Full Judgment Text
2022:DHC:1179-DB
$~16
* IN THE HIGH COURT OF DELHI AT NEW DELHI
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% Decided on: 25 March, 2022
+ W.P.(C) 10015/2019
SRIVENKATESHWARE TRADEX PRIVATE LIMITED .....Petitioner
Represented by: Mr. A.K. Babbar & Mr. Surendra
Kumar, Advocates.
versus
COMMISSIONER, DELHI VALUE ADDED TAX AND ANR.
...... Respondents
Represented by: Mr. Shadan Farasat, ASC, GNCTD
with Ms. Hafsa Khan & Mr. Shorya
Dasgupta, Advocates for GNCTD.
CORAM:
HON'BLE MS. JUSTICE MUKTA GUPTA
HON’BLE MS. JUSTICE NEENA BANSAL KRISHNA
NEENA BANSAL KRISHNA, J. (ORAL)
1. This Writ Petition under Article 226 of Constitution of India read with
Section 8 of Central Sales Tax Act, 1956 ( hereinafter referred to as „CST
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Act‟) has been filed to challenge the order dated 05 July, 2019 passed by
the respondent denying the issue of prescribed statutory Form “C” to the
petitioner in respect of purchases made in the Financial Year 2016-2017.
2. Facts in brief are that the petitioner, who is a registered dealer under
the CST Act, had purchased goods in the course of interstate transactions
against “C” Forms. By virtue of Section 8(4) of the CST Act, the
respondent is obliged to issue Form “C” in respect of the purchases made
on the strength of his Registration Certificate under CST Act. The petitioner
was duly assessed for the Assessment Year 2016-17 and the Interstate
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purchases against Form “C” were accepted by the Assessing Authority.
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The petitioner applied for issuance of Form “C” on 21 June, 2019 in
respect of Assessment Year 2016-17 of ₹2,24,14,584/- for third quarter and
₹1,87,17,945/- for fourth quarter in accordance with all the conditions
prescribed in CST (Delhi) Forms Rule 4(1)(A), 1957. The Assessing
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Authority vide impugned order dated 05 July, 2019 observed that the facts
stated in the application for issuance of Form “C” were true but rejected the
issuance of Form “C” for the reason that the system did not permit
downloading of “C” Form.
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3. The impugned order dated 10 October, 2018 of the Assessing
Authority has been challenged on the ground that since the Interstate
purchases were reflected in the petitioner‟s Books of Accounts and Balance
Sheet and had been accepted for the Assessment Year, there was no reason
to deny issuance of “C” Form. The reasons given for rejecting the
application are erroneous. The petitioner has relied upon the decision of this
court in the case of M/s Ingram Micro India Pvt. Ltd. Vs. Commissioner,
Department of Trade & Taxes, (2016) 89 VST 312, wherein similar facts
were involved, and it was held that the Authority was not justified in
declining issue of Form “C” to the petitioner and directed issuance of Form
“C” pertaining to interstate purchase transactions within three months.
4. The petitioner has thus, prayed for issue of writ of Mandamus or
appropriate directions to the respondent to issue requisite number of Form
“C” in respect of Assessment Year 2016-17 and correct their system for
release of “C” Form.
5. The respondent in its short counter affidavit has explained that the
statutory Form “C” could not be issued as the details of purchases were not
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entered in prescribed Col.R-11.1 which provides for filling details of
interstate trade and exports-imports against Form “C” in the returns filed
with the Department. The interstate purchases against Form “C” were
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reflected as High Seas purchases in 3 and 4 quarter in the returns filed for
the year 2016-17. By virtue of Section 28 of Delhi Value Added Tax Act,
2004 (herein after referred to as ‘DVAT Act’) if any dealer or person
discovers a discrepancy in a Return furnished by him under Section 26 of
the DVAT Act, then such discrepancy has to be removed by filing a revised
return within a period of one year following the year of such tax period.
