2014 (3) TMI 1059 - HC - VAT and Sales Tax

Blocking access to the website for issue of statutory C declaration forms online - Indisputably, interstate transactions covered by a certificate in Form-C, issued under Rule 9 of the Central Sales Tax Rules, 1957, entitles the assessee to claim confessional rate of tax. The petitioner, therefore, applied for C declaration forms to certify the sales under which they purchased from various suppliers. If C declaration forms are not issued, they shall be liable to pay tax without availing concession. The question, therefore, is when a purchaser is in arrears of tax to the State of Andhra Pradesh, can he be denied the C declaration forms to enable the dealer to certify the sales? The issue appears to be no more res integra. Held that - The learned Special Government Pleader has not brought to our notice any provision in the VAT Act or the C.S.T. Act, 1956, which empowers denial of C declaration forms to the petitioner. Thus, in view of the principles laid down by this Court in the decision cited supra, the writ petition is allowed directing the respondents to supply the C form declarations. However, this order does not preclude the respondents from initiating appropriate proceedings for recovery of tax arrears, if any. - Decided in favor of petitioner.

Summary

Issues:
Denial of 'C' declaration forms due to alleged tax arrears.

Analysis:
The case involved a writ petition filed by a company seeking a direction to quash the proceedings of the tax department, which had blocked the issuance of 'C' declaration forms due to alleged tax arrears. The petitioner, a registered dealer under the VAT and CST Acts, purchased components from other states and needed 'C' declaration forms to avail concessional rates. The tax department rejected the petitioner's request for 'C' forms citing tax arrears, despite an appeal pending. The main issue was whether the denial of 'C' forms was justified based on tax arrears.

The Court considered the importance of 'C' declaration forms for interstate transactions to claim concessional tax rates. The petitioner's inability to obtain these forms meant they would have to pay taxes without availing concessions. The Court referred to a previous case where it was held that coercive measures cannot be taken to recover taxes if not legally obligated. The Court noted that the tax department did not have the power to deny 'C' forms based on tax arrears without any specific provision empowering them to do so.

Referring to legal principles and precedents, the Court allowed the writ petition, directing the tax department to supply the 'C' declaration forms to the petitioner. However, the Court clarified that this order did not prevent the tax department from initiating recovery proceedings for any outstanding tax amounts. The judgment concluded by closing any related pending petitions and did not award costs to either party.