2022 (4) TMI 128 - HC - VAT and Sales Tax

Interstate purchases - issuance of C Form pertaining to interstate purchase transactions within three months - Financial Year 2016-2017 - HELD THAT - It is evident from the Assessment Order dated 10th October, 2018 in respect of Financial Year 2016-17 that it was a case where no Form C were found missing. The only error that occurred was in mentioning the purchase of ₹2,24,14,584 in third quarter and ₹1,87,17,945 in fourth quarter as High Seas Purchases when in fact they were the sales made against Form C purchases. No Form C was found missing and the assessment was made on NIL demand. It is quite evident from the Assessment Order dated 10th October, 2018 that it was only an inadvertent misdescription of the purchasers for two quarter even though all the documents had been duly furnished. It is not a case where there is a default or concealment or adverse material is found by the Commissioner suggesting inaccurate particulars in the returns. It is the case where all the documents and particulars were furnished correctly except that the purchases were inadvertently misdescribed as High Seas instead of Form C purchases. The sole reason for declining the Form C is not that the petitioner is not entitled but merely that the system does not permit the downloading of C Form - Rule 5(4) (i) of the CST Delhi Rules is not attracted in the facts of this case. There was no failure on the part of the Petitioner to furnish a return, including reconciliation return or return in accordance with the provisions of law or in payment of tax due according to such return. In fact, the tax demand was Nil and there was no loss on account of Tax revenue to the Department. While in present day and age, technology has immensely facilitated the business transactions but it cannot be permitted to take over completely and prevent the genuine entitlements of the petitioner to be denied merely on the technical ground that the system does not so permit. The systems have been created purely for facilitating and simplifying the business transactions and cannot be self defeating. The respondent cannot plead its helplessness on the ground of the system not enabling it to do so. Once the petitioner is held to be entitled to C Form, the same cannot be denied for technical or administrative reasons. The Writ petition is accordingly allowed.

Summary

Issues:
Challenge to denial of prescribed statutory Form "C" for purchases made in Financial Year 2016-2017 under CST Act.

Analysis:
1. Challenge to Denial of Form "C": The petitioner, a registered dealer under CST Act, sought issuance of Form "C" for interstate purchases made in 2016-2017. The Assessing Authority rejected the request citing system limitations. Petitioner argued that purchases were accepted during assessment, relying on a previous court decision. Petitioner sought a writ of Mandamus for Form "C" issuance.

2. Legal Provisions: Section 8(4) of CST Act mandates furnishing Form "C" for interstate purchases. Rules specify procedures for obtaining and refusing Form "C" requests. The petitioner argued that no default occurred, and the denial was solely due to system constraints, not entitlement issues.

3. Unique Circumstances: Assessment revealed no missing Form "C," only inadvertent misdescription of purchases as High Seas instead of Form "C." Previous court decisions highlighted the importance of preventing misuse of Form "C" to ensure tax compliance by both selling and purchasing dealers.

4. System Limitation vs. Entitlement: Respondent cited system constraints for denial, not petitioner's non-compliance. Court noted that denial based on system incapacity contradicts petitioner's entitlement to Form "C." Technology should facilitate transactions, not hinder legitimate entitlements.

5. Judicial Precedents: Court referenced past judgments emphasizing that technical or administrative reasons should not deprive entitled parties of Form "C." The inability of the system to generate Form "C" should not impede legitimate claims, as observed in State of H.P. v. Gujarat Ambuja Cement Ltd. (2005) 6 SCC 499.

6. Decision: The court allowed the writ petition, directing the respondent to provide Form "C" for the Financial Year 2016-2017 within three months. The judgment emphasized upholding entitlements over technical barriers and ensuring the smooth functioning of business transactions despite system limitations.