2015 (12) TMI 1135 - HC - VAT and Sales Tax

Misuse of C-Forms / D-Forms - disputed turnover relating to the manufacture and supply of missiles is sale or job work - majority of the bulk of material was purchased by the respondent by issuance of C-Forms and D-Forms and which material was got incorporated in the final product which were sold to Government of India and also the foreign buyer. Held that - Applying the ratio laid down by this Court in Bharat Dynamics Limited (1 supra) and in the absence of any material to come to a different conclusion, respectfully agreeing with the ratio laid down by earlier judgment, question No.1 is required to be answered in favour of the Assessee and against the Department. So far as question No.2 is concerned, the Tribunal had found that ERDL, Pune is not one of the entity listed in G.O.Ms.No.882 dated 28.12.1988, which fact is not being disputed before us. It is only those specific entities which are listed in G.O.Ms.No.882 dated 28.12.1988 that are prohibited to issue D- Forms. We may also further add that the fact that ERDL, Pune, had issued D-Form for procuring material would go to show that they are eligible and entitled to issue such D-Forms and the D-Forms are validly issued. In that view of the matter, allowing the respondent to avail the concessional rate of duty, as applicable to the transaction, is unassailable. We are also not persuaded by the argument of the learned counsel for the Department that on account of the alleged misuse of C-Forms, we have to assume that there is a sale transaction involved. Even assuming for the sake of argument that if there is mis-utilisation of C-Forms or any of the Forms which are issued under the Act, at best, a dealer may invite penalties or punitive measures. This aspect of the matter is settled by the judgment of the Hon ble Supreme Court in Commissioner of Sales Tax v. Leather Facts Co. 1987 (3) TMI 481 - SUPREME COURT OF INDIA . Hence, we find no reason to interfere with the orders of the Tribunal. - Decided against Revenue.

Summary

Issues:
1. Whether the disputed turnover relating to the manufacture and supply of missiles is sale or job work?
2. Whether rejection of D forms in respect of disputed turnovers is proper and justified or not?

Issue 1:
The tax revision case involved a dispute regarding the turnover related to the manufacture and supply of missiles, questioning if it constituted a sale or job work. The State contended that the material purchased using C-Forms for missile production, sold to the Government of India, did not qualify as job work exempt from taxation. The State argued that the distinction from a previous judgment was relevant due to the nature of the transactions. The respondent, however, argued that the facts were similar to a previous case and sought dismissal of the revision. The High Court emphasized that in tax revision cases, only questions of law arising from the Tribunal's orders could be considered. The Court highlighted the importance of accepting the Tribunal's factual findings unless perversity was proven, citing legal precedent.

Issue 2:
Regarding the rejection of D forms, the Tribunal had allowed a concessional tax rate despite the Assessing Officer's view that ERDL, Pune, was ineligible for D-Forms. The State argued that ERDL's ineligibility indicated a sale transaction, while the respondent maintained that ERDL's issuance of D-Forms validated their eligibility. The High Court upheld the Tribunal's decision, noting that ERDL's issuance of D-Forms indicated eligibility and dismissed the argument of sale based on alleged misuse of C-Forms. The Court cited legal precedent to support its decision and found no reason to interfere with the Tribunal's orders, ultimately dismissing the tax revision case without costs.

In conclusion, the High Court analyzed the issues raised in the tax revision case concerning missile production turnover and the rejection of D forms. The Court emphasized the importance of accepting the Tribunal's factual findings and upheld the Tribunal's decisions in favor of the respondent, dismissing the tax revision case.