1997 (12) TMI 630 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the assessee-dealers are deprived of the benefit of the concessional rate of tax due to the misuse of "C" forms by purchasing dealers.
2. The necessity of publication of cancellation of registration certificates in the official gazette.
3. Measures to prevent misuse or abuse of "C" forms.

Summary:

Issue 1: Concessional Rate of Tax and Misuse of "C" Forms

The assessee-dealers, engaged in inter-State sales of photographic goods, were initially granted the benefit of a concessional rate of tax based on "C" forms provided by purchasing dealers in Andhra Pradesh. Upon verification, it was discovered that the purchasing dealers misused "C" forms issued to other dealers to avoid local taxes. Consequently, the assessing officer revised the assessment orders u/s 16 of the Tamil Nadu General Sales Tax Act, 1959, and subjected the inter-State sales turnover to the appropriate tax rate, thereby depriving the assessee-dealers of the concessional rate.

Issue 2: Publication of Cancellation of Registration Certificates

The court noted that there was no evidence of a notification in the Andhra Pradesh Gazette regarding the cancellation of registration certificates of the dealers whose "C" forms were misused. The absence of such notification or intimation to the Tamil Nadu Government meant that the assessee-dealers could not have known about the cancellation. The court emphasized that publication in the official gazette is crucial for informing the public, including the assessee-dealers, about the cancellation of registration certificates. Therefore, without such publication, the assessee-dealers cannot be deprived of the concessional tax rate.

Issue 3: Measures to Prevent Misuse of "C" Forms

The judgment suggested that to prevent the misuse of "C" forms, the issuing authority should fill out the first part of the "C" forms with specific details at the time of issuance. This would reduce the possibility of misuse, as any alteration would be difficult to conceal. The court also highlighted that the purchasing dealer would be liable for any misuse of the "C" forms, either through prosecution u/s 10 of the Central Sales Tax Act or by penalty u/s 10-A.

Conclusion:

The court allowed the revisions, set aside the orders of the tax authorities, and remitted the matters back to the assessing officer for a fresh determination, considering whether due notification of the cancellation of registration certificates was published in the Andhra Pradesh Gazette and intimated to the Tamil Nadu Government. The court also recommended measures to prevent future misuse of "C" forms.

Petition allowed.