2018 (1) TMI 553 - HC - VAT and Sales Tax

Concessional rate of tax - sale or purchase of goods in inter-state trade or commerce - certificate of registration granted in Form B - CST Act, 1956 - A declaration is sought in the writ petition that UPPTCL is entitled to be issued Form C for the financial year 2010-11 to 2016-17, for the purchases to be effected for the contract work specified in Form B at Unnao and Sirathu - An alternative prayer is also made to direct the UPPTCL to pay differential amount of tax, together with interest, in case it is found not entitled to Form C . Held that - Admittedly, UPPTCL is the registered dealer to whom a certificate has been issued by the competent authority in Form B . Such inter-state sales attract concessional rate of tax as per the description given in the Form. It is an admitted position that registration certificate issued to UPPTCL in Form B subsists and has not been amended or cancelled, in terms of sub-section (4) of section 7 of the Act. In such eventuality, the registered dealer (UPPTCL) is required to provide declaration, dully filled and signed by it to the selling dealer (writ petitioner) containing the prescribed particulars in prescribed form. Such declaration and certificate has to be made in form C appended to the Rules of 1957. In its absence, normal rate of tax would have to be paid by the selling dealer. This would be impermissible once the inter-state sale is covered by sub-section (1) and (3) of section 8 and a certificate is already issued under Form B . Once a certificate has been issued by the competent authority, it was impermissible for the authorities to withhold issuance of certificate in Form C . Denial of Form C to the UPPTCL despite the certificate issued in Form B was wholly unwarranted and illegal yet, it would be appropriate to examine the matter from another aspect before concluding the discussions. The Commercial Tax Authorities have been of the opinion that power transmission is not covered within the express terms of section 8(3)(b) of the Act of 1956. For arriving at such an opinion the provision itself has been taken note of and construed as being limited to generation or distribution of electricity alone. While taking such view the authorities have not examined the expression occurring in the statute itself. The tribunal has committed manifest error of law in upholding denial of Form C to the revisionist, notwithstanding the fact that registration certificate issued in Form B specifies levy of tax at concessional rate in respect of inter-state sale made for power transmission - A direction is also issued to the concerned authorities of the Department of Commercial Tax to issue Form C to the revisionist in respect of items included in Form B , which are liable to be taxed under section 8(1) of the Act of 1956. Petition allowed - decided in favor of assessee.

Issues Involved:
1. Denial of Form 'C' by the Commercial Tax Tribunal.
2. Whether UPPTCL is entitled to purchase goods on concessional tax rates.
3. Interpretation of 'generation or distribution of electricity' under Section 8(3)(b) of the Central Sales Tax Act, 1956.
4. Validity of the registration certificate in Form 'B' issued to UPPTCL.
5. Obligation of authorities to issue Form 'C' based on the subsisting registration certificate.
6. Legal precedents regarding the issuance of Form 'C'.

Issue-wise Detailed Analysis:

1. Denial of Form 'C' by the Commercial Tax Tribunal:
UPPTCL filed Commercial Tax Revision No. 269 of 2017 challenging the Tribunal's order which affirmed the denial of Form 'C'. The Tribunal had rejected UPPTCL's second appeal, thereby upholding the earlier order denying Form 'C' for the assessment year 2010-11.

2. Whether UPPTCL is entitled to purchase goods on concessional tax rates:
UPPTCL, a registered dealer under the Central Sales Tax Act, 1956, argued that its certificate of registration in Form 'B' entitles it to purchase goods at concessional tax rates. The denial of Form 'C' was challenged on the grounds that it violated Section 9-A of the 1956 Act, which mandates concessional tax rates for specified goods.

3. Interpretation of 'generation or distribution of electricity' under Section 8(3)(b) of the Central Sales Tax Act, 1956:
The authorities contended that 'power transmission' does not fall under 'generation or distribution of electricity' as per Section 8(3)(b) of the Act. However, the court interpreted that 'distribution of power' includes transmission, as distribution cannot occur without transmission. Additionally, the term 'any other form of power' was deemed to encompass transmission.

4. Validity of the registration certificate in Form 'B' issued to UPPTCL:
The court noted that UPPTCL's registration certificate in Form 'B' was valid and had not been amended or canceled. The certificate specified goods eligible for concessional tax rates, and the authorities were not justified in questioning its validity at the stage of issuing Form 'C'.

5. Obligation of authorities to issue Form 'C' based on the subsisting registration certificate:
The court held that once a registration certificate in Form 'B' is issued, the authorities cannot deny issuing Form 'C' based on the goods specified in the certificate. The issuance of Form 'C' is a procedural requirement to avail concessional tax rates, and the authorities must comply with it.

6. Legal precedents regarding the issuance of Form 'C':
The court referred to several legal precedents, including State of Madras vs. Radio and Electricals, AIR 1967 SC 234, and Chunni Lal Parshadi Lal vs. Commissioner of Sales, U.P. Lko., (1986) 2 SCC 501, which established that once a certificate of registration is issued, its validity cannot be questioned at the stage of issuing Form 'C'. The court also cited Commercial Taxation Officer Udaipur vs. Rajasthan Taxchem, (2007) 3 SCC 124, reinforcing that the authorities cannot roll back from their stand to the detriment of the assessee.

Conclusion:
The court concluded that the denial of Form 'C' to UPPTCL was unwarranted and illegal. It directed the concerned authorities to issue Form 'C' to UPPTCL for the items included in Form 'B'. The revision and writ petition were allowed, and the parties were directed to bear their own costs.

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