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2016 (6) TMI 504 - MADRAS HIGH COURT

2016 (6) TMI 504 - MADRAS HIGH COURT - TMI - Non-production of 'C'-Forms - Demanding a higher rate of tax under the CST Act, 1956 due to the non production of 'C' Forms - Dealers were refused to issue 'C' Forms in the Union Territory of Puducherry - Held that:- Once it is found that the Prescribed Authority is the Authority of the State Government and once it is found that under Section 13(4)(e), a power is conferred upon the State Government to make rules prescribing the conditions, subject to .....

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the benefit of the State and not intended to benefit the assessee. Neither the assessee,nor the person to whom the assessee owes an obligation, can dictate to the State, the mode of recovery to be chosen by them. The power available to the State for the cancellation of the registration of a defaulting dealer, is actually in addition to the several modes of recovery available to the State. After all, the cancellation of registration does not result in the automatic recovery of tax due. The recour .....

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015 and 4515 to 4517 of 2015 and W.A.Nos.783 to 788 & 1496 of 2014 & all connected pending MPs - Dated:- 7-4-2016 - V. Ramasubramanian And T. Mathivanan, JJ. Shri Maruthi Agencies, Puducherry Versus The Commercial Tax Officer, M/s Bharat Petroleum Corporation Limited Versus The Additional Deputy Commercial Tax, The Union Territory of Puducherry, The Deputy Commissioner (CT)-1, LTU ,Amurtham Petroleum Agency, The Commissioner of Commercial Taxes, M/s. Indian Oil Corporation Limited VersusThe Comm .....

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ner (CT)-IV, Shri Maruthi Agencies Union of India ,M/s. Sri Rajeswari Agencies Versus The Additional Deputy Commercial Tax Officer-II, Commercial Taxes For the Petitioners : Mr.S.Raveekumar For the Respondent : Mr.A.N.R.Jayapratap, G.A.(Taxes), Mrs. N. Mala, AGP (P) JUDGMENT V. Ramasubramanian, J Bharat Petroleum Corporation Limited and Indian Oil Corporation Limited have appointed several dealers in the Union Territory of Puducherry. Two of those dealers by name M/s.Shri Maruthi Agencies and M/ .....

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demanding a higher rate of tax under Section 8(2) of the CST Act, 1956 from the Bharat Petroleum Corporation Limited (hereinafter referred to as the BPCL) and the Indian Oil Corporation Limited (hereinafter referred to as the IOCL). 2. Challenging either the orders of assessment passed by the Assessing Officer or the orders passed by the Appellate Authority, demanding a higher rate of tax under the CST Act, 1956 due to the non production of 'C' Forms, the BPCL filed two writ petitions in .....

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The two writ petitions filed by the BPCL and the three writ petitions filed by the IOCL were dismissed by the learned Judge, forcing the BPCL to come up with two writ appeals in W.A.Nos.783 and 784 of 2014 and the IOCL to come up with three writ appeals in W.A.Nos.785 to 787 of 2014. The fourth writ petition filed by the Indian Oil Corporation Limited in W.P.No. 11739 of 2014 was disposed of by the learned Judge directing them to avail the alternative remedy of appeal, as the challenge in the w .....

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Tax Officer, Puducherry, to issue 'C' Forms. Similarly, M/s.Shri Maruthi Agencies, Puducherry, which is an authorised dealer of the IOCL, filed a writ petition in W.P.No.21556 of 2014 seeking a Mandamus to direct the Commercial Tax Officer, Puducherry to issue 'C' Forms. 5. In the meantime, the BPCL and the IOCL suffered orders of assessment for the subsequent assessment years, whereby the higher rate of central sales tax was demanded due to non production of 'C' Forms. T .....

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ent for the assessment years 2012-13 and 2014-15. 6. In view of the fact that the issues raised in the writ appeals and the writ petitions are common, the writ petitions were directed to be tagged along with the writ appeals and they were taken up together for disposal. 7. We have heard Mr.C.Natarajan, learned Senior Counsel appearing for the two Oil Corporations, Mr.S.Raveekumar, learned counsel appearing for the authorised dealers, Mr.A.N.R.Jayaprathap learned Government Advocate (Taxes) appea .....

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ESULT OF WP PRAYER MADE IN WP 1 783 of 2014 15799 of 2013 Bharat Petroleum Corporation Ltd. 1.CTO, Pondicherry 2.UTP 3.Deputy Commissioner (CT) Chennai 4.Joint Commissioner (CT) Appeals 5.Bharat Petroleum Agency, Pondicherry Dismissed Writ of Certiorari calling for the files of R4 and quash the same 2 784 of 2014 15800 of 2013 Bharat Petroleum Corporation Ltd. 1.CTO, Pondicherry 2.UTP 3.Deputy Commissioner (CT) Chennai 4.Joint Commissioner (CT) Appeals 5.Bharat Petroleum Agency, Pondicherry Dism .....

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ondicherry Dismissed Writ of Mandamus directing R1 to issue Form C to R4. 5 787 of 2014 31680 of 2012 Indian Oil Corporation 1.CTO, Pondicherry 2.UTP 3.Deputy Commissioner (CT)-IV, Chennai 4.Shri Maruthi Agency, Pondicherry Dismissed Writ of Mandamus calling for records of R1 and quashing the same as illegal. 6 788 of 2014 11739 of 2014 Indian Oil Corporation 1.CTO, Pondicherry 2.UTP 3.Deputy Commissioner (CT)-IV, Chennai 4.Shri Maruthi Agency, Pondicherry 5.Union of India Disposed of, giving li .....

