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Ingram Micro India Pvt. Ltd. Versus Commissioner, Department of Trade & Taxes & Another

2016 (2) TMI 244 - DELHI HIGH COURT

Issuance of C-Forms - AO rejected the request made by the Petitioner for issuance of C-Forms in relation to the inter-state purchases - the purchases were not entered in the purchase register to be maintained in Form DVAT-30; the purchases were not shown in the documents produced before the Special Auditor when a special audit was conducted for FYs 2010-11 and 2011-12. - Held that:- Petitioner is candid that it made a genuine mistake in the figures disclosed in its revised returns for inter- .....

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the Court does not find it to be the stand of the Respondents that any of the inter-state purchases, that had escaped inclusion in the revised returns, were not genuine transactions. - it is not the stand of the Respondents that the inter-state purchase transactions in respect of which the C-Forms are being asked for by the Petitioner are not genuine. As far as the furnishing of bank statements is concerned, it is stated that the Petitioner has by a letter dated 10th July 2015 furnished the said .....

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hose and Ms. Pratishtha Vij, Advocates ORDER Dr. S. Muralidhar, J. 1. This is a writ petition under Article 226 of the Constitution by Ingram Micro India Pvt. Ltd. ( IMIPL ) which is registered as a dealer under the Delhi Value Added Tax Act, 2004 ( DVAT Act ) and also under the Central Sales Tax Act, 1956 ( CST Act ). The registration certificate of the Petitioner permits it to deal with electronic goods within the state of Delhi and also undertake inter-state sales and purchases. 2. The challe .....

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2015, Respondent No. 2 was asked to dispose of the representation made by the Petitioner on 26th May 2015 in accordance with law. Pursuant thereto the impugned order was issued. Ten reasons have been given in the impugned order for rejecting the Petitioner s request. In short, it is stated that purchases in the sum of ₹ 4,35,62,335 and ₹ 1,61,49,137 in the third and fourth quarters respectively of FY 2010-11 were not shown in the returns or even in the revised returns filed by the Pe .....

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ant to the order of this Court. 4. Writ Petition (C) No. 5836 of 2015 was disposed of on 28th August 2015 in view of the impugned order having been passed. On that day, notice was issued in the present petition. A reply thereto has been filed by the Respondents. 5. This Court has heard the submissions of Mr. Balbir Singh, learned Senior counsel appearing for the Petitioner and Mr. Sanjay Ghose, learned counsel for the Respondents. 6. In terms of Section 8 (1) of the CST Act, a dealer selling in .....

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rnished to the selling dealer. 7. Under The Central Sales Tax (Delhi) Rules, 2005 ( CST Delhi Rules ) there are provisions regarding the obtaining and furnishing of C-Forms. Rule 5 (1) to (4) of the CST Delhi Rules which is relevant for the purposes of present case reads as under: 5. Authority from which Declaration Form C may be obtained, use, custody and maintenance of records of such forms and matters incidental thereto. (1) A registered dealer, who wishes to purchase goods from another such .....

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shall fill in all required particulars in the Form, and shall also affix his usual signature in the space provided in the form for this purpose. Thereafter, the counterfoil of the Form shall be retained by the purchasing dealer and the other two portions marked Original and Duplicate shall be made over by him to the selling dealer. PROVIDED that the counterfoils of the Declaration Forms should be maintained by the dealer for a period of five years or such further period as may be prescribed by t .....

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m 2A together with his last return for the year 2005-06 or by such date as may be notified by the Commissioner in this regard.] [(3) If the applicant for Declaration Forms has, at the time of making the applications, failed to comply with an order demanding security from him under sub-section (3A) of section 7 of the Act, the Commissioner shall reject the application.] [(4) If the applicant for Declaration Form C has, at the time of making the application- (i) defaulted in furnishing any return .....

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ined from the competent authority under the provision of law; or (iii) not filed proper utilization account in Form 2B ,of Forms issued to him earlier; or (iv) some adverse material has been found by the Commissioner suggesting any concealment of sale or purchase or furnishing inaccurate particulars in the returns; the Commissioner shall, after affording the applicant an opportunity of being heard, withhold, for reasons to be recorded in writing, issue of Declaration Form C to him: PROVIDED that .....

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ant, issue such forms in such numbers and subject to such conditions and restrictions, as he may consider necessary. PROVIDED ALSO that notwithstanding the provisions of any other rule the issue of Declaration Form C to a dealer to whom a certificate of registration under the Act has been granted for the first time, shall be withheld by the Commissioner, until such time as all the returns for the return period commencing from the date of validity of the certificate of registration are furnished .....

