2018 (1) TMI 910 - HC - VAT and Sales Tax

Time limitation - primary defence of the Defendant was that the sales tax forms pertained to the year 1991-92 but the suit for recovery was filed only in the year 2001. Hence, the Defendant claimed that the suit was barred by limitation - Held that - The Trial court specifically notes that the non-giving of the ST-1 forms, which is an admitted position, was a statutory obligation of the Defendant which was discharged by the Plaintiff only in the year 2001. Hence, the suit was well within limitation. Demand of deposit from Sales Tax authorities - It is the case of the Plaintiff that though the payments for purchases were made, the ST-1 forms were not submitted despite repeated requests - Held that - A perusal of the records reveals that the pleadings and the evidence has been properly appreciated by the learned Trial court. The admissions by the witness of the Defendant, both in the pleadings and in the cross-examination, clearly point to the fact that there was default by the Defendant in depositing the sales tax on the purchases made by him and on handing over of the ST-1 forms. The statutory obligation of the Defendant having been discharged by the Plaintiff, the Plaintiff is entitled to recover the said amount from the Defendant. There is no illegality in the impugned order. The suit has been rightly decreed in the favor of the Plaintiff.

Summary

Issues:
Recovery of outstanding amount for supplied goods, Submission of ST-1 forms, Limitation period for filing suit, Entitlement to decree with interest.

Analysis:
The judgment pertains to a case where the Plaintiff, a manufacturer of stationery products, filed a suit against the Defendant for recovery of a sum of ?11,59,381.44. The Plaintiff claimed that despite making payments for goods supplied, the Defendant did not submit the required ST-1 forms, leading the Plaintiff to deposit a significant amount with the Sales Tax Authorities. The suit was filed for the supplies made during the years 1991-92 and 1992-93.

The Trial court framed several issues, including the entitlement of the Plaintiff to the decree with interest, the limitation period for filing the suit, and the submission of ST-1 forms. The Defendant's primary defense was that the suit was barred by limitation as it was filed in 2001 for transactions dating back to 1991-92. However, the Plaintiff argued that there was a continuing breach by the Defendant, which ceased only when the Plaintiff deposited the required amount in 2001.

The Trial court examined the evidence, including the invoices bearing the Defendant's signature and the statutory obligation to submit ST-1 forms. It was found that the Defendant failed to provide evidence of submitting the forms, leading to the Plaintiff being forced to pay the sales tax amount. Consequently, the Trial court held in favor of the Plaintiff, awarding the outstanding sum along with interest.

Upon review, the High Court found no illegality in the Trial court's decision. The admissions by the Defendant's witness and the evidence presented clearly indicated the Defendant's default in fulfilling the statutory obligations. Therefore, the High Court upheld the Trial court's judgment and decree in favor of the Plaintiff, dismissing the appeal on its merits.