Once, the period of one year expires, the dealer cannot be allowed to rectify
discrepancy by filing revised return as no such process exists under DVAT
Act. The provisions of DVAT Act are extended to CST Act by virtue of sub
Section 2 of Section 9 of CST Act.
6. It is further submitted by the respondent that Rule 54 of Central Sales
Tax (Delhi) Rules, 2005 on which reliance has been placed by the petitioner,
is not applicable to the facts in hand. It deals with the principles on which
issuance of Form “C” can be withheld by the Department. Moreover, the
facts in hand are squarely covered by the decision of this Court in the matter
of M/s Ingram Micro India Pvt. Ltd. Vs. Commissioner (supra). This Court
in Indian Oil Corporation Ltd . vs. Commissioner, Vat, Delhi & Ors.
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W.P.(C) No.2633/2017 decided on 11 April, 2017 and other connected
petitions had given a ruling in favour of the dealers. However, Civil Appeal
No.6071/2017 was preferred before Hon‟ble Supreme Court wherein a stay
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has been granted vide order dated 01 May, 2017 and the appeal against the
judgement of this Court in M/s Ingram Micro India Pvt. Ltd . is tagged along
with these appeals. The petitioners cannot be thus granted the relief as
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claimed by way of the present writ petition.
7. Rejoinder was filed on behalf of the petitioner to clarify that vide the
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impugned order dated 05 March, 2019 the respondent had accepted the
Interstate purchases and had even agreed to the petitioner‟s claim for issue
of Form “C” but the same was denied for the reason that the system for
downloading Form “C” does not allow this. It is asserted that the facts
involved in the present case are distinguishable and unique and petitioner is
entitled to issue of “C” Form.
8. Submissions heard.
9. Section 8(1) of CST Act provides that a dealer selling goods
answering the description in terms thereof, in the course of Interstate sales to
another registered dealer is liable to pay 2% tax or at the rate applicable to
inter-state sales whichever is low. In terms of Section 8(4) of the CST Act,
it is mandatory for the selling dealer to furnish the prescribed Authority a
declaration in Form “C” to be furnished by the purchasing dealer. The
Form “C” has to be obtained from the Sales Tax Authority of the concerned
purchasing dealer and furnished to the selling dealer.
10. Rule 5 (1) to (4) of the CST Rules, Delhi provides for the Authority
from which the Declaration Form “C” may be obtained, use, custody and
maintenance of records of such forms and matters incidental thereto. In
terms of Rule 5(2) a request has to be made by the dealer to the
Commissioner of the Department for issuance of Form “C” in Form 2C
declaring the due return that has been filed for the quarters/ months and the
tax due as per return has been made.
11. Rule 5(4) of the CST Rules, 1957 provides for four contingencies
when a request for issuance of Form “C” may be refused by the
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Commissioner after giving an opportunity of being heard. These are:
(i) The applicant had defaulted in furnishing any return
including reconciliation return in accordance with the
provisions of law or in payment of tax due according to
such return; or
(ii) defaulted in making of payment of the amount of tax
assessed, re-assessed or the penalty imposed; or
(iii) not filed proper utilization account in Form ‘2B’ of form
issued to him earlier; or
(iv) some adverse material has been found suggesting any
concealment of sale or purchase or furnishing inaccurate
particulars in the returns.
12. Rule 12(7) of the CST Rules, 1957 requires the selling dealer to
furnish the declaration in Form “C” to the prescribed Authority within three
months after the end of the period to which the declaration or certificate
relates. However, proviso to Rule 12(7) of CST Rules authorizes prescribed
Authority to allow further time to the selling dealer to furnish such
declaration, if sufficient cause is shown. A comprehensive reading of the
Rules thus reflects that there appears to be no such inflexible condition as to
the time within which the request should be made by a purchasing dealer.