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ining C-Forms to the Commissioner of the Department. Inter alia, in the said Form, the dealer declares that due return(s) have been filed for all quarters/months till ....... (mention period ending) and the tax due as per return has been paid . As is evident from Rule 5 (2) even blank C-Forms can be obtained in anticipation of inter-state sales. Secondly, there is no time limit prescribed under the CST Delhi Rules for issuance of C-Forms. 9. Under Rule 5(4) there are four contingencies when a re .....

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mmissioner suggesting any concealment of sale or purchase or furnishing inaccurate particulars in the returns . The second proviso to Rule 5 (4) indicates that a Commissioner may issue C-Forms in such numbers and subject to such conditions and restrictions as he may consider necessary instead of withholding the C-Form. 10. The difficulties in obtaining of C-Forms by the selling dealer from the purchasing dealer is acknowledged in the Central Sales Tax (Registration & Turnover) Rules, 1957 ( .....

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ority may allow further time to the selling dealer to furnish such declaration as that authority may permit . A collective reading of the aforementioned rules reflects the intention of not specifying a rigid and inflexible time limit for furnishing a C-Form. In any event, as far as a purchasing dealer making a request for issuance of C-Forms under the CST Delhi Rules, there appears to be no such inflexible condition as to the time within which the request should be made. 11. The central thrust o .....

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er-state transactions in his returns would set a bad precedent and make the administration of tax collection extremely difficult for the Department. 12. In the present case, the Petitioner is candid that it made a genuine mistake in the figures disclosed in its revised returns for inter-state purchases made by it. It is pointed out that although in the original returns disclosures were made of inter-state purchases, there was a mistake owing to the wrong understanding by the Petitioner of the pu .....

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. It is stated that on account of clerical mistake made at the stage of filing the revised return, inter-state purchase transactions of the value of ₹ 5,97,11,472 were not reflected in the revised returns although they did form part of the original returns. The net result is that there were inter-state purchases made to the extent of ₹ 5,97,11,472, in respect of which the Petitioner was entitled to C-Forms, which were however not reflected in its revised returns. 13. Turning to the r .....

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examined, the purchases which were not included in the revised return would be accounted for. Indeed it appears that when the impugned order refers to purchase register for the relevant period, it is talking of the entries in months of October 2010 to March 2011, whereas according to the Petitioner the purchase register for the entire FY 2010-11 ought to have been examined. In ground (iv) of the writ petition, the Petitioner explains this as under: It is submitted that the details of the dispute .....

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case of the Respondents that the above assertion is factually incorrect. Importantly, the Court does not find it to be the stand of the Respondents that any of the inter-state purchases, that had escaped inclusion in the revised returns, were not genuine transactions. It is the Petitioner s case that it has produced the relevant invoices, letters from the vendors seeking C-Forms and proof of payment to vendors. Importantly, the Petitioner also furnished the details of the subsequent sales relat .....

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on the part of the Petitioner to furnish a return, including a reconciliation return or return in accordance with the provisions of law or in payment of tax due according to such return. 16. A question was repeatedly posed to learned counsel for the Respondents whether there was any adverse impact as far as the Department was concerned if the C-Forms in respect of the aforementioned inter-state purchase transactions as requested by the Petitioner were to be furnished even at this stage. The repl .....

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counsel appearing for the Petitioner, referred to certain decisions in the context of non-issuance of C-Forms to selling dealers where the Court appears to have taken a liberal view. For instance, in State of A.P. v. Hyderabad Asbestos Cement Production Ltd. (1994) 5 SCC 100, the Supreme Court favoured a liberal stand being taken by the concerned authority where sufficient cause is shown by the dealer for not producing the C-Forms in time. Likewise, in State of H.P. v. Gujarat Ambuja Cement Ltd. .....

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isenabled him to file the Form in time, it can be accepted . 18. On his part, Mr. Ghose drew the attention of the Court to the decision in India Agencies (Regd.), Bangalore v. Additional Commissioner of Commercial Taxes, Bangalore (2005) 2 SCC 129 which was in the context of Central Sales Tax (Karnataka) Rules, 1957. The Supreme Court was in that case of the view that Rule 6(b)(ii) of the said Karnataka Rules had to be strictly construed and the duty of the authorities was to simply implement it .....

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where the actual sales are effected. Secondly, the purchasing dealer also cannot suppress such purchases once he issues C-Form to the selling dealer." The above decision in India Agencies (Regd.), Bangalore only serves to underscore the essential purpose of the CST Rules which is to ensure that inter-state sale transactions are genuine and that no dealer is permitted to take benefit of a lower tax rate on a transaction which is not genuine. 19. Turning to the facts of the present case it is .....

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