1969 (11) TMI 70 - HC - VAT and Sales Tax

Issues Involved: Classification of "cord" as cotton yarn, Timeliness of filing 'C' Forms, Applicability of concessional tax rates, and Compliance with statutory provisions for filing 'C' Forms.

Issue-wise Detailed Analysis:

1. Classification of "cord" as cotton yarn:

The petitioner argued that the "cord" should be classified as cotton yarn, which is distinctly understood as a separate commodity in commercial circles. The Tribunal initially found that "cord" is neither yarn nor fabric but a distinct species of goods subject to multi-point levy under the M.G.S.T. Act. The Tribunal's view was that "cord" is an independent item of goods and not covered by the provisions of the C.S.T. Act. However, the court, after inspecting the material, concluded that the "cord" is indeed cotton yarn in the accepted commercial sense. The court emphasized that the "cord" is manufactured on looms and is not a textile fabric or cloth. The court held that the "cord" is cotton yarn and thus subject to a tax rate of 1% under the C.S.T. Act.

2. Timeliness of filing 'C' Forms:

The court examined various instances where 'C' Forms were filed at different stages:

- For the turnover of Rs. 11,159.75, the 'C' Forms were claimed to have been filed along with the returns but were not traceable. Duplicate forms were later filed before the appellate authority, which refused to consider them. The court found no undue delay in the production of these forms.
- For the turnover of Rs. 2,52,311.80, the 'C' Forms were filed after pre-assessment notices were issued but before the assessment order was passed.
- For the turnover of Rs. 1,53,154.90, the 'C' Forms were filed after the order was passed but before it was communicated to the assessee.
- For the turnover of Rs. 1,13,026.12, the 'C' Forms were filed after the receipt of the order but were returned and not entertained by the appellate authority.

The court emphasized that the rule-making power did not extend to prescribing a time limit for filing 'C' Forms and that they should be filed within a reasonable time. The court found that in all these instances, the 'C' Forms were filed within a reasonable time and should have been considered by the authorities.

3. Applicability of concessional tax rates:

The assessing officer initially rejected the claim for a lower tax rate because the 'C' Forms were not filed in time. The Tribunal upheld this view, citing non-compliance with statutory provisions. However, the court, referencing the Supreme Court decision in Sales Tax Officer v. Abraham, held that the mandate as to time for filing 'C' Forms was ultra vires. The court stated that if 'C' Forms are furnished within a reasonable time, there is sufficient compliance with the requirements of section 8(4)(a) of the C.S.T. Act. The court found that the petitioner was entitled to the concessional rate of tax as the 'C' Forms were filed within a reasonable time.

4. Compliance with statutory provisions for filing 'C' Forms:

The Tribunal had found that the petitioner did not furnish the 'C' Forms before the prescribed authority within the stipulated time nor maintained a register in Form No. 9. The court, however, held that the rule-making power did not extend to prescribing a time limit for filing 'C' Forms. The court emphasized that principles of natural justice require that the assessee should be given an opportunity to rectify defects in 'C' Forms within a stipulated time. The court found that the authorities failed to act prudently and reasonably, resulting in a failure of natural justice.

Conclusion:

The court allowed the petition, holding that the "cord" is cotton yarn and subject to a tax rate of 1%. The court also held that the 'C' Forms were filed within a reasonable time and should have been considered by the authorities. The case was remitted to the Tribunal for disposal in accordance with the law, with no order as to costs.

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