1992 (2) TMI 356 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the petitioner is entitled to "C" form certificates.
2. Whether the petitioner's business qualifies as a works contract or sale under the Central Sales Tax Act.
3. The authority and discretion of the Sales Tax Officer in issuing "C" forms.
4. The implications of misuse of "C" forms and the authority's power to penalize.

Detailed Analysis:
1. Entitlement to "C" Form Certificates:
The petitioner, a registered dealer under both the Kerala General Sales Tax Act and the Central Sales Tax Act, has been denied "C" form certificates by the respondents. The petitioner argued that under Notification G.O. (P) No. 41/88/TD dated March 30, 1988, issued by the Kerala Government, printing presses are exempt from sales tax under the Kerala General Sales Tax Act. The petitioner contended that this exemption should not affect their entitlement to "C" forms for interstate purchases at a concessional tax rate of 4%.

2. Business Classification: Works Contract vs. Sale:
The respondents argued that the petitioner's business is in the nature of a works contract, not involving the resale or manufacture of goods for resale. They asserted that the petitioner merely provides printing services and does not engage in the buying and selling of goods, which disqualifies them from obtaining "C" forms under Section 8(3) of the Central Sales Tax Act. The petitioner countered that the goods purchased are used in manufacturing printed materials, which are then supplied to customers, thus qualifying them for "C" forms.

3. Authority and Discretion in Issuing "C" Forms:
The court examined the provisions under Section 8 of the Central Sales Tax Act and the Central Sales Tax (Registration and Turnover) Rules, 1957. It was noted that once a dealer is registered and possesses a valid registration certificate, the Sales Tax Officer has no discretion to deny "C" forms. The court emphasized that the officer's role is administrative, not investigative, regarding the potential misuse of "C" forms. The court cited precedents such as T.V.P. Nambiar v. State of Madras and Chanda Paints (Madras) Ltd. v. Commercial Tax Officer, which held that the right to "C" forms cannot be denied based on potential misuse or the nature of the business.

4. Misuse of "C" Forms and Penalization:
The court acknowledged that while the misuse of "C" forms is a concern, it is not a valid ground for denying them to a registered dealer. The Act and Rules provide mechanisms to address misuse, including penalties under Section 10(b) of the Central Sales Tax Act and the power to cancel or amend the registration certificate under Section 7(4). The court reiterated that the suspicion of misuse does not justify withholding "C" forms.

Conclusion:
The court concluded that the petitioner, being a registered dealer with a valid registration certificate, is entitled to "C" forms. The Sales Tax Officer does not have the authority to deny "C" forms based on the nature of the petitioner's business or potential misuse. The court allowed the petitions, affirming the petitioner's right to obtain "C" forms as long as their registration certificates remain valid.

Judgment:
Petitions allowed.