms are to be procured from the prescribed authority by the dealer who purchases the goods in the course of inter-State Trade and Commerce and counter sign the same and thereafter furnish it to the seller who supplied the goods in the course of inter-State sale. The State authorities however are empowered not to grant the 'C' Forms to the purchasing dealer, if the State authorities are of the view that tax as assessed if found to be payable and outstanding from such a dealer. This is precisely the situation which has arisen in the facts of the present case. The respondent No. 4 had substantial outstanding taxes liable to be paid to the State of Assam, Finance Department. This fact is admitted by the respondent No. 4 in the communication addressed to the petitioner which is enclosed to the writ petition. ....
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....closed to the writ petition as well as the contention of the petitioner reveals that the 'C' Forms were not duly supplied by the respondent No. 4 to cover the sales made by the writ petitioner to the respondent No. 4. This position is also not disputed by the respondents. This leads to a very peculiar situation whereby the petitioner is being deprived of the benefits prescribed under the provisions of the Act of 1956 without any fault that can be attributed to it. The 'C' Forms are mandatorily are required to be issued by the prescribed authority namely the State respondents and which can also be refused to be issued by the State authorities if there are pending dues found to be outstanding towards payment of tax. This fact is equally admitted by the respondent No. 4 in their communications. The State respondents had also made an enquiry with the respondent No. 4 in respect of the claims made by the petitioner but which remained unresolved because of non-furnishing of any reply by the respondent No. 4. Under such circumstances whether the benefits due to the petitioner under Section 6 (2) of the Act of 1956 in respect of sales which are otherwise not disputed can be curtailed for n....
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.... a dealer outside the State of Assam is accepted by the respondents. Therefore, the objections raised by the respondents that it is not a sale under Section 6 (2) cannot be accepted. 49. Under the provisions of the CST Act, 1956, it is seen that although the purposive intent of the Statute is to impose Sales Tax on the transactions prescribed on such rates as applicable, yet at the same time there is a clear legislative intent discernable that where benefits accrue to a dealer, the same shall be available subject to fulfillment of the norms prescribed. Under such circumstances, where the sales stated to have been made by the selling dealer to the respondent No. 4-Corporation are not disputed and also where these items claimed to be purchased by the petitioner from outside the State and for which the supporting E-1 Form declarations are also furnished are not questioned by the department, the only conclusion that can be arrived at is that the goods were indeed purchased in the course of inter-State Trade and Commerce by the petitioner from outside the State of Assam and which purchased was duly supported by the E-1 Form declaration. The goods have been claimed to be sold to the res....
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....This therefore means that the subsequent sale (within the state) is to be considered to be a continuation of the first sale (purchased by the dealer making the subsequent sales) which was in the course of interstate trade & commerce. The subsequent sale is therefore also out of the purview of State Sales Tax. Once it is established that the subsequent sale is also a sale under section 3 the benefit under section 6 (2) will be available to the dealer subject to furnishing of the prescribed C-forms. However, whether this benefit under section 6 (2) will be denied to the dealer for its failure to submit C-forms even when there is no dispute that the subsequent sales is in continuation of a sale under Section 3 of the Act of 1956 is not specifically provided for under the Act of 1956. But what is clear from the provisions is that whether a sale is in the course of interstate trade has to be determined by section 3 only. Sections 6, 8 or 9 or any other provision does not define or determine interstate sales. As such in the facts of the present case where it is not disputed by the assessing officer that the first sale is an interstate sales or that the subsequent sale is not in continuat....
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....istered dealer, if the goods are of the description referred to in Sub-section 3 of Section 8, shall be exempt from tax under the said Act. Sub-section 3 of Section 8 specifies the classification of goods or classes of goods which are to be considered for liable for payment of tax under Section 8 (1) of the said Act. In other words, in order for any transaction to be covered under Section 6 (2) it must satisfy the following:- (a) It must be a sale of goods in the course of inter-State Trade or Commerce; (b) and it has occasioned movement of goods from one State to another or it has been effected by transfer of documents of title to such goods; (c) and that these goods fit the description as prescribed under Sub-Section 3 of Section 8. 52. In order to examine the contention of the respondent State that the sale effected is not covered under Section 6 (2), it will require reference to the impugned assessment order. A perusal of the impugned assessment order reflects that the assessing officer did not question the claims of the petitioner that the goods supplied to respondent No. 4 were procured from outside the State. The claim of the petitioner that the returns reflected inte....
