2022 (5) TMI 981 - HC - VAT and Sales Tax

Denial of concessional rate of tax - D-Forms not accepted - D Forms disallowed on the ground that the said dealer is a Government concern and not a Government and, as such, D Forms, issued by it cannot be accepted and by further on the ground that a Govt. concern being a registered dealer could not issue D Forms - HELD THAT - The provision as laid down under Section 8 (1) (a) is applicable in case of inter-state sale made to Government whether registered or not being registered and in case of Government not being a registered dealer, the selling dealer has to furnish certificate in Form D as referred to in Rule 12 (1) of the CST (Registration Turnover) Rules, 1959. A selling dealer is not required to furnish any certificate or declaration if the sale is made to Government being a registered dealer. Considering the judgment of the Hon ble Karnataka High Court in the case of KARNATAKA DAIRY DEVELOPMENT CORPORATION LIMITED VERSUS COMMISSIONER OF COMMERCIAL TAXES IN KARNATAKA 1992 (6) TMI 164 - KARNATAKA HIGH COURT and in view of admitted fact that in past the respondents have already accepted the D Forms and allowed the petitioner the concessional rate of tax on the similar sales in their assessment orders and appeals relating to 2001-02 and 2002-03, this Writ Petition is allowed by quashing the impugned assessment orders and order of the Appellate authority and Revisional authority arising out of the impugned assessment order, by directing the respondent no. 1 to accept the D Forms in question and to allow consequential benefits of concessional rate of tax to the petitioner, within three months from the date of communication of this order subject to factual verification of genuineness of the transaction in question. Petition disposed off.

Summary

Issues:
Denial of concessional tax rate on sales to a government company, Disallowance of 'D' Forms by tax authorities, Interpretation of Section 8(1) of the Central Sales Tax Act, Doctrine of Legitimate Expectation, Validity of relying on a judgment from Karnataka High Court.

Analysis:
The Writ Petitioner challenged the denial of concessional tax rate on sales to a government company by the tax authorities. The dispute arose when the tax authorities refused to accept 'D' Forms received from the Diesel Locomotive Works, Varanasi, on the basis that the purchasing company was a registered dealer and not a government entity. The Appellate authority upheld this decision, leading to a Revision Petition which was also dismissed. The Petitioner argued that the refusal to accept the 'D' Forms was arbitrary and illegal, emphasizing that the forms were accepted by sales tax authorities in other states. The Petitioner contended that the Diesel Locomotive Works, being a unit of Indian Railways, was entitled to purchase goods at a concessional rate and had the right to issue 'D' Forms, which were accepted by other states.

Regarding the interpretation of Section 8(1) of the Central Sales Tax Act, the Petitioner highlighted that the provision applied to sales made to the government, whether registered or not, and that a selling dealer was not required to furnish any certificate if the sale was made to a government entity registered as a dealer. The Petitioner argued that the claim for concessional tax rate could not be denied solely based on the later discovery that the purchaser was a registered dealer, especially when similar claims in the past were allowed by the tax authorities.

The Petitioner relied on the Doctrine of Legitimate Expectation, citing a judgment from the Karnataka High Court, to support their argument. The Court considered the exceptional circumstances of the case, the past acceptance of 'D' Forms, and the binding effect of the Karnataka High Court judgment. Consequently, the Writ Petition was allowed, quashing the assessment orders and directing the tax authorities to accept the 'D' Forms and grant the concessional tax rate to the Petitioner, subject to verification of the transaction's genuineness within three months.

In opposition, the Respondents argued that 'D' Forms could not replace 'C' Forms, especially after the discontinuation of 'D' Forms by the legislature. They contended that the statutory requirements must be followed as prescribed, and the judgment relied upon by the Petitioner had no binding effect. However, the Court, considering the facts and past practices, ruled in favor of the Petitioner, emphasizing the acceptance of 'D' Forms in previous assessments and the need for factual verification before granting the concessional rate of tax.