TMI Blog2014 (9) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... s for reference thereof to arbitration and the Arbitral Tribunal shall have no jurisdiction in such matters. Question was not merely of performance and non-performance of contractual obligations affecting the civil/contractual rights of the parties but also of liability to pay tax which was statutory exaction and therefore, the writ court, cannot shut its eyes and refuse to interfere only on the ground that the question raised was only one of enforcement of contractual obligation particularly when the enforcement of contractual obligation involves rights and liabilities of the parties under statutory provisions. - In a sale of goods involve offer, acceptance and consideration. All these relates to goods which are the corpus and transfer of goods cannot be segregated from the total cause of action of the transaction of sale. The goods against which declaration form C is being sought by the petitioner, as per various apex court rulings, are deemed to have been transferred to the respondent-NEEPCO in the State of Arunachal Pradesh in execution of the works contract by the petitioner. Delivery of goods being an integral part of the cause of action, the cause of action can also be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven communicated to the Commissioner of Commercial Taxes, West Bengal in connection with issue of C form in order to avoid any disruption of the supply of the contract materials. In the aforesaid facts and circumstances, it cannot be allowed to deny the same and reject the claim of the petitioner on the pretext of absence of any provision in the contract agreement to issue C form. The impugned letter dated October 29, 2010 refusing to issue form C is impermissible and unacceptable under the provisions of law and the same is liable to be quashed and set aside. It is accordingly, quashed and set aside. - Decided in favour of assessee. - W. P. (C) No. 45(AP) of 2011 - - - Dated:- 8-3-2013 - MUSAHARY P.K., J. For the Appellant : Dr. B.P. Todi, Senior Advocate, A. Nath, A. Todi, K. Jini, and D. Loyi For the Respondents : Muk Pertin, Tony Pertin, A. K. Singh and A. Nima JUDGMENT :- P.K. MUSAHARY J.- The petitioner has approached this court under article 226 of the Constitution of India praying for issue of an appropriate writ directing the respondent, North Eastern Electric Power Corporation Ltd. (in short, NEEPCO ) to issue declaration form C under the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government of India, Ministry of Power, New Delhi, and requested the petitioner to avail of the admissible benefits of taxes and duties as per norms and arrange to dispatch pen stock steel liners and all hydro mechanical items as described in the contract agreement pertaining to Package IV of Kameng Hydro Electrical Project. NEEPCO being a registered dealer under the Central Sales Tax Act, 1956 as well as under Arunachal Pradesh Goods Tax Act, 2005 also gave their Central sales tax registration number as well as VAT registration number to the petitioner. (iv) The petitioner in order to accelerate the progress of the work set up its factory at Howrah, West Bengal, with due approval of the authorities of NEEPCO. The petitioner by its letter dated November 17, 2008 informed NEEPCO about such setting up of workshop at Howrah, West Bengal and started sending pen stock steel liners from Howrah, West Bengal charging in the invoices, Central sales tax at two per cent as maximum applicable benefit as per section 8(1) of the Central Sales Tax Act, 1956 starting from November 21, 2008. The said two per cent Central sales tax as charged in the invoices was deposited by the petitioner to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d October 29, 2010 informed the petitioner that the petitioner's request for issue of C forms against the materials dispatched from Howrah to Kimi was referred to Corporate Taxation Cell wherein it was decided that C forms cannot be issued to such transfer to Kimi since there is no provision in the contract agreement for the same. (viii) The petitioner in the meantime have received notice dated December 14, 2010 from the Joint Commissioner of Commercial Taxes, West Bengal, due to the petitioner's failure to furnish declaration form C under section 8 of the Central Sales Tax Act, 1956, wherein it was stated that for failure to submit declaration form C penalty not exceeding 50 per cent of the amount would be payable besides levy of tax. Heard Dr. B.P. Todi, learned senior counsel assisted by Mr. A. Todi, learned counsel for the petitioner as well as Mr. T. Pertin, learned counsel for the respondent-Corporation. The respondent-Corporation NEEPCO has filed an affidavit raising preliminary objections to the maintainability of the present writ petition on the following main grounds: (i) That the present issue with respect to the furnishing of C form to the contractor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statute. In support of the above contentions Dr. Todi, relies on a judgment of the Jammu and Kashmir High Court rendered in Subash Chander Gupta Sons v. Union of India [2006] 144 STC 217 (J K), which involves similar facts wherein it was held that although the contract between the parties contained an arbitration clause the question relating to the liability to pay tax, which is a statutory liability, the arbitration clause in the contract is not an absolute bar to entertain the writ petition. In this matter a question has also arisen as to whether the jurisdiction of this court can yet be ousted and referred to arbitration considering the subject-matter of the present