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....d therefore it was not the case of sales which was made by affecting transfer of documents of title of the concerned goods during their movement from outside the State and into the State of Assam cannot be accepted. This argument is fallacious as Section 6 (2) covers sales made in the course of inter-State Trade and Commerce which are occasioned by movement of goods from outside the State into the State of Assam as well as sales by effecting transfer of the documents of title of the goods during their course of movement from outside the State into the State of Assam. There is no dispute as have been discussed above, as can be seen in the impugned assessment order that the movement of goods from outside the State into the State of Assam was accepted to be occasioned in the course of inter-State Trade or commerce and which sales are therefore covered under Section 3 of the Act. No such dispute has been raised by the assessing officer as can be seen in the impugned assessment order that such sale did not occasion movement of goods from outside the State and into the State of Assam. The form E-1 submitted by the petitioner was also accepted by the assessing officer and there was no dis....
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....spondent authorities that the goods which were ultimately supplied to the respondent No. 4 did not occasion movement from outside the State. Neither the assessing officer nor the respondents in their affidavits filed raised any dispute that the goods supplied by the petitioner to the respondent No. 4 were never procured from outside the State. Although the assessing officer did not raise any such dispute but the respondents in their affidavit filed before this Court had disputed the claim of the petitioner that it is not a sale covered under Section 3(b) as the petitioner was aware that goods were required to be supplied to respondent No. 4 and were therefore procured by the petitioner. 58. Purpose of Section 6 is to ensure that sales under Section 3 are inter-state sales even in cases where there is subsequent sale within the state. This subsequent sales within the state cannot be taxed by the state. In order to avail benefits under section 6 (2) it must be shown that the goods were procured from outside the state and it had occasioned movement in the course of interstate trade. To support such claim, transfer of documents of title to the goods must be shown. There is no finding ....
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.... for denial of the benefit of the exemption available under Section 6 (2) of the Act of 1956 is that in the absence of valid 'C' Forms required to be furnished by the petitioner. Therefore, what is clear is that the State respondents are not considering the subsequent sales made to respondent No. 4 to be a sale under the State Sales Tax laws. It is also not disputing the claim of the petitioner that the goods which were sold or supplied to respondent No. 4 were not procured from outside the State and are supported by the relevant Form E-1. Under such circumstances, it is clear that the goods which were supplied to respondent No. 4 by the petitioner were goods which had occasioned movement from outside the State and into the State of Assam and are therefore covered under Section 3 of the CST Act of 1956. From a bare reading of the provisions of Section 6 (2), it is seen that the benefit under 6 (2) is not restricted to those sales which were made by transfer of the documents of title to the goods during the transit of such goods, but it will cover all such goods which occasion movement of goods from outside the State in the course of the inter- State Trade and Commerce which are cov....
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.... Deputy Commissioner of Taxes (Appeals) Guwahati in case No. 40 STA/2013 & 41 STA/2013 in a appeal preferred by the assessee against the assessment order where assessing officer declined to grant the benefit or inter-State sales made which were not supported by 'C' Forms. The Board of Revenue disagreeing with the findings of the assessing officer declining to accept such portion of sales to be inter-State sales and accordingly the Revenue Board disagreed with such findings and deleted the such imposition of taxes. It is not disputed in the bar that no further appeal has been preferred by the Department against this order. This position is accepted by the respondents. 61. Again in M/S Prism Cement Ltd (Supra), while considering the powers of the State Government to grant exemption to tax under Section 8 (5) pursuant to the amendments carried out in the Finance Act 2002, the Bombay High Court rejected the arguments of the Revenue that the amendments carried out by the Finance Act 2002 restricts the power of the State Government to grant total/partial exemption under Section 8 (5) of the Act of 1956 in respect of inter- State sales covered under Section 8 (1). The Bombay High Court h....