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TMI Blog2016 (6) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... li No. 3, Vishwas Nagar, Delhi-110032. Background facts 3. The Petitioner made an inter-state sale of goods to Respondent No. 2 (Purchasing Dealer) by way of two invoices both dated 10th March, 2015. The first invoice was for a sum of Rs. 7,53,373/- and the second for a sum of Rs. 2,49,715/-. In terms of Section 8(1) (b) of the CST Act with Respondent No. 2 being a dealer registered under the CST Act in New Delhi [apart from being registered under the Delhi Value Added Tax Act, 2004 (DVAT Act)] as of that date, and having purchased the goods from the Petitioner by way of inter-state sale, tax at the concessional rate of 2% was chargeable in the invoices and was accordingly included in the invoices raised by the Petitioner. The said two invoices accordingly mentioned the CST amounts as 15,067 and 4,994 respectively. The total sums of the 2 invoices were Rs. 7,68,441/- and Rs. 2,54,709/- respectively. The payments for these invoices were made by RTGS into the Petitioner's bank account. 4. On 13th April 2015, Respondent No. 2 obtained C-Form from the DT&T in respect of the aforementioned two invoices. A copy of the said C-Form is enclosed with the petition as Annexure P-4. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC) and State of Orissa v. Santosh Kumar & Co. (1983) 054 STC 322 (Orissa) to contend that the retrospective cancellation of the CST registration of the purchasing dealer would not affect right of the selling dealer to use the C-Form validly issued to such selling dealer. Reliance is also placed on the decision of this Court in Shanti Kiran India Pvt. Ltd. v. Commissioner Trade & Tax Department (2013) 57 VST 405 (Delhi) where it was held that the input tax credit could not have been denied for a period prior to the date on which the registration of the selling dealer was cancelled. Submissions of counsel for the Respondent No.1 9. Mr Gautam Narayan, learned Additional Standing counsel appearing for the DT&T, first submitted that this was a proxy litigation on behalf of the Respondent No. 2 who has himself not come forward to challenge the cancellation of his CST registration. It is submitted that the Petitioner, a dealer in Kanpur, has no locus whatsoever to question the cancellation of the CST registration of Respondent No.2. Secondly, it is submitted that under Section 74 of the DVAT Act, the Petitioner has an alternative remedy of approaching the Objection Hearing Authority. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Act can be cancelled by the authority which granted it. However, he again did not dispute that under Section 7 (4) (b) of the CST Act retrospective cancellation of a registration is not contemplated. Preliminary objections 13. As far as the plea of the Respondent No. 1 regarding this being a proxy litigation on behalf of the Respondent No.2, Mr Srivastava submits that the Petitioner is essentially concerned about the cancellation of the C-Form issued to it. The Petitioner was constrained to also challenge the cancellation of the registration of Respondent No.2 by the DT&T only because that was the main reason for the cancellation of the C-Form. 14. In view of the above clarification by Mr Srivastava, it is apparent that the Petitioner is pressing only for the relief of validation of the C-Form issued to it. Consequently, the Court rejects the plea of the DT&T that this is a proxy litigation by Petitioner on behalf of Respondent No.2. It is clarified that the Court is not expressing any view as far as the cancellation of the registration of Respondent No. 2 is concerned. 15. As regards the plea regarding the availability of an alternative remedy under Section 74 (1) (b) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot insist on being issued a C-Form. In the present case, on the date of the transaction i.e. 10th March, 2015 the purchasing dealer viz., Respondent No. 2 did posses a valid CST registration. The name of the purchasing dealer as shown in the invoices, and the name and address of the registered purchasing dealer as reflected in the C-Forms issued by the DT&T matched. The cancellation of the CST registration of Respondent No. 2 took place subsequently on 4th August 2015. Therefore , there was no means for the Petitioner as the selling dealer to suspect as of the date of sale or soon thereafter that the payments made to it RTGS was not by Respondent No.2 but by some other entity with the same name. It is not possible, therefore, to straightaway infer any collusion between the Petitioner and Respondent No. 2 or for that matter the other entity of the same name spoken of by the DT&T. 19. In any event, from the point of view of the Petitioner, the requirement of Section 8(1) of the CST stood fully satisfied. The purchasing dealer had a valid CST registration on the date of purchase of goods by the Respondent No. 2 from the Petitioner. The C-Form issued by the DT&T confirmed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant. The VAT authorities observed that the scanty amounts deposited by the selling dealers was incommensurate with the transactions recorded, and straightaway proceeded to hold that they colluded with the appellant. Such a priori conclusions are based on no material, or without inquiry, and accordingly unworthy of acceptance." 22. In State of Orissa v. Santosh Kumar (supra), the deduction in respect of sales made to a registered dealer was disallowed on the ground that the purchasing dealer was fictitious although the purchaser dealer held a valid registration on the date of the transaction. In those circumstances, it was observed as under: "Once a certificate of registration is issued to a person and he becomes a registered dealer, he is entitled to certain benefits under the Act. Certificates granted by the public officers have their value and people in the commercial field would in normal course accept such certificates to be genuine. The fact that registration has been granted, yet the person holding the certificate is a fictitious one seem to be contradictions in term. A certificate of registration can be granted only when the dealer, apart from being a businessman, satis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of the transaction and the C-Form having been validly issued on the date it was so issued, there could not have been a retrospective cancellation of the C-Form. At the risk of repetition, it must be observed that there is no statutory power that permits cancellation of a C-Form that has been validly issued, much less retrospectively. The only circumstance perhaps that could lead to the cancellation of a C Form is the failure by the issuing authority to notice the cancellation of the purchasing dealer's CST registration previous to the date of the sale. That would be a case of a purchasing dealer obtaining a C Form by fraudulent means concealing the fact of cancellation of his CST registration. The issuance of a C Form in such instance would be void ab initio since it would not satisfy the requirement of Section 8 (1) of the CST Act read with Section 7 (4) thereof. The practical effect of cancellation of C Forms 26. It was submitted by Mr Narayan that there would be a practical difficulty in the DT&T seeking to inform every selling dealer in the country of the cancellation of registration of a purchasing dealer registered under the CST Act in Delhi and that the remed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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