TaxTMI 
TaxTMI 
2024 (8) TMI 1736
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....etitioner is a company incorporated under the provisions of the Companies Act, 1956 and is having its Registered Office at 98, Okhla Industrial Estate, Phase-III, New Delhi-110020. The Petitioner, in the year 2015-16, sold Pan Masala amounting to Rs.62.60 Crore including tax from it's manufacturing units located at Guwahati to M/s Om Traders, Gurugram on concessional rate of tax under the applicable provisions of Central Sales Tax Act. M/s Om Traders was a registered dealer and carried a valid 'Registration Certificate' under section 11 of the Haryana Value Added Tax Act, 2003 with the Tax Identification Number (TIN) 06691950815 and was issued a 'Certificate of Registration' as a dealer under Section 7(1) / 7(2) of the Central Sales Tax Act, 1956. 3. The Petitioner transacted with M/s Om Traders, Gurugram by selling them its finished product 'Pan Masala' from its manufacturing units located at Guwahati (Assam) for the period starting from 29/01/2016 to 29/03/2016 for a total taxable value of Rs. 61,37,43,561/- and paid Central Sales Tax of Rs. 1,22,74,871/- at prescribed concessional rate of 2% of value of goods to Assam VAT Authority in accordance with the Section 8(1) read wit....
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.... the present writ petition has been filed assailing the impugned Notices issued by the respondent No. 3 treating the same conducted by the petitioner outside the State to be a sale within the State. 10. Referring to Section 8 (1) of the Central Sales Tax Act, 1956 (hereinafter referred to as the Act), it is submitted that every dealer, who in the course of the inter-State trade or commerce, sells to a registered dealer goods of the description referred to in sub-section (3), shall be liable to pay tax under this Act, which shall be 2%(two percent) of his turnover or at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of that State, whichever is lower. 11. He submits that under Section 8(4) of the Act, it is provided that the provisions of sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes 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 particular form obtained from the prescribed authority. 12....
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....he said "C" Form has been declared obsolete. Thereby the impugned notice dated 03.07.2018 issued by the respondents is absolutely illegal and without jurisdiction inasmuch as the same has been issued on the ground that the 'C' Forms in question was declared obsolete by the concerned authorities whereas the said 'C' Form was only cancelled and was not declared obsolete by the Haryana Taxation Authority. 16. It is submitted on behalf of the Petitioner that in reply to the above notice, the petitioner sent a letter dated 27/08/2018 to the Respondent No. 3 pointing outthat both the parties, i.e. the Petitioner and M/s Om Traders, were registered dealers in their respective states and the inter-State sale was made on principal to principal basis, with genuine and valid documents. Therefore, there was no reason to treat the transaction undertaken against the subject Form 'C' as obsolete whereas the said 'C' Form was only said to have been cancelled by the Excise and Taxation Officer - cum - Assessing Authority, Gurgaon, Haryana and the said 'C' Form was not declared to be obsolete. The Petitioner, as a proof of compliance with the applicable Central Sales Tax laws, also enclosed with ....
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....oods were sold to M/s Om Traders reflecting the sales made and the payments received are all enclosed to the writ petition. 20. It is submitted that the purchasing dealer i.e. M/s Om Traders duly provided the statutory Form C' to the Petitioner for obtaining the benefit under Section 8 of CST Act. Section 8(1) of the CST Act provides that every dealer, engaged in inter-State sale, is liable to pay tax at the rate of two percent of his turnover or at the rate applicable under the sales tax law of that State, whichever is lower. However, Section 8(4) provides that the provisions of Section 8(1) shall not apply unless the dealer selling the goods furnishes a declaration in the prescribed form as per the Rules. Rule 12(1) of the CST (R&T) Rules provides that for the purpose of Section 8(4), the declarations shall be in Forms C. Thus, until the dealer furnishes a declaration by way of Form 'C', it shall not be entitled to the benefit of concessional rate of tax provided under Section 8(1). The Petitioner after having obtained the prescribed Form C, from the M/s Om Traders for the period starting from 01/01/2016 to 31/03/2016, duly furnished, the said Form 'C' declaration to the Re....
