2011 (2) TMI 1313 - HC - VAT and Sales Tax

Whether the petitioner by virtue of being a registered dealer under section 7 of the CST Act is entitled to be supplied with declaration form C as provided under section 8 of the CST Act read with rule 12(1) and rule 12(6) of the CST (Registration and Turnover) Rules and rule 6 of the CST (Orissa) Rules? Whether the opposite party-department authorities are justified in refusing C form to the petitioner? Held that - It is the statutory right of a dealer registered under section 7(2) of the CST Act to be supplied with declaration form C to avail of concessional rate of tax against the purchase of goods from outside the State. In the instant case we find that the foreign buyer placed purchase order with MSPL Ltd. Karnataka on January 18 2010 whereas M/s. Saha Brothers Jharkhand raised bills in the name of the petitioner on November 4 2009 November 24 2009 December 6 2009 December 27 2009 January 8 2010 (annexure 5 series) which is prior to the purchase order placed by the foreign buyer on M/s MSPL Ltd. Karnataka. We further notice from copy of form H in Sl. No. F 176853 at page 93 to the writ petition that M/s. MSPL Ltd. Bangalore has purchased the goods from the petitioner vide cash memo No. 1 dated August 21 2009. Thus the claim of the petitioner that its sale to M/s. MSPL Ltd. is in course of export and fall within the ambit of section 5(3) of the CST Act is not tenable. In view of the above we do not find any infirmity or illegality in the order passed by opposite party Nos. 2 and 3 under annexures 1 and 6 respectively warranting any interference by this court. Appeal dismissed.

Summary

Issues Involved:
1. Entitlement to be supplied with declaration form C under section 7 of the CST Act.
2. Legality and validity of the order refusing to issue C forms to the petitioner.

Issue-wise Detailed Analysis:

1. Entitlement to be supplied with declaration form C:

The petitioner, a registered dealer under section 7(2) of the CST Act, claimed entitlement to declaration form C for concessional tax rates on inter-State purchases. Section 7(2) allows dealers not liable to pay tax under the CST Act but liable under state sales tax laws to apply for registration. Such dealers can obtain goods at concessional tax rates if specified in their registration certificate. Section 8(4) mandates submission of form C for concessional tax claims. Rule 12(1) of the CST (Registration and Turnover) Rules specifies form C for declarations, and Rule 12(6) states that form C should be obtained in the state where goods are delivered. Rule 6 of the CST (Orissa) Rules outlines the procedure for obtaining form C.

The court concluded that it is the statutory right of a dealer registered under section 7(2) of the CST Act to be supplied with declaration form C to avail of concessional tax rates on inter-State purchases.

2. Legality and validity of the order refusing to issue C forms:

The petitioner argued that the refusal to issue form C was unjustified, as the transactions with M/s. Saha Brothers, Jharkhand, were inter-State sales. The petitioner claimed that the CST Act provides safeguards against misuse of form C through sections 10 and 10A, which impose penalties for misuse.

The Revenue countered that the petitioner was not entitled to form C, as the transactions were not inter-State sales. They argued that the goods did not move to Orissa and the transactions were outside state transactions. The revisional authority upheld the refusal, stating that the sale between M/s. Saha Brothers and the petitioner was not inter-State, as there was no transfer of documents or movement of goods to Orissa.

The court agreed with the Revenue, stating that if the issuing officer has knowledge of potential misuse of form C, they are not expected to issue it. The court found that the petitioner was not entitled to form C as the transactions did not qualify as inter-State sales. The goods did not move to Orissa, and the documents showed that the petitioner was not a party to the transactions.

Regarding the claim of export sales, the court found that the petitioner did not meet the conditions under section 5(3) of the CST Act. The transactions did not follow the required sequence, and the goods were not the same as those specified in the export order.

Conclusion:

The court found no infirmity or illegality in the orders passed by the opposite parties, upholding the refusal to issue form C to the petitioner. The writ petition was dismissed with no order as to costs.