2008 (4) TMI 683 - HC - VAT and Sales Tax

Whether the Tribunal is legally correct in refusing to accept the declarations in form F and form C and whether such refusal on the part of the Tribunal does not run contrary to the law laid down by the honourable Orissa High Court in Oriental Chemical Industries v. State of Orissa 1978 (3) TMI 201 - ORISSA HIGH COURT ? Held that - Under the provisions of sales tax law a registered dealer is entitled to effect inter-State sale at a concessional rate of tax on the strength of C declaration forms and also entitled to transfer goods from its manufacturing unit to its other place of business or agent situated outside the State otherwise than by way of sale on the strength of F declaration forms without payment of tax. The dealer cannot be deprived of the above benefit of tax available under the statute merely because the declaration forms are for the first time filed before the second appellate authority, if for some good reasons the same could not be produced before the assessing officer and first appellate authority. From the order of the learned Tribunal, it is revealed that the reason assigned by the dealer in its petition dated August 7, 2001 was not disputed by the Revenue. In these circumstances, the learned Tribunal is not justified in insisting on production of further documentary evidence in support of the contention of the petitioner that the declaration forms were received by it after the hearing of the first appeal, for the purpose of accepting those declaration forms. Against revenue. Since the Tribunal has not examined the correctness of the declaration forms produced before it, now it shall examine the same and for this purpose the matter is remanded to the Tribunal.

Summary

Issues Involved:
1. Justification of the Tribunal in not accepting the declaration forms produced before it.
2. Acceptance of declaration forms at a later stage by the Tribunal.
3. Sustainability of the Tribunal's refusal to accept the declaration forms on the indicated reasons.

Detailed Analysis:

Issue 1: Justification of the Tribunal in not accepting the declaration forms produced before it

The core issue revolves around whether the Tribunal was justified in refusing to accept the declaration forms "C" and "F" produced by the petitioner. The petitioner, a company registered under the Indian Companies Act, 1956, with branches in different states, had claimed transfer of machineries and equipment to its work sites in different states as stock transfers, not liable for Central Sales Tax (CST). However, the assessing officer treated these transactions as inter-State sales, levying tax at the usual rate of ten percent. The first appellate authority upheld this view but allowed the petitioner's claim for inter-State sale at a concessional rate based on the declaration forms produced before it. The Tribunal, however, refused to accept additional declaration forms submitted for the first time before it, citing the lack of supporting documentary evidence for the late submission.

Issue 2: Acceptance of declaration forms at a later stage by the Tribunal

The petitioner argued that the declaration forms could only be collected after the hearing of the first appeal was closed. The petitioner contended that the first appellate authority did not allow reasonable opportunity to collect these forms. The Tribunal, however, insisted on documentary evidence to support the claim that the forms were received post-hearing of the first appeal. The petitioner cited precedents from Sahu Trading Co. v. State of Orissa and Oriental Chemical Industries v. State of Orissa, where it was held that declaration forms could be accepted at the appellate stage if sufficient explanation for the delay was provided. The Tribunal's refusal to accept the forms was challenged on the grounds that the reason for the delay was not disputed by the Revenue, and thus, further documentary evidence should not have been necessary.

Issue 3: Sustainability of the Tribunal's refusal to accept the declaration forms on the indicated reasons

The Tribunal's refusal was based on the lack of documentary evidence supporting the petitioner's claim that the forms were received after the first appeal hearing. The petitioner argued that the Tribunal should have accepted the forms based on the explanation provided, as per the legal precedents. The court highlighted that under the sales tax law, a registered dealer is entitled to effect inter-State sales at a concessional rate on the strength of "C" forms and transfer goods to its branches without payment of tax on the strength of "F" forms. The court concluded that the dealer should not be deprived of these benefits merely because the forms were filed at the second appellate stage, provided there were good reasons for the delay.

Conclusion:

The court found that the Tribunal was not justified in refusing to accept the declaration forms based on the reasons provided by the petitioner. It held that the Tribunal should have accepted the forms if sufficient explanation for the delay was given and not disputed by the Revenue. The court answered the first and third questions in the negative and the second question in the affirmative, thus ruling in favor of the petitioner. The matter was remanded to the Tribunal to examine the correctness of the declaration forms produced. The tax revisions were disposed of with no costs.