2010 (8) TMI 782 - HC - VAT and Sales Tax

Whether the reason offered by the first respondent for rejecting the C forms as belated is correct or sustainable?

Summary

Issues:
Challenge to assessment under CST Act for assessment year 2005-06, legality of final assessment, delay in submission of 'C forms', power of authority to condone delay, interpretation of Rule 12(7) of CST (R&T) Rules, rejection of 'C forms' by assessing authority.

Analysis:
1. The petitioner, a Public Sector Undertaking, challenged the assessment finalised by the first respondent under the CST Act for the assessment year 2005-06. The primary issue raised was whether the petitioner should be directed to pursue the statutory remedy of appeal instead of approaching the Court directly.

2. The grievance raised by the petitioner pertained to the legality of the assessment process followed by the first respondent, resulting in a substantial tax liability being imposed on the petitioner. The petitioner contended that the assessment was more of a legal issue than a factual one, emphasizing that the 'C forms' produced by them were not considered due to alleged delay.

3. The petitioner argued that they were a registered dealer under the KVAT and CST Act, engaged in the manufacture and sale of 'newsprint'. They highlighted that the requirement to procure 'C forms' during the assessment year in question was on purchasers, and due to changes in the law, delays occurred in obtaining the forms, leading to the assessment dispute.

4. Following the issuance of a notice of assessment (Ext.P1), the petitioner submitted a detailed reply (Ext.P2) explaining the circumstances leading to the delay in obtaining 'C forms'. Despite this explanation, the first respondent finalized the assessment (Ext.P3) holding the petitioner liable for a significant tax amount, citing non-submission and belated submission of 'C forms'.

5. The petitioner contended that the assessing authority's decision (Ext.P3) was incorrect and contrary to statutory provisions, specifically Rule 12(7) of the CST (R&T) Rules. They argued that the authority had the power to condone delays in submitting 'C forms', which was not exercised in their case, leading to the imposition of higher tax liability.

6. The Government Pleader representing the respondents defended the assessment order (Ext.P3) as reasoned and supported by the petitioner's failure to apply for condonation of delay within the prescribed period. The respondents maintained that the petitioner had the option to appeal and that judicial interference was unwarranted.

7. The Court acknowledged that the dispute primarily revolved around the interpretation of relevant legal provisions, particularly the power of the authority to condone delays in 'C form' submissions. The petitioner's claim of having procured the necessary 'C forms' was noted, emphasizing the rejection of forms solely on grounds of delay.

8. In its analysis, the Court highlighted the importance of the proviso in Rule 12(7) of the CST (R&T) Rules, which allows for the condonation of delays in submitting 'C forms'. The Court noted the lack of discussion in the assessment order (Ext.P3) regarding the authority's power to condone delays, leading to the decision to set aside the assessment and remit the matter for fresh consideration.

9. Emphasizing the legislative intent behind retaining the proviso unchanged post-amendment, the Court stressed the beneficial nature of the provision for condoning delays. Referring to legal precedents and the lack of discussion on the authority's power in Ext.P3, the Court directed a reevaluation of the matter by the first respondent within a specified timeframe.

10. Consequently, the Court allowed the writ petition, setting aside the assessment order (Ext.P3) and remitting the matter for fresh consideration by the first respondent, emphasizing the need for a comprehensive review in light of legal provisions and judicial precedents.