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....23. The further submission of the learned Senior counsel is that the Petitioner submits that it is a settled law that when the statutory functionary makes an order passed on certain grounds its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reason and cannot be supplemented by fresh reason by the affidavit or otherwise. 24. In support of his contentions, the learned Senior counsel relies upon the following Judgments: "(i) Mohinder Singh Gill & Anr. Vs. The Chief Election Commissioner, New Delhi & Ors, reported in (1978) 1 SCC 405; (ii) State of Madras Vs. Radio and Electricals Ltd., reported in AIR 1967 SC 234; (iii) A.D.M. Stores Vs. CST, reported in (1966) 18 STC 305, 310 (Punj); (iv) State of Orissa Vs. Santosh Kumar, reported in (1983) 54 STC 322 (Orissa); (v) State of Maharashtra Vs. Suresh Trading Company, reported in (1998) 109 STC 439 (SC); (vi) Shanti Kiran India Pvt. Ltd. Vs. Commissioner Trade & Tax Department, reported in (2013) 57 VST 405 (Delhi); (vii) Balabhagas hulaschand Vs. State of Orrisa, reported in (1976) 2 SCC 41; (viii) Jain Manufacturing Vs. T....
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....ered in Whitney Vs. Commissioner of Inland Revenue, reported in (1926) A.C. 37 at Page-52. He also refers to and relies upon the Judgment of the Apex Court rendered in C.C.E. Vs. national Tobacco 28 Co. of India Ltd. reported in (1972) 2 SCC 560 in support of his contention that there is distinction between the term "levy" and the term "assessment". He submits that the Apex Court distinguished between the term "levy" and "collection". He is also relied on the Judgment of the Apex Court rendered in Somaiya Organics (India) Ltd. Vs. State of U.P., reported in (2001) 5 SCC 519 in support of his contention. It is further submitted that issuance of notice of demand is a condition precedent to the treatment of the tax as an arrear. He submits that there has to be proof of actual steps which constitute an assessment prior to imposition of a levy. In support of his contention, he has referred to the Judgment rendered in Assistant Collector of General, Kolkata Division Vs. National Tobacco Co. of India Ltd., reported in (1972) 2 SCC 560. He therefore submits that no assessments have been completed for the period in question. There is no occasion to issue a notice of demand and therefore the....
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....learned Standing Counsel further questions the maintainability of the writ petition on the ground of non-joinder of proper parties. He submits that the contention of the petitioner cannot be verified without the presence of the purchaser namely M/s Om Traders in the State of Haryana as well as the Haryana Tax Department which has intimated the Department of Finance, Government of Assam that pursuant to which the notices which are impugned in the present writ petition have been issued. He however, fairly submits on instructions that no assessment proceedings were undertaken prior to issuance of the notice. These notices were issued on the communication received from the State of Haryana requesting the petitioner to voluntarily deposit the Tax amount which he had unauthorizedly availed of at the concessional rate. 29. The learned counsel for the parties have been heard. Pleadings on records have been carefully perused. Upon due consideration of the rival arguments, the following questions fall for consideration before this Court. (i) The responsibility cast upon the selling dealer towards the Form-C issued by the purchasing dealer in the State of Haryana; (ii) The effect of ....
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....Rule 12(c), the declaration and the certificate which is referred to in Section 8(4) of the CST Act shall be Form-'C' and Form 'D' respectively. The relevant provisions of the Section 8 as well as the Rule 12 of the CST Rules are extracted below: 8. Rates of tax on sales in the course of inter-State trade or commerce.- [(1) Every dealer, who in the course of inter-State trade or commerce, sells to a registered dealer goods of the description referred to in sub-section (3), shall be liable to pay tax under this Act, which shall be three per cent of his turnover or at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of that State, whichever is lower : Provided that the Central Government may, by notification in the Official Gazette, reduce the rate of tax under this sub-section. (2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter-State trade or commerce not falling within sub-section (1), shall be at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sal....
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....at the tax on such sales shall be calculated at such lower rates than those specified in sub-section (1) [* * *] as may be mentioned in the notification; (b) that in respect of all sales of goods or sales of such classes of goods as may be specified in the notification, which are made, in the course of inter-State trade or commerce [to a registered dealer [* * *]], by any dealer having his place of business in the State or by any class of such dealers as may be specified in the notification to any person or to such class of persons as may be specified in the notification, no tax under this Act shall be payable or the tax on such sales shall be calculated at such lower rates than those specified in sub-section (1) [* * *] as may be mentioned in the notification. [(6) Notwithstanding anything contained in this section, no tax under this Act shall be payable by any dealer in respect of sale of any goods made by such dealer, in the course of inter-State trade or commerce to a registered dealer for the purpose of setting up, operation, maintenance, manufacture, trading, production, processing, assembling, repairing, reconditioning, re-engineering, packaging or for use ....