13. It has been rightly argued on behalf of the petitioner that the facts
involved in the present case are unique. It is evident from the Assessment
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Order dated 10 October, 2018 in respect of Financial Year 2016-17 that it
was a case where no Form “C” were found missing. The only error that
occurred was in mentioning the purchase of ₹2,24,14,584 in third quarter
and ₹1,87,17,945 in fourth quarter as High Seas Purchases when in fact they
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were the sales made against Form “C” purchases. No Form “C” was found
missing and the assessment was made on NIL demand. It is quite evident
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from the Assessment Order dated 10 October, 2018 that it was only an
inadvertent misdescription of the purchasers for two quarter even though all
the documents had been duly furnished. This fact was duly acknowledged
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in the Assessment Order dated 10 October, 2018 and the demand was
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raised as NIL. After the assessment was finalized vide order dated 10
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October, 2018, the petitioner had made an application dated 21 June, 2019
for issuance of “C” Forms. The GSTO Ward observed that the facts stated
in the Assessment Order were correct but the request for Form “C” was
rejected solely on the ground that the downloading of Form “C” was not
allowed by the system.
14. In the decision reported as (2005) 2 SCC 129 India Agendes (Regd.),
Bangalore y. Additional Commissioner of Commercial Taxes, Bangalore ,
the Hon‟ble Apex Court pointed out that the CST Rules are intended to
prevent misuse of Form “C” and that the very purpose of filing the Form
“C” was to ensure that there should not be any suppression of interstate sales
by selling dealer and evasion of tax to State from where the actual sales are
effected. Secondly, the purchasing dealer also cannot suppress such
purchases once he issues Form “C” to the selling dealer.
15. It is not a case where there is a default or concealment or adverse
material is found by the Commissioner suggesting inaccurate particulars in
the returns. It is the case where all the documents and particulars were
furnished correctly except that the purchases were inadvertently
misdescribed as High Seas instead of Form “C” purchases. The sole reason
for declining the Form “C” is not that the petitioner is not entitled but
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merely that the system does not permit the downloading of “C” Form.
16. Rule 5(4) (i) of the CST Delhi Rules is not attracted in the facts of this
case. There was no failure on the part of the Petitioner to furnish a return,
including reconciliation return or return in accordance with the provisions of
law or in payment of tax due according to such return. In fact, the tax
demand was “Nil” and there was no loss on account of Tax revenue to the
Department.
17. The Ld. Counsel for the respondent states that Indian Oil Corporation
Ltd. and its connected cases including M/s Ingram Micro (supra) involving
similar issues was challenged in Civil Appeal No. 4573/2017. The Hon‟ble
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Supreme Court has granted stay vide order dated 01 May, 2017. The
petitioner thus cannot place reliance upon M /s Ingram Micro (supra).
18. Ld. Counsel for the Respondent has however not placed on record the
facts involved in Indian Oil Corporation Ltd. (supra) and other petitions.
Moreover, the controversy in the present case as detailed above, is not in
respect of entitlement of the petitioner to issuance of Form “C” or being in
violation of the Rules. Rather the petitioner has been held entitled to
issuance of Form “C” but the refusal is solely limited to the administrative
incapacity of the respondent to issue Form “C” as the system does not so
permit. The petitioner, therefore, who is held entitled to issuance of Form
“C” cannot be deprived of the same on technical reason of failure of the
electronic system to generate the “C” Form.
19. While in present day and age, technology has immensely facilitated the
business transactions but it cannot be permitted to take over completely and
prevent the genuine entitlements of the petitioner to be denied merely on the
technical ground that the system does not so permit. The systems have been
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created purely for facilitating and simplifying the business transactions and
cannot be self defeating. The respondent cannot plead its helplessness on the
ground of the system not enabling it to do so. Once the petitioner is held to
be entitled to “C” Form, the same cannot be denied for technical or
administrative reasons as has been observed by Hon‟ble Supreme Court in
the decision of State of H.P. v. Gujarat Ambuja Cement Ltd. (2005) 6 SCC
499.
20. The Writ petition is accordingly allowed and the respondent is
directed to furnish the Form “C” for the Financial Year 2016-2017 to the
petitioner within 3 months.
(NEENA BANSAL KRISHNA)
JUDGE
(MUKTA GUPTA)
JUDGE
MARCH 25, 2022
Va
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