2017 (9) TMI 1421 - HC - VAT and Sales Tax

Inter-state Sales - declaration forms - Form-C - Rule 12(7) of the Central Sales Tax (Registration and Turnover) Rules, 1957 - exemption towards tax holiday - the Company had approached their purchaser, on various occasions for C-Form declarations, but their supplier failed to produce the same to them - demand - Whether the Sales Tax Appellate Tribunal was justified in invoking proviso to Rule 12(7) of the CST (Registration and Turnover) instead of invoking the power proviso to section 8(4)? Held that - As per the provisions of the Central Sales Tax (Pondicherry) Rules, 1967, C-Form Declarations ought to have been submitted before 25th April, 2007, being the last date to submit the last month return of the year 2006-07 or in pursuance of sub-rule (7) of Rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957, C-Form Declarations ought to have been submitted within June 2007. However, in the case on hand, the assessment order has been passed on 13.05.2014, by the assessing authority. An appeal has been filed before the Appellate Assistant Commissioner. The Appellate Authority has proceeded, by stating that as per sub-rule (7) of Rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957, C-Form Declarations ought to have been submitted within June 2007. As per the proviso to Rule 12(7) of the Central Sales Tax (Registration and Turnover) Rules, 1957, if the prescribed authority is satisfied that the person concerned was prevented by sufficient cause from furnishing such declaration or certificate with in the aforesaid time, that authority may allow such declaration or certificate to be furnished within such further time as that authority may permit. Whether the appellant had acted diligently to obtain the Form-C Declarations, from their purchasers, for production before the authorities? - Held that - Though in the case in hand, the department has contended that sufficient cause was not shown for the production of C-Form declaration, before the assessing officer and that no request was made for production of the same, accepting the contention of the assessee therein that the Appellate Authority/Tribunal, has powers to receive documents, in particular, Form-C declarations and considering the fact that the assessee had taken diligent steps to obtain Form-C Declarations, from their purchasers, by causing a legal notice and on obtaining the same, produced the C-Form Declarations, we accept the sufficient cause shown, which the authorities have failed to consider - impugned order set aside. Petition allowed - decided in favor of petitioner.

Summary

Issues Involved:
1. Non-production of Form-C declarations within the prescribed time.
2. Imposition of a higher tax rate due to non-production of Form-C.
3. Sufficient cause for non-production of Form-C.
4. Powers of the appellate authorities to accept Form-C at the appellate stage.

Issue-Wise Detailed Analysis:

1. Non-production of Form-C declarations within the prescribed time:
The appellant, a manufacturer of various chemicals, failed to submit Form-C declarations within the stipulated three months after the end of the tax period, as mandated by Rule 12(7) of the Central Sales Tax (Registration and Turnover) Rules, 1957. Despite several opportunities, the appellant did not request additional time for submission during the assessment period for the year 2006-07, which led to the imposition of a higher tax rate.

2. Imposition of a higher tax rate due to non-production of Form-C:
The Assessing Officer imposed a 10% tax rate instead of the concessional 4% due to the non-production of Form-C declarations. The appellant's failure to produce Form-C declarations resulted in a tax liability of ?1,31,40,000. The appellant argued that the higher tax rate was unjustified as they had taken steps to procure the declarations but faced delays beyond their control.

3. Sufficient cause for non-production of Form-C:
The appellant contended that they had taken reasonable steps, including sending legal notices to their purchasers, to obtain the Form-C declarations. They argued that the delay was due to factors beyond their control, such as the non-cooperation of their purchasers. The appellant presented evidence of their efforts, including legal notices and correspondence with the purchasers, to substantiate their claim of sufficient cause.

4. Powers of the appellate authorities to accept Form-C at the appellate stage:
The appellant relied on several judicial precedents, including the Full Bench decision in State of Tamil Nadu v. Arul Murugan (51 STC 381) and the Supreme Court's decision in State of Andhra Pradesh v. Hyderabad Asbestos Cement Production Ltd. (94 STC 410), which established that appellate authorities have the power to accept Form-C declarations at the appellate stage if sufficient cause is shown. The appellant argued that the Appellate Assistant Commissioner and the Sales Tax Appellate Tribunal erred in not accepting the Form-C declarations submitted during the appeal process.

Judgment:
The High Court of Madras, after considering the rival submissions and relevant legal provisions, concluded that the appellant had shown sufficient cause for the delay in submitting the Form-C declarations. The court noted that the appellant had taken diligent steps to procure the declarations and that the appellate authorities have the power to accept Form-C declarations at the appellate stage. The court cited the decisions in State of Tamil Nadu v. Arul Murugan and other relevant cases to support its conclusion.

The court set aside the impugned order of the Sales Tax Appellate Tribunal and allowed the Tax Case Revision Petition, directing the Assessing Officer to proceed with the assessment after receiving the necessary statutory declarations. The court emphasized that the approach of the tax authorities should be to ensure that the assessee is not denied a rightful benefit due to technicalities.