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....he said form was obtained, for such sum as the said authority may, having regard to the circumstances of the case, fix. Such indemnity bond shall be furnished by the selling dealer to the notified authority of his State if a duly completed form of declaration received by him is lost, whether such loss occurs while it is in his custody or while it is in transit to the notified authority of his State: [Provided that where more than one form of declaration is lost, the purchasing dealer or the selling dealer, as the case may be, may furnish one such indemnity bond to cover all the forms of declarations so lost.] (3) Where a declaration form furnished by the dealer purchasing the goods or the certificate furnished by the Government has been lost, the dealer selling the goods may demand from the dealer who purchased the goods or, as the case may be, from the Government which purchased the goods, a duplicate of such form or certificate, and the same shall be furnished with the following declaration recorded in red ink and signed by the dealer or authorised officer of the Government, as the case may be, on all the three portions of such form or certificate,- "I ....
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....hat where such person is a proprietor of any business or a partner of a firm or a karta or manager of a Hindu undivided family, any other person authorised by him in writing may also sign such declaration or certificate :] [Provided further that in the case of a company, such declaration or certificate can also be signed by any other officer of the company authorised under the Memorandum or Articles of Association of the company or under any other special or general resolution of the company or under a resolution passed by the Board of Directors of the company, to authenticate any document on behalf of such company.] (b) Such person shall signify on such declaration or certificate his status and shall make a verification in the manner provided in such declaration or certificate. (9) (a) The provisions of 3 [***] sub-rule (2) and sub-rule (3) shall, with necessary modifications, apply to the declaration in Form 'F' or the certificate in Form 'E-I' or Form 'E-II'. [(b) The provisions of the second and third provisos to sub-rule (1) shall, with necessary modifications, apply to certificates in Form 'E-I' or Form 'E-II'.] [(10)(a) the declar....
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....e been filed without full payment of tax due; or (ii) assessed under this Act less the sum already paid in respect of such period together with interest, if any; or (b) the amount of penalty imposed under any provision of this Act; or (c) any other dues under this Act, shall be paid by the person or dealer or the person liable therefore into the Government account within thirty days from the date of service of the notice issued by the Prescribed Authority in respect thereof; Provided that the Prescribed Authority may, in respect of any particular dealer or person, and for reasons to be recorded in writing, allow him to pay the tax, penalty, interest or the sum forfeited, by instalments but grant of instalments to pay tax shall be without prejudice to the other provisions of this Act including levy of penalty and interest. (5) Where a dealer fails to make payment of the tax assessed or interest levied or penalty imposed on him or any other amount due from him under this Act within thirty days of the date of service of the notice of demand, the Prescribed Authority may, after giving the dealer a reasonable opportunity of being heard, direc....
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....t the seller in inter-State transactions have no control over the purchaser. He has to refer to the representations made to him and he has to satisfy himself that the purchaser is a registered dealer, and the goods purchased are specified in the certificate. Beyond that no further duty is caste on the selling dealer. The relevant paragraph of the Apex Court is extracted below: "Indisputably the seller can have in these transactions no control over the purchaser. He has to rely upon the representations made to him. He must satisfy himself that the purchaser is a registered dealer, and the goods purchased are specified in his certificate; but his duty extends no further. If he is satisfied on these two matters, on a representation made to him in the manner prescribed by the Rules and the representation is recorded in the certificate in form "C" the selling dealer is under no further obligation to see to the application of the goods for the purpose for which it was represented that the goods were intended to be used. If the purchasing dealer misapplies the goods he incurs a penalty under Section 10. That penalty is incurred by the purchasing dealer and cannot be visited upon ....
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....deposited tax, for the period in question, and in the absence of notification in a manner that can be ascertained by men in business that a dealer's registration is cancelled (as has happened in this case) the benefit of input credit, under Section 9(1) cannot be denied. Furthermore, this Court notices that the cancellation of both selling dealers' registration occurred after the transactions with the appellant. The VAT authorities observed that the scanty amounts deposited by the selling dealers was incommensurate with the transactions recorded, and straightaway proceeded to hold that they colluded with the appellant. Such prior conclusions were held to be based on no material, or without inquiry, and accordingly were considered to be unworthy of acceptance. The Orissa High Court in State of Orissa Vs. Santosh Kumar, reported in (1983) 54 STC 322 held that once a certificate of registration is issued to a person and he becomes a registered dealer, he is entitled to certain benefits under the Act. Certificates granted by the public officers have their value and people in the commercial field would in normal course accept such certificates to be genuine. Where the registr....
