2023 (2) TMI 589 - HC - VAT and Sales Tax

Denial of the concessional rate of duty in respect of certain inter-state sales - benefit of the C-Forms denied, by cancelling of the same retrospectively - HELD THAT - In Jain Manufacturing (India) Pvt. Ltd. v. The Commissioner Value Added Tax Anr. 2016 (6) TMI 304 - DELHI HIGH COURT this Court had held that C-forms cannot be cancelled retrospectively. The decision in the case of Jain Manufacturing (India) Pvt. Ltd. v. The Commissioner Value Added Tax Anr. is binding on this Court and therefore, the benefit of the C-Forms in question cannot be denied to the petitioner, by cancelling the same retrospectively. Petition allowed.

Summary

Issues:
1. Denial of concessional rate of duty for inter-state sales.
2. Verifiability of C-forms submitted for sales.
3. Initiation of cancellation proceedings for C-forms.
4. Legality of cancellation of declaration forms.
5. Applicability of previous court decisions on C-form cancellations.

Analysis:

1. The petitioner, engaged in the sale of electronic items, faced denial of concessional duty rate for inter-state sales to a registered dealer under DVAT Act. The issue arose due to non-verifiability of C-forms submitted for sales made in different quarters of the financial year.

2. While the C-forms submitted for the 3rd Quarter were accepted, those for the 1st and 2nd Quarters were not verifiable online. The respondents cited non-cooperation by the purchasing dealer, based on information from Enforcement Directorate, leading to initiation of cancellation proceedings for C-forms.

3. The petitioner argued against the cancellation, stating that there is no provision under CST Act for such cancellations. Citing previous court decisions, including Maa Jagdamba Traders case, it was emphasized that once forms are utilized, declaring them obsolete is impermissible.

4. The court referred to the decision in Jain Manufacturing case, establishing that C-forms cannot be cancelled retrospectively. The respondents' failure to appeal against this decision rendered it binding. The court held that the benefit of C-forms cannot be denied to the petitioner through retrospective cancellations.

5. The legal battle surrounding the cancellation of C-forms, as evidenced by the appeals and SLPs filed by the department against various court decisions, underscores the significance of established precedents in determining the rights of dealers under the CST Act. The judgment, allowing the petition, reaffirms the legal position on the non-retrospective cancellation of C-forms, ensuring the petitioner's entitlement to the concessional rate of duty for the relevant sales transactions.