2021 (11) TMI 543 - HC - VAT and Sales Tax

Seeking issuance of requisite F Forms to the Petitioner - interstate stock transfers undertaken by the Petitioner - Bullion - period starting from April 2016 until June 2017 - HELD THAT - A reading of the above provision would clearly show that where the applicant, seeking Form F , has defaulted in making the payment of the amount of the tax assessed, the Commissioner may, after affording the applicant an opportunity of being heard, withhold the issuance of Form F to him for the reasons to be recorded in writing. In the present case, from the chart of tax demands placed by the respondents and not denied by the petitioner, it is evident that the petitioner owes tax demand. Though the same are pending challenge at various stages or forums, for some there is no order of stay on the said demand. This Court in the present proceedings cannot usurp the jurisdiction of the Courts/Authorities hearing such appeals/objections and hazard a guess as to whether the petitioner is entitled to a stay of demands in those proceedings. Compliance with the proviso to Rule 5(4) of the CST (Delhi) Rules - HELD THAT - Admittedly, the respondents have now passed the Order dated 16.06.2021 giving reasons for refusing the facility of issuance of the F Forms to the petitioner. The said Order is not in challenged. Challenge to Rule 5(4) of the CST (Delhi) Rules - HELD THAT - Section 13(3) and 13(4)(e) of the CST Act empowers the State Governments to make rules, including specifying the conditions subject to which Form F may be obtained - It cannot therefore, at least at this stage be said that Rule 5(4)(ii) of the CST (Delhi) Rules is ultra vires the CST Act. Application dismissed.

Issues Involved:

1. Issuance of 'F' Forms for interstate stock transfers.
2. Pending VAT demands and their impact on issuance of 'F' Forms.
3. Compliance with Rule 5(4)(ii) of the CST (Delhi) Rules.
4. Validity of Rule 5(4)(ii) of the CST (Delhi) Rules.

Analysis:

1. Issuance of 'F' Forms for Interstate Stock Transfers:

The petitioner sought an interim relief to direct the respondent to issue 'F' Forms for interstate stock transfers of 'Bullion' from April 2016 to June 2017. The petitioner argued that these transactions were not sales but transfers between branches, qualifying for benefits under Section 6-A of the CST Act. Despite accessing the online platform and uploading necessary documents, the petitioner was denied 'F' Forms due to pending VAT demands.

2. Pending VAT Demands and Their Impact on Issuance of 'F' Forms:

The petitioner contended that the VAT demands were primarily due to the sale of repossessed vehicles, which were under challenge in various courts, including the Supreme Court and High Court. The Supreme Court had restrained coercive action for certain financial years, and some demands were stayed by the Objection Hearing Authority. The petitioner argued that these pending demands should not obstruct the issuance of 'F' Forms.

The respondents presented a chart detailing the pending demands for various financial years, which the petitioner did not deny. The respondents argued that, as per Circular No. 13 of 2013-14, no forms, including 'F' Forms, could be issued if dues were pending. They maintained that the refusal to issue 'F' Forms was justified due to the pending demands.

3. Compliance with Rule 5(4)(ii) of the CST (Delhi) Rules:

The petitioner argued that the respondents failed to comply with Rule 5(4)(ii) of the CST (Delhi) Rules, which mandates a hearing and a reasoned order before denying 'F' Forms. The petitioner relied on past judgments where the court held that denial without a reasoned order was non-compliant. However, the respondents had issued an order on June 16, 2021, giving reasons for the denial. The court noted that this order was not challenged and thus, the past judgments cited by the petitioner did not apply.

4. Validity of Rule 5(4)(ii) of the CST (Delhi) Rules:

The petitioner challenged the validity of Rule 5(4)(ii), arguing it was ultra vires the CST Act. The court, however, found no merit in this challenge. It noted that Section 13(3) and 13(4)(e) of the CST Act empowers State Governments to make rules, including conditions for obtaining 'F' Forms. Therefore, Rule 5(4)(ii) was within the legal framework and not inconsistent with the CST Act.

Conclusion:

The court dismissed the application, finding no merit in the petitioner's arguments. The pending VAT demands justified the denial of 'F' Forms, and the respondents had complied with procedural requirements by issuing a reasoned order. The challenge to Rule 5(4)(ii) was also found to be without substance. The main petition was scheduled for further hearing, with parties directed to file short-written submissions and relevant judgments within four weeks.

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