2016 (6) TMI 62 - HC - VAT and Sales Tax

Declining to issue Form H declarations - Limitation of assessment - Section 40 of the Karnataka Value Added Tax Act, 2003 - Export obligations are fulfilled and receipt of income in foreign currency - Held that - the learned Government Advocate would submit that the impugned order is an appealable order and hence, the present petitions are misconceived, however, the endorsement issued merely claiming that the petitioner is not entitled to such Form H declarations when there is no legal presumption, it is incumbent on the first respondent to explain himself and pass a reasoned order. The impugned endorsement is a non speaking order and therefore, the petitioner being constrained to approach this Court would require the petitions to be allowed. Therefore the impugned order is quashed. - fresh orders to be passed - Decided in favour of petitioner

Summary

Issues:
1. Refusal to issue Form H declarations by the first respondent.
2. Validity of the impugned endorsement.
3. Legal presumption for declining the relief sought by the petitioner.

Analysis:
1. The petitioner, a manufacturer and exporter, entered into an agreement with another party for the supply of iron ore. Due to the other party's failure to fulfill its obligations, the petitioner demanded a refund and initiated criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881. The other party sought Form H declarations, but the petitioner withheld them to pressure for repayment. Subsequently, the other party invoked arbitration proceedings, leading to the current dispute regarding the issuance of Form H declarations for the tax period 2006-2007.

2. The first respondent declined to issue Form H declarations citing a limitation of assessment under Section 40 of the Karnataka Value Added Tax Act, 2003. The petitioner challenged this decision, arguing that there was no legal impediment under Rule 12(10) of the Central Sales Tax Rules, 1957, and Section 5 of the Central Sales Tax Act, 1956, for issuing the declarations. The petitioner contended that the refusal was arbitrary and lacked legal basis, resulting in a denial of rightful claims without any revenue loss to the authorities.

3. The petitioner approached the High Court challenging the impugned endorsement, claiming it lacked a reasoned explanation and was a non-speaking order. The Court agreed with the petitioner, finding the endorsement to be arbitrary and without legal backing. The Court quashed the impugned order and directed the first respondent to provide a reasoned order justifying the refusal to issue Form H declarations. The Court emphasized the need for a legal basis for such decisions and instructed the first respondent to pass an appropriate order after the petitioner's appearance before them.