petition. To find an answer to the above question one may refer to section 2(3) of the Arbitration and Conciliation Act, 1996 which is quoted hereunder: 2. (3) This part shall not affect any other law for the time being in force by virtue of which certain disputes may not be submitted to arbitration. A perusal of the provisions of the Arbitration and Conciliation Act, 1996 and of the above quoted section 2(3) makes it clear that all or certain disputes arising in respect of defined relationship, whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contract, which, inter alia, provide reference of all questions arising out of contract to the arbitrator and it is accordingly stated that the issue involved being referable to arbitration in view of the wide amplitude of the arbitration clause, writ petition is not maintainable, that too after the contract stands concluded. It is vehemently argued on behalf of the respondents that since there is efficacious alternative remedy, discretionary jurisdiction to be exercised by the writ court, should not be exercised in such a case. No doubt, the contract between the parties do contain an arbitration clause and the issue arbitral thereunder. However, the question raised in the writ petitions relates to the liability to pay tax, which is statutory liability. In view of the specific constitutional provision contained under article 265 of the Constitution of India and section 114 of the Constitution of Jammu and Kashmir, there is constitutional prohibition from levying and recovering the tax without the authority of law. Therefore, what needs to be examined, is not enforceability and interpretation of mere contractual obligations, but also statutory liability of the petitioners to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as public interest. After entering into contract, in cancelling the contract which is subject of terms of the statutory provisions, as in the present case, it cannot be said that the matter falls purely in a contractual field. Therefore, we do not think it would be appropriate to suggest that the case on hand is a matter arising purely out of a contract and, therefore, interference under article 226 of the Constitution is not called for. This contention also stands rejected.' ... 15. As said above, the issue in the present cases involve the statutory liability to pay tax under law and therefore, the alternative remedy of arbitration even if include within its ambit, the issue involved cannot form a valid ground to prevent the writ court from exercising its discretionary jurisdiction under article 226 of the Constitution of India. I, therefore, hold that the arbitration clause in the contract is not an absolute bar and considering the issue involved, the remedy of writ cannot be denied to the petitioners. ... 18. The ratio of the aforesaid judgments is clearly applicable to the facts of these cases. The question is not merely of performance and non-performanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. It is further stated that the goods sold in the course of inter-State trade and commerce, against which declaration form C is being sought from the respondents, are transferred to the respondent-NEEPCO in execution of the contract works of Package-IV of Kameng Hydro Electric Project in the State of Arunachal Pradesh. Delivery of goods being an integral part of the cause of action, the cause of action can also be said to have arisen in the State of Arunachal Pradesh giving jurisdiction to this court to entertain the petition. In order to bring home this submission, Mr. Todi, relies on the judgment of this High Court in Goodrich Group Ltd. v. Mahmood Hasan Sultan [2011] 1 NEJ 237. According to him, in the said case, the vital question as to whether a suit must be instituted at the very place, where the cause of action arises or where the sole or principal office is located or is it permissible to institute a suit, at a place, solely on the ground that a subordinate or branch office of the defendant-company is located there, has been discussed and decided. Referring to the Explanation to section 20 of the Code of Civil Procedure, 1973 it was held that section 20 clarifies that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued by the respondent-NEEPCO, to the petitioner. In a sale of goods involve offer, acceptance and consideration. All these relates to goods which are the corpus and transfer of goods cannot be segregated from the total cause of action of the transaction of sale. The goods against which declaration form C is being sought by the petitioner, as per various apex court rulings, are deemed to have been transferred to the respondent-NEEPCO in the State of Arunachal Pradesh in execution of the works contract by the petitioner. Delivery of goods being an integral part of the cause of action, the cause of action can also be said to have arisen in the State of Arunachal Pradesh giving jurisdiction to this court to entertain the petition. In my considered view, the ratio of the judgment in Goodrich Group Ltd. [2011] 1 NEJ 237 and Navinchandra N. Majithia [2000] 7 SCC 640 are fully applicable to the present case. Applying the law laid down in the above cases, cause of action in part has arisen in the State of Arunachal Pradesh giving jurisdiction to this court to entertain this petition. Coming to the principal question and the relief claimed in this petition as regards liability of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / commissioning. So long sale is not taken place NEEPCO can neither be held liable for Central sales tax nor is bound to issue C forms either under any law or under the contract