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TMI Blog2025 (4) TMI 952X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Sales Tax Act, 1956 (for short, 'the CST Act') and rules made thereunder, the assessing authority or any other authority authorised by the Commissioner after affording such dealer an opportunity of being heard, is empowered to cancel such declaration forms or certificates. By the impugned judgment, the High Court held that the first appellant-State had no rule-making power to frame a rule providing for the cancellation of validly issued declarations/forms. The High Court held that sub-rule (20) of Rule 17 of the Rajasthan Rules was ultra vires Sections 8(4), 13(1)(d), 13(3) and 13(4)(e) of the CST Act. 2. During 2017-18, the respondent sold certain goods to M/s. H.G. International and M/s. Saraswati Enterprises (originally respondent Nos.2 and 3, whose names were deleted from the array of parties) against Form C amounting to Rs. 4.89 crores and Rs. 7.20 crores respectively. Goods were sold in the first quarter of the year 2017-18. 3. The revenue authorities inspected the places of business of M/s. H.G. International and M/s. Saraswati Enterprises. On inspection, it was revealed that no business activity was carried out at the places and registration of M/s. H.G. Internatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invited our attention to the rule-making power conferred by Section 13 (3) of the CST Act. He pointed out that the general rule-making power has been conferred on the State Government to make rules which are not inconsistent with the provisions of the CST Act and the rules made by the Central Government under Section 13(1) thereof. He submitted that sub-rule (20) of Rule 17 of the Rajasthan Rules is not inconsistent with the provisions of the CST Act. He submitted that sub-rule (20) of Rule 17 has been enacted to prevent fraud and contravention of the provisions of the CST Act and rules made thereunder. He submitted that sub-section (3) of Section 13 of the CST Act confers a power on the State Government to make rules to carry out the purposes of the CST Act. Rule-making power can be exercised under subsection (3) of Section 13 to check evasion. He submitted that the activity of preventing evasion is for carrying out the purposes of the CST Act. 7. The learned counsel invited our attention to the separate orders dated 7th December 2017 passed by the Commercial Tax Officer of the first appellant-State Government, by which Forms C issued to M/s. H.G. International and M/s. Saraswat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was introduced on 14th July 2014 after a gap of 57 years from the date on which the CST Act came into force. He submitted that no other State has made any such rule. He relied upon a decision of the Delhi High Court in the case of Jain Manufacturing (India) Pvt Ltd v. Commissioner of Value Added Tax & Anr (2016) (93) VST (326) (Delhi) : 2016 SCC OnLine Del 3656. In this case, the Commissioner under the Delhi VAT Act had cancelled Form C. He pointed out that the counsel appearing for the Commissioner stated that there was no provision in the CST Act for cancellation of Form C. He submitted that the special leave petition preferred against the decision was dismissed on the ground of low tax effect. 10. The learned counsel relied upon a decision of this Court in the case of Sales Tax Officer, Ponkunnam & Anr. v. K.I. Abraham (1967) (20) STC 367 (SC) : 1967 SCC OnLine SC 157. He also relied upon another decision of this Court in the case of The State of Madras v. R Nand Lal & Co (1967) (20) STC 374 (SC) : 1968 SCC OnLine SC 142. He would therefore submit that the view taken by the High Court of Rajasthan in the impugned judgment is correct. CONSIDERATION OF SUBMISSIONS 11. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 8, the condition precedent for applicability of sub-section (1) is that the dealer selling the goods in the course of inter-State trade or commerce must furnish to the prescribed authority in the prescribed manner a declaration duly filled containing the prescribed particulars in a prescribed form obtained from the prescribed authority and signed by the registered dealer to whom the goods are sold. 12. The word "prescribed" means prescribed by the rules. Under sub-section (1) of Section 13, the rule making power has been conferred on the Central Government providing for what is set out in clauses (a) to (g) of Section 13(1). Clause (d) of Section 13(1) thereof is material, which reads thus: "13. Power to make rules- (1) The Central Government may, by notification in the Official Gazette, make rules providing for - .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. (d) the form in which and the particulars to be contained in any declaration or certificate to be given under this Act the State of origin of such form or certificate and the time within which any such certificate or declaration shall be produced or furnished;" ( emphasis added ) 12.1. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and the manner in which any such form may be used and any such certificate or declaration may be furnished; (ee) the form and manner in which, and the authority to whom, an appeal may be preferred under sub-section (3H) of section 7, the procedure to be followed in hearing such appeals and the fees payable in respect of such appeals; (f) in the case of an Undivided Hindu Family, association, club, society, firm or company or in the case of a person who carries on business as a guardian or trustee or otherwise on behalf of another person, the furnishing of a declaration stating the name of the person who shall be deemed to be the manager in relation to the business of the dealer in the State and the form in which such declaration may be given; (g) the time within which, the manner in which and the authorities to whom any change in the ownership of any business or in the name, place or nature of any business carried on by any dealer shall be furnished." ( emphasis added ) 13.1. On the face of it, none of the clauses (a) to (j) of sub-section (4) empower the State Government to frame rules providing for cancellation of declarations or forms furnished as per the rules f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der sub-section (3) of Section 13 by making rules providing for cancellation of a declaration in Form C as provided in Central Registration Rules, the State Rules will be inconsistent with the Central Registration Rules framed by the Central Government in exercise of power under Section 13(1)(d) of the CST Act. The State Government cannot frame rules in exercise of power under Section 13(3) which will be inconsistent with the rules framed by the Central Government in exercise of powers under Section 13(1) of the CST Act. 17. The respondent relied upon the decision of this Court in the case of R. Nand Lal & Co3. In the facts of this case, the assessing authority declined to assess the turnover as prescribed by sub-section (1) of Section 8 of the CST Act on the ground that the declaration in Form C covered two or three transactions contrary to the first proviso to Rule 10(1) of the Rules framed by the State Government under the CST Act. This Court, in the said decision, while dealing with the rule-making power of the State under Section 13, held thus: ".. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. We are constrained to observe that the rule-making authorities have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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