2013 (4) TMI 274 - HC - VAT and Sales Tax

Adjust of tax paid on purchase of paddy with sales tax on sale of rice - Requirement of furnishing Form C - The Assessing Authority held that since Form C has not been furnished by the revisionist, it was not entitled to claim that it indulged in inter-State sale. - The Assessing Authority, accordingly, imposed tax. - Held that - In the absence of furnishing of a Form C , the conclusion would be that the sale is not an inter-State sale. - in respect of such sale, the State Law will apply. - The reason is that Section 14 of the said Act has declared that paddy, rice and wheat, amongst others, are goods of special importance. In Section 15 (a) of the said Act, all the State Governments have been restrained from imposing tax on sale or purchase of such goods of special importance at a rate exceeding 4 per cent and the State Government too has imposed tax on paddy, rice and wheat at the rate of 4 per cent. Therefore, in fact, revisionist was not seeking to come within the purview of sub-section (1) of Section 8 of the said Act. In other words, in the absence of furnishing of Form C , the matter will not be dealt with under the Central Sales Tax Act, 1956, but under the State Law dealing with the matter. It is clarified that law, as propounded herein, was in vogue since 1st April, 1973, when sub-section (5) of Section 8 was substituted. Since penalty, if any, leviable under the Central Sales Tax Act, 1956 for effecting inter-State sale without furnishing Form C was not the subject matter of the revision, we have not considered the same.. With the direction, as above, the revision is disposed of.

Summary

Issues:
1. Interpretation of provisions regarding set off of sales tax paid on purchases made by the dealer.
2. Validity of the requirement to furnish 'C' Form for inter-State sales under the Central Sales Tax Act, 1956.

Issue 1: Interpretation of provisions regarding set off of sales tax paid on purchases made by the dealer

The case involved a revisionist who purchased paddy, rice, and wheat, paid State sales tax, and sold rice and wheat outside the State of Uttarakhand. The revisionist claimed set off of the sales tax paid on purchases against the Central sales tax for inter-State sales. The Sales Tax Department accepted this claim for previous assessment years but denied it for the years 2000-2001 and 2001-2002 due to the absence of Form 'C'. The Appellate Authority initially rejected the revisionist's claim, but the High Court held that the revisionist was entitled to set off the tax already paid on purchases from the tax liability for sales. The judgment emphasized the importance of adhering to statutory requirements for claiming set off under the Central Sales Tax Act, 1956.

Issue 2: Validity of the requirement to furnish 'C' Form for inter-State sales under the Central Sales Tax Act, 1956

The revisionist argued that a notification issued by the State Government in 1994 exempted the necessity of furnishing 'C' Form if tax was paid on purchases. However, the Appellate Authority and Tribunal rejected this argument, stating that the revisionist must furnish 'C' Form for inter-State sales. The High Court analyzed the provisions of the Central Sales Tax Act, emphasizing that the absence of 'C' Form implies the sale is not inter-State, subjecting it to State law. The judgment clarified that without 'C' Form, no set off is allowed under the Central Sales Tax Act except for tax paid on paddy procurement. The High Court highlighted the statutory requirement of 'C' Form for establishing inter-State sales and the implications of non-compliance with this requirement on tax treatment under State law versus the Central Sales Tax Act.

In conclusion, the High Court's judgment clarified the statutory provisions regarding set off of sales tax paid on purchases and the mandatory requirement of furnishing 'C' Form for inter-State sales under the Central Sales Tax Act, 1956. The decision emphasized the importance of adhering to legal requirements for claiming tax benefits and highlighted the distinction in tax treatment based on compliance with statutory provisions.