agreement. On the question of non-issue of declaration form C by the respondentNEEPCO, Dr. Todi, learned senior counsel for the petitioner submits that the respondent-Corporation NEEPCO once availed of the concessional rate of tax and once on their request the petitioner acted upon to charge concessional rate of tax for the materials dispatched, the NEEPCO is legally bound to issue C forms as per requirement of section 8(1) of the Central Sales Tax Act, 1956 read with rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957. It is stated that non-issuance of C forms by NEEPCO and consequential failure to submit the same by the petitioner before the Sales Tax Authority at Howrah, West Bengal, would attract penal consequences besides payment of higher amount of tax by the petitioner. It is submitted that NEEPCO cannot refuse to issue C form simply because of the reason that there is no provision in the contract agreement, when they were issuing letters one after another to the petitioner to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e turnover or any part thereof relates to the sale of goods in the course of inter-State trade or commerce not falling within sub-section (1), shall be at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of that State. Explanation.-For the purposes of this sub-section, a dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law. (3) The goods referred to in sub-section (1),- (a) . . . (b) are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for re-sale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or in the telecommunications network or in mining or in the generation or distribution of electricity or any other form of power; (c) are containers or other materials specified in the certificate of registration of the registered dealer purchasing the goods, being containers or materials intended for being used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit of section 8(1) of the Act. Although there is no express provision requiring FCI or for that matter, other Government and non-Government bodies to issue C forms there is an implied obligation to issue such forms. This has been discussed in paragraph 4 of the said judgment which is quoted hereunder (pages 406 and 407 in 52 STC): From the above provisions and the form C prescribed in this behalf, it is clear that the registered dealer to whom the goods are sold, has to furnish form C. As contended by Sri Venkatarama Reddy, the learned counsel for the Corporation, that rule does not specifically lay down that the purchaser of the goods shall issue C form to the seller. But that obligation can be inferred from the intendment of the Act and the other specific provisions made in this behalf in regard to signing of the declaration in form C and the right of seller to pay only four per cent sales tax on inter-State sales. Sub-rule (3) of rule 12 makes a specific provision entitling the seller to demand from the dealer who purchased goods to issue a duplicate form in case the form already issued is lost. In sub-rule (8)(a) of rule 12, the person who is required to sign the declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of his turnover. In this view of the matter, a writ of mandamus shall issue to the respondents to issue C forms in respect of the turnover covered by section 8(1) and (4) read with rule 12(1) and 12(8)(a) of the Rules referred to above, as requested by the petitioner-company in its letter dated August 1, 1980, in respect of the above transaction. The writ petition is accordingly allowed. No costs. Consideration of section 8 of the Central Sales Tax Act, 1956 as quoted above makes it abundantly clear that if, in the course of inter-State trade or commerce, any sale is effected by a registered dealer, of the goods described in sub-section (3) of section 8, the tax shall be only two per cent (with effect from June 1, 2008) of the turnover or such other rate as shall be applicable to the sale of such goods inside the appropriate State under the sales tax law of that State, whichever is lower. However, the Legislature intended the seller and the purchaser to furnish a declaration, and made a provision in sub-section (4) of section 8 requiring the registered dealer to whom the goods are sold, to file a declaration as prescribed by the Rules. Rule 12 of the Central Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, by reason of the purchasing dealer not being registered under section 7 in the State in which the goods covered by form C referred to in sub-rule (1) are delivered, he is not able to obtain the said form in that State, Form C may be the one obtained by him in the State in which he is registered under the said section. (7) The declaration in form C or form F or the certificate in form E-I or form E-II shall be furnished to the prescribed authority up to the time of assessment by the first assessing authority: Provided that if the prescribed authority is satisfied that the person concerned was prevented by sufficient cause from furnishing such declaration or certificate within the aforesaid time, that authority may allow such declaration or certificate to be furnished within such further time as that authority may permit. (8) to (10) . . . On perusal of rule 12 quoted above it becomes clear that the said rule specifically lay down that the purchaser of the goods shall issue C form to the seller and that obligation is a statutory exaction of the Central Sales Tax Act, 1956, and the other specific provisions made in this behalf in regard to obtaining of the declaration ..... X X X X Extracts X X X X X X X X Extracts X X X X
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