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....ransaction i.e. 10th March, 2015 the purchasing dealer viz., Respondent No. 2 did posses a valid CST registration. The name of the purchasing dealer as shown in the invoices, and the name and address of the (18 of 28) [CW-11580/2018] registered purchasing dealer as reflected in the C-Forms issued by the DT&T matched. The cancellation of the CST registration of Respondent No. 2 took place subsequently on 4th August 2015. Therefore, there was no means for the Petitioner as the selling dealer to suspect as of the date of sale or soon thereafter that the payments made to it RTGS was not by Respondent No.2 but by some other entity with the same name. It is not possible, therefore, to straightaway infer any collusion between the Petitioner and Respondent No. 2 or for that matter the other entity of the same name spoken of by the DT&T. In any event, from the point of view of the Petitioner, the requirement of Section 8(1) of the CST stood fully satisfied. The purchasing dealer had a valid CST registration on the date of purchase of goods by the Respondent No. 2 from the Petitioner. The C-Form issued by the DT&T confirmed the registration of Respondent No.2 under the CST Act." 37. The q....
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.... to sub-section (2) of section 6 or of declaration prescribed under sub-section (1) of section 6A or subsection (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;" Beyond and in addition to that, no authority has been conferred on the States and therefore it can be safely deduced therefrom that no power has been conferred on the States to frame any Rule for cancellation of the declaration once validly issued. Rule 17(20) of the Rajasthan Rules is thus marred by lack of legislative competence and does not conform to the CST Act, having exceeded the authority conferred on the State Government under which it is purported to have been made. In view of what we have held above, we are inclined to hold that State has no authority to frame a rule providing for cancellation of validly issued declaration form/form-C. In the result, the writ petition deserves to succeed and is hereby allowed. Rule 17(20) of the Rajasthan Rules is declared ultra vires Section 8(4), 13(1)(d), 13(3) and 13(4)(....
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.....H. Cockerline & Co. V. Commissioners of Inland Revenue (1930) 16 Tax Case 1 observed at page 19: "...........but the charge is made in consequence of the Act, upon the subject; the assessment is only for the purpose of quantifying it." 42. The Apex Court in the case of in the case of CCE Vs. National Tobacco 28 Co. of India Ltd. reported in (1972)2 SCC 560 in paragraph 19 held as under: "19. The term 'levy' appears to us to be wider in its import than the term 'assessment'. It may include both 'imposition' of a tax as well as 'assessment'. The term 'imposition' is gene rally used for the, levy of a tax or duty by legislative provision indicating the subject matter of the tax and the rates at which it has to be taxed. The term 'assessment', on the other hand, is generally used in this country for the actual procedure adopted in fixing the liability to pay a tax on account of particular goods or property or whatever may be the object of the tax in a particular case and determining its amount. The Division Bench appeared to equate 'levy' with an 'assessment' as well as with the collection of a tax when it. held that 'when the payment of tax is enforced, there is ....
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....r any compelling reason to hold that what could at most be a mechanical provisional collection, which would become a "levy" in the eye of law only after an "assessment", was itself a levy or an "assessment" . 46. In the facts of the case, the selling dealer namely the writ petitioner herein, is a registered dealer within the State of Assam. It had sold its goods namely, Pan Masala to a registered dealer in the State of Haryana. This sale according to the writ petitioner is a sale undertaken in the course of inter-State trade and commerce and not a sell within the Assam. Consequently, upon the Form 'C' declaration being furnished by the selling dealer namely the writ petitioner for the period indicated, the petitioner had availed the benefit of concessional sales tax as prescribed under Section 8 of the CST read with Rule 12 of the CST Rules. The dispute between the State and the writ petitioner has arisen pursuant to a communication which was issued by the competent department of Tax & Excise from the State of Haryana informing the competent authorities in the State of Assam that the 'C' Form which was issued in favour of the writ petitioner were found to be fraudulently obtaine....
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....the communication although it is seen that the 'C' Forms have been declared obsolete but since no specific date from which the 'C' Forms have been declared obsolete is mentioned, as such it will have to be accepted that the effective date for declaration of the 'C' Forms will be from the date of knowledge which is the date of communication dated 19.02.2018 issued by the Excise and Taxation-cum-Assessing Authority-cum-Officer. Such a declaration unless otherwise specified cannot be made effective retrospectively. 51. As such it has to be held that declaration that the 'C' Forms are obsolete by the Haryana Taxation Department can only be accepted to be effective from the date of the communication which is 19.02.2018. That apart the Haryana Taxation Department did not undertake any proceedings to cancel the said 'C' Forms. No information to that effect is placed before this Court by the respondents. It will therefore not take away any benefit that had accrued to the assessee well prior to the date of the communication. Where the mandate of the Statute is clear, the benefits that accrue to a dealer must be conferred to the full extent as permitted under the Statute without any restr....