2022 (12) TMI 891 - HC - VAT and Sales Tax

Validity of assessment order - concessional rate of tax in respect of inter-State sales on the strength of C Form - mismatch of products - Section 32 of the Delhi Value Added Tax Act, 2004 - HELD THAT - A perusal of the impugned assessment orders indicates that the benefit of C Forms has been denied to the petitioner in respect of certain inter-State sales on the ground that the C Forms could not be verified. The concerned VATO had noted that whereas the petitioner deals with kirana items soap and detergents, cosmetics/shampoo/hair oils and tooth brush/paste/powder etc the concerned authorities of Rajasthan have confirmed that the C Forms have been issued in respect of different items such as gitti, grit cotton seed cake. It is material to note that the VATO did not consider the judgements relied upon by the petitioner. Whether the petitioner could be denied the benefit of the C Forms on the ground that the same have not been verified, or on the basis of the mismatch of the products? - HELD THAT - In Pentex Sales Corporation v. Commissioner of Sales Tax, Delhi 2013 (5) TMI 566 - DELHI HIGH COURT , this court had referred to the decision in the case of State of Madras v. M/s Radio and Electrical Ltd Anr. 1966 (4) TMI 59 - SUPREME COURT and held that the dealer claiming the benefit of ST-I Form was required to verify that the purchasing dealer was a registered dealer and holds a registration certificate in respect of the said goods sold to him. Once the said dealer had complied with the same, his duty did not extend any further. In the present case, there is no dispute that the purchasing dealers are duly registered with the concerned authority as the registered dealers. Their registration certificates also indicate that they are registered in respect of the goods sold by the petitioner. There is no dispute that the petitioner had produced invoices and other material to establish that he had sold the concerned goods to the purchasing dealers. Under the scheme of taxation, the point of further taxation shifts to the purchasing dealer and the tax on the goods in question have to be recovered from those dealers. Petition allowed.

Summary

Issues:
Challenge to assessment orders under DVAT Act for violating constitutional provisions.

Analysis:
The petitioner challenged assessment orders dated 29.08.2020, alleging violation of Article 14, 19, and 265 of the Constitution of India. The petitioner, engaged in inter-State trading, claimed concessional tax rates for inter-State sales using C Forms. Despite filing returns and claiming refunds, the petitioner faced delays and non-processing of refunds. The petitioner filed writ petitions seeking refund directions, which were disposed of with a directive to submit physical C Forms for refund processing.

Subsequently, a refund order was passed for one quarter, but the amount was not credited to the petitioner's account. Another refund claim for a different quarter remained unprocessed. The VAT Officer issued a notice of default assessment, alleging mismatched C Forms and treated sales as central sales without valid C Forms, demanding additional tax and interest.

The petitioner's review application and appeal were rejected, leading to the issuance of impugned assessment orders in 2020, similar to the earlier order. The VAT Officer denied C Form benefits citing unverified forms and product mismatches, disregarding Supreme Court precedents.

The Court noted that the purchasing dealers were registered for goods sold by the petitioner, and the C Forms were issued by valid dealers. The Court emphasized that the selling dealer need not investigate how the purchasing dealer obtained C Forms if they are genuine and the purchasing dealer is registered for the goods. The Court set aside the impugned order, directing the refund processing and allowing the petition.

In conclusion, the Court highlighted that under the taxation scheme, further tax liability shifts to purchasing dealers, and genuine C Forms issued by registered dealers should be accepted without further inquiry. The judgment focused on upholding the petitioner's right to benefit from C Forms and directed expeditious refund processing by the respondents in compliance with the law.