2016 (6) TMI 807 - HC - VAT and Sales Tax

Failure to produce declaratory forms C and F - determination of central sales tax liability @10% - Held that - There appears to be a miscarriage of justice in not having afforded an opportunity to explain the circumstance and there may be a default on the part of the petitioner itself, in not having proceeded with diligence before the Tribunal in seeking to establish the reasons assigned. Therefore, it would be proper if the petitioner is permitted to establish the reasons assigned, before the Tribunal. By this measure, no prejudice is caused to the Revenue for the law itself provides the benefit to the assessee. In that, if the declaratory forms are produced, he would be entitled to a concessional levy of tax. This benefit cannot be taken away on account of an inadvertent lapse on the part of the petitioner. - Petition allowed - matter remanded back - Decided in favor of petitioner.

Summary

Issues:
Dismissal of appeal for assessment year 2003-04 due to failure to produce declaratory forms C and F; Whether Tribunal erred in rejecting appeal without considering reasons for not producing forms; Whether petitioner entitled to concessional levy of tax; Opportunity to establish reasons for not producing forms.

Analysis:
The petitioner challenged the dismissal of the appeal for the assessment year 2003-04, contending that the assessing authority had finalized the case ex parte, resulting in a tax levy of 10% under the Central Sales Tax Act due to the petitioner's failure to provide declaratory forms C and F for inter-State and consignment sales. The petitioner argued that they were not granted sufficient opportunity by the assessing authority to procure and submit the required forms, despite specific requests. The first appellate authority upheld the dismissal, emphasizing the mandatory nature of producing the declaratory forms for tax concessions.

Subsequently, the petitioner approached the Karnataka Appellate Tribunal seeking to present the forms obtained after the appeal dismissal. However, the Tribunal summarily rejected the appeal, deeming the reasons for not producing the forms earlier as unacceptable. The petitioner raised substantial legal questions challenging the Tribunal's decisions, primarily focusing on the sufficiency of reasons for not submitting the forms within a reasonable time as per CST (R & T) Rules, 1957.

The High Court acknowledged the ambiguity regarding the presence of substantial legal questions but noted the petitioner's failure to provide evidence supporting the claim that purchasers and consignment agents withheld the required forms. While recognizing a potential default on the petitioner's part in diligently pursuing the matter before the Tribunal, the Court highlighted the entitlement to concessional tax levy for the petitioner. The Court emphasized the importance of allowing the petitioner to clarify the reasons for the delay in submitting the forms, ensuring no prejudice to the Revenue while upholding the benefit provided by law to the assessee.

Consequently, the High Court allowed the petitions, remanding the matter to the Tribunal for the petitioner to establish the reasons for not producing the declaratory forms promptly. The Court underscored the necessity of substantiating the reasons for the delay to avail the concessional tax benefits, emphasizing the importance of ensuring justice without compromising the legal entitlements of the petitioner.