1964 (4) TMI 105 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the assessment order dated 30th December 1963.
2. Statutory force of the Commissioner's circular prescribing the time limit for filing "C" Forms.
3. Consistency of Rule 8(2) of the C.S.T. (U.P.) Rules with Section 8(4) of the C.S.T. Act.
4. Inconsistency between Rule 8(2) and Rule 5A of the C.S.T. (U.P.) Rules.
5. Reasonability of Rule 8(2) of the C.S.T. (U.P.) Rules.
6. Existence of an alternative remedy.

Detailed Analysis:

1. Validity of the Assessment Order Dated 30th December 1963:
The assessment order dated 30th December 1963 denied the petitioner the benefit under Section 8(1) of the Central Sales Tax Act because the petitioner failed to file the declaration in Form "C" by 31st March 1963. The petitioner filed 235 "C" Forms on 21st December 1963, covering inter-State sales of Rs. 1,61,601-81 nP. The Sales Tax Officer rejected these forms as they were not filed within the time prescribed by the circular of the Commissioner. Consequently, the petitioner was taxed at 7% instead of 1%.

2. Statutory Force of the Commissioner's Circular Prescribing the Time Limit for Filing "C" Forms:
The petitioner's counsel argued that the circular issued by the Commissioner of Sales Tax lacked statutory force. The counsel further contended that Rule 8(2) of the C.S.T. (U.P.) Rules, which required the "C" Forms to be attached to the quarterly returns, was ultra vires Section 8(4) of the C.S.T. Act. The Full Bench decision of the Kerala High Court in Abraham v. Sales Tax Officer was cited, where it was held that the phrase "in the prescribed manner" in Section 8(4) does not include a time element for filing "C" Forms.

3. Consistency of Rule 8(2) of the C.S.T. (U.P.) Rules with Section 8(4) of the C.S.T. Act:
The court agreed with the Kerala High Court's interpretation that the words "in the prescribed manner" do not authorize the State Government to fix a time limit for filing "C" Forms. Section 8(4) only prescribes the mode in which the "C" Forms are to be produced, not the time for filing them. The court found Rule 8(2) to be repugnant to Section 8(4) of the C.S.T. Act.

4. Inconsistency Between Rule 8(2) and Rule 5A of the C.S.T. (U.P.) Rules:
Rule 8(2) requires "C" Forms to be attached to the quarterly returns, while Rule 5A allows a dealer to file a revised return at any time before the assessment is completed. The court noted that if a revised return can be filed showing an omission in the turnover, it reasonably follows that "C" Forms can also be attached to the revised return. Therefore, the rigid time limit under Rule 8(2) is inconsistent with Rule 5A.

5. Reasonability of Rule 8(2) of the C.S.T. (U.P.) Rules:
The court acknowledged the practical difficulties dealers face in obtaining "C" Forms from purchasers residing outside the State. It emphasized that rigid time limits could lead to unjust penalties and that the Sales Tax Department has sufficient means to investigate and penalize the submission of bogus "C" Forms. The court found Rule 8(2) unreasonable and inconsistent with the objectives of Section 8(1) of the C.S.T. Act.

6. Existence of an Alternative Remedy:
The court noted that the existence of an alternative remedy is not an absolute bar, especially when the vires of a rule are under challenge. Given that the "C" Forms were filed before the assessment was completed, the court found no justification for depriving the petitioner of the benefit of Section 8(4) of the C.S.T. Act.

Conclusion:
The writ petition was allowed, and the assessment order dated 30th December 1963 was quashed. The Sales Tax Officer was directed to make a fresh assessment in accordance with the law. The petitioner's counsel undertook not to raise any question of the bar of limitation for the new assessment. The petitioner was awarded costs.

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