2021 (7) TMI 841 - HC - VAT and Sales Tax

Reopening of completed assessment - declaration forms filed by the petitioner claiming concessional rate of tax/exemption not considered - allegation of defective C and H forms - violation of principles of natural justice - HELD THAT - The 1st respondent ought to have considered the fact that the declaration forms are not generated by the petitioner, and on the other hand, are issued by the concerned authorities of the petitioner s buyers, located in the other State. The petitioner cannot compel the authorities in the respective States to fill up the details before the same are issued to the petitioner, who merely on receiving the same, has filed with the 1st respondent. If only the 1st respondent had issued a notice pointing out the deficiencies and returned the defective C and H forms, the petitioner could take steps to get the same rectified by sending the original declarations to the issuer. If the 1st respondent had done so, such action could have been considered as in the interest of justice and fair-play. The action of the 1st respondent in refusing to return the original C and H declaration forms submitted would also deprive the petitioner to claim the difference of tax from the purchaser, if they fail to provide the duly rectified declaration forms and would result in loss to the petitioner - It is settled position of law that whenever declaration forms filed are found to be defective in nature, the authority is duty bound to return the same to the dealer/assessee who filed the same to enable him to rectify such defects. The action of the 1st respondent in rejecting the claim of the petitioner for concessional rate of tax / exemption on the ground of declarations being defective and also not returning the C and H declaration forms to the petitioner to rectify such defects, is highly objectionable and violative of principles of natural justice, resulting in serious prejudice to the petitioner - the action of the 1st respondent in passing the impugned order is in violation of principles of natural justice and calls for interference by this Court. The matter is remitted back to the 1st respondent with a direction to the 1st respondent to return the defective C and H declaration forms to the petitioner by issuing a notice pointing out the deficiencies - petition allowed by way of remand.

Summary

Issues:
Challenge to assessment order under Rule 12(7) of the CST Rules for AY 2015-16.

Analysis:
1. The petitioner contested an order passed by the 1st respondent under Rule 12(7) of the CST Rules for AY 2015-16, alleging that the initial assessment order did not consider claims for concessional tax rates and exemptions on Inter-State and export sales, without notifying the petitioner.

2. The Court intervened due to violations of natural justice, prompting the reopening of assessments for dealers like the petitioner to file statutory declarations under Rule 12(7) of the CST Rules.

3. The petitioner claimed to have submitted valid declaration forms for concessional rates and exemptions on Inter-State and export sales, but the 1st respondent rejected some forms as incomplete without specifying the defects or allowing rectification.

4. The respondent argued that incomplete declaration forms should be considered invalid, but acknowledged the necessity of notifying the dealer about defects before rejection.

5. The Court noted that the petitioner had filed valid declaration forms before the original assessment, and the 1st respondent's rejection without notice or opportunity to rectify defects violated principles of natural justice.

6. Refusal to return original declaration forms prevented rectification by the petitioner, depriving them of claiming tax differences from purchasers and resulting in unjust loss.

7. Legal precedents emphasized the duty to return defective forms for rectification, highlighting the importance of providing dealers with opportunities to rectify defects before rejection.

8. Consequently, the Court found the 1st respondent's actions to be in violation of natural justice and ordered the return of defective forms to the petitioner for rectification, followed by a reasoned order after re-submission and a personal hearing.

9. The Writ Petition was allowed, setting aside the impugned order and remitting the matter back to the 1st respondent for compliance with the Court's directions.

10. The judgment concluded by closing pending petitions and making no order as to costs.