2010 (12) TMI 1090 - HC - VAT and Sales Tax

Whether the petitioner submitted certificates in form C to claim concessional rate of sales tax? Held that - No country can survive for long if the public officeholders (who are negligible in number in comparison with the population) become corrupt. Rampant corruption may lead to serious consequences. We are not saying this with reference to this case only. But when the court is concerned with a case of this nature, not dealing with it firmly is not proper. Therefore, we summoned all the files and examined them thoroughly. The original C forms which are allegedly now traced due to the search made by the record assistant (Junior Assistant) have also been compiled as a file being A/31/2010 of the office of CTO II. On verification, we are convinced that even to a naked eye, the signature of the Director in the C form does not tally with one another. We have our own doubts about the C forms. This also requires a thorough enquiry.

Summary

Issues Involved:
1. Jurisdiction and Alternative Remedy
2. Submission and Verification of C Forms
3. Misplacement and Recovery of C Forms
4. Assessment Order and Concessional Rate of Tax
5. Conduct of Public Officials and Corruption

Detailed Analysis:

1. Jurisdiction and Alternative Remedy:
The petitioner, M/s. Sai Tirumala Papers Private Limited, challenged the final assessment order under the Central Sales Tax Act, 1956, issued by the Commercial Tax Officer, Vengalaraonagar Circle, Hyderabad (CTO II), dated March 12, 2010. The petitioner bypassed the alternative remedy available under section 31 of the VAT Act read with section 9(2) of the CST Act, which generally precludes the court from exercising its discretionary jurisdiction. However, the court deviated from this rule due to the specific circumstances involving verification of C forms.

2. Submission and Verification of C Forms:
The petitioner, a registered dealer under the VAT Act, claimed to have submitted three C forms on August 13, 2007, and two C forms on July 13, 2007, to CTO I for the fiscal year 2006-07. CTO II, who took over the assessment after the petitioner shifted its office, proposed to assess the turnover not covered by C forms at 10%. Despite the petitioner's submission of certain C forms and declarations, CTO II did not accept the plea for a concessional rate of tax on the assessed turnover of Rs. 22,61,787, leading to a tax levy of 10%.

3. Misplacement and Recovery of C Forms:
The court summoned the records from CTO I and CTO II and discovered discrepancies in the handling of C forms. Affidavits from the officers involved revealed that the C forms were allegedly misplaced and later found in another file. The petitioner had submitted duplicate copies of the C forms, which were initially ignored by CTO II. The court noted that the records were not properly maintained, creating doubts about the authenticity of the C forms and the handling of the case by the tax authorities.

4. Assessment Order and Concessional Rate of Tax:
The impugned assessment order dated March 12, 2010, denied the concessional rate of tax on the turnover of Rs. 19,38,034 based on the counterfoils of three declaration forms. The court observed that the petitioner had submitted monthly returns and various C forms, but the records were not properly acknowledged or maintained by the tax authorities. The court criticized the casual manner in which the files and correspondence were handled, leading to adverse effects on accountability and transparency.

5. Conduct of Public Officials and Corruption:
The court highlighted the importance of probity in public life and the adverse impact of corruption. It emphasized that public officeholders must act in the public interest and maintain integrity, objectivity, accountability, and openness. The court expressed doubts about the authenticity of the C forms and the conduct of the tax officials, suggesting a thorough enquiry into the matter. It directed the Commissioner of Commercial Taxes to conduct an investigation and take appropriate action against the officials involved.

Directions Issued:
1. A thorough enquiry within two months by the Commissioner of Commercial Taxes.
2. Departmental enquiry and appropriate punishment if officials are found guilty.
3. Suspension or transfer of officials pending enquiry.
4. Development of a foolproof system for receiving forms and declarations.
5. Submission of a report by the Commissioner after two months for further consideration.