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2015 (7) TMI 587 - HC - VAT and Sales TaxIssuance of C forms - subsequent sale against E-1 / E-2 forms - The petitioner has been denied C Form by the Board (purchaser of the goods) on the ground that the petitioner has not produced any proof of payment of tax under the CST Act - Held that - the first sale alone will be taxable and the tax on subsequent sale will be exempted if dealers are registered. Therefore, the Board cannot insist proof of tax paid by the first seller. For the reason that the Board has already admitted supply of materials by the petitioner, they are bound to issue C Forms as and when Form E-2 certificate is received from the petitioner. It is always open to the Assessing Authority to consider genuineness of the claim for exemption claimed by the petitioner in appropriate proceedings. The issue whether the petitioner is entitled for exemption and has satisfied the conditions under Section 6(2) of the CST Act cannot be decided in these proceedings at the instance of the Tax Department. Thus, the writ petition is disposed of directing the Board to issue C Forms to the petitioner as and when petitioner produces E-2 certificate without any delay. - Decided in favor of petitioner.
Issues:
1. Denial of 'C' Form declaration by the Board to the petitioner. 2. Requirement of proof of payment of tax under the CST Act. 3. Interpretation of Section 6(2) of the CST Act regarding exemption for subsequent sales during the movement of goods. 4. Compliance with Rule 12(4) of the Central Sales Tax (Registration and Turn Over) Rules, 1957 for issuance of certificates. 5. Misconception by the Board regarding the necessity of invoices for issuing 'C' Forms. Analysis: 1. The petitioner, a Company executing works for the Kerala State Electricity Board, sought a writ of mandamus for the issuance of 'C' Form declaration by the Board. The petitioner claimed entitlement to the form under clause 14.4 of the Instruction to Bidders, allowing for the issuance of construction of sales tax declaration forms for materials supplied. The Board denied the 'C' Form citing lack of proof of tax payment and alleged tampered invoices. 2. The petitioner argued that they purchased goods from outside the State and transferred them to the Board as a part of intra-State works contract, requiring the 'C' Form for exemption under Section 6(2) of the CST Act. The Board contended that the petitioner did not fulfill the tax payment requirement under the Act. 3. Section 6(2) of the CST Act exempts subsequent sales during the movement of goods if certain conditions are met. The Court emphasized that the first sale is taxable, and subsequent sales are exempt if the necessary certificates are provided. The Board's insistence on proof of tax paid by the first seller was deemed unnecessary, and the Board was directed to issue 'C' Forms upon receipt of Form E-2 certificate from the petitioner. 4. Rule 12(4) mandates certificates in Form E-1 or E-2 under the CST Act. The petitioner had issued a 'C' Form to the first seller, who then issued Form E-1 to the petitioner. The Court clarified the process for issuing Form E-2 to the Board and receiving 'C' Forms in return, emphasizing the importance of transfer of title during the movement of goods. 5. The Board's misconception regarding the necessity of invoices for issuing 'C' Forms was addressed, highlighting that invoices are not mandatory for the issuance of such forms. The Court cited a Supreme Court ruling to support the interpretation of Section 6(2) and emphasized that the Assessing Authority can verify the exemption claim's genuineness in separate proceedings. In conclusion, the Court directed the Board to issue 'C' Forms to the petitioner upon submission of the E-2 certificate, without delay, leaving the assessment of exemption eligibility for appropriate proceedings.
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