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ated 16 March 2010 and consequently forbear the respondent from denying to issue the statutory C-Forms to the petitioner WRIT PETITIONS S. No WP NO. PETITIONER RESPONDENTS PRAYER DETAILS 1 21556 of 2014 M/s Shri Maruthi Agencies, Pondicherry CTO, Pondicherry Writ of Mandamus directing the Respondent to issue Form C to the Petitioner Petitioner is a dealer of Indian Oil Corporation Ltd. Petitioner had made representations to the respondent for issue of Form C on 14.09.2012, which has not been iss .....

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Petroleum Agency, Pondicherry 5.Commissioner of Commercial Taxes, Pondicherry Writ of Certiorarified Mandamus calling for the records of R3 and quashing the same and to direct R1 to issue Form C to the dealer, R4. The Additional Deputy Commercial Tax officer (R1) has refused to issue form C to the dealer (R4) 4 128 of 2015 M/s Bharat Petroleum Corporation Ltd., Chennai 1.Additional DCTO-IW, Pondicherry 2.UTP 3.Deputy Commissioner (CT)-1, Chennai 4.Amurtham Petroleum Agency, Pondicherry 5.Commis .....

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amus directing R1 and R2 to issue form C to R4; and to suitably modify the website of R2 which is contrary to the scheme of the CST Act. 6 4515 of 2015 Indian Oil Corporation Ltd., Chennai 1. CTO, Karaikal 2.UTP 3.Deputy Commissioner (CT) IV, Chennai 4.S.V.& Co., Karaikal 5.Commissioner of Commercial Taxes, Pondicherry Writ of Declaration declaring that R1 and R2 have no authority to rely on Section 43 of the PVAT Act, to decline Form C to R4; and to declare that the online system website of .....

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.V.& Co., Karaikal 5.Commissioner of commercial taxes, Pondicherry Writ of Certiorarified Mandamus calling for records on the file of R3 and quash the same; and directing R3 to keep pending the finalization of demand against sales to R4 pending issue of form C declarations. 9. As we have indicated earlier, the BPCL and the IOCL, effected sales of petroleum products both within the State of Tamil Nadu as well as to dealers outside the State. The sales that they effected in the course of Inter .....

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aler, who sells goods in the course of Inter-State trade or commerce, to another registered dealer, is stipulated at the concessional rate of 2% under Section 8(1) of the Act, if the goods are of the description contained in Sub-Section (3) of Section 8. In so far as the goods that do not satisfy the description contained in Section 8(3) are concerned, the rate of tax payable by a dealer on the turnover of Inter-State sales, is as per the rate applicable to the sale or purchase of such goods ins .....

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ter), to claim the benefit of Section 8(1), they should furnish to the Prescribed Authority, in the prescribed manner, a declaration duly filled and signed by the registered dealer in the other State (Pondicherry in this case). This declaration should be furnished within the prescribed time in the prescribed manner, in terms of Sub-section (4) and the Proviso thereto, of Section 8. 12. The normal rate of tax payable on petroleum products in terms of Section 8(2) is 30%. But if the sale is by a r .....

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ions signed by the Prescribed Authority at Puducherry, not because they are not registered dealers, but in view of the fact that they have committed default in payment of value added tax as per the provisions of the Puducherry VAT Act, 2007. The Prescribed Authority at Puducherry namely the Commercial Tax Officer or the Additional Commercial Tax Officer refused to issue Form 'C' Declarations to Shri Maruthi Agencies and Amurtham Agencies, by placing reliance upon Section 43 of the Puduch .....

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ded Tax, it is the BPCL and the IOCL, which are affected by such default. Therefore, the BPCL and the IOCL have also joined issues with their registered dealers, though not actually supporting the default committed by them. 15. The sum and substance of the grievance of the BPCL and the IOCL is that for the default committed by Shri Maruthi Agencies and Amurtham Agencies in the payment of Puducherry Value Added Tax, these Corporations should not be deprived of the benefit statutorily conferred up .....

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d Authority under the State Enactment cannot refuse to issue a declaration under a Central Enactment; (iii) that the mandate of a Parliamentary Enactment cannot be defeated by a State Enactment, since the States are empowered by the Central enactments only to prescribe the procedural provisions for the collection of the tax under the Central Enactment; and (iv) that when there are other effective provisions available to the State Authorities for the recovery of the dues under the State Enactment .....

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hority under the Puducherry VAT Act, 2007 to issue 'C' Form Declarations to dealers registered under the Puducherry VAT Act, 2007; (ii) that there was not even a contractual relationship between these Oil Corporations and the Union Territory of Puducherry to issue 'C' Form Declarations; (iii) that the obligation to obtain 'C' Form Declaration from the Prescribed Authority is upon the authorised dealers of these Oil Corporations, as such obligation arises out of a contract .....

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e we consider the contentions of the Oil Corporations, it may be necessary for us to first deal with the preliminary objections raised by the learned Additional Government Pleader (Puducherry) with regard to the entitlement of the assessees to seek a Mandamus to direct the Commercial Tax Officer, Puducherry to issue 'C' Form Declaration. PRELIMINARY OBJECTIONS REGARDING LOCUS: 20. Mrs.N.Mala, learned Additional Government Pleader appearing for the Government of Puducherry contended that .....

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proceed against their authorised dealers, who are bound, as per the terms and conditions of the contract that they have mutually entered into, either for recovery of damages or for any other relief. 21. To test the above contentions, it is necessary to take note of the provisions of the CST Act, 1956 and two sets of Rules issued thereunder. 22. Section 6(1) of the CST Act, 1956 imposes an obligation upon every dealer, to pay tax under the Act, on all sales effected by him in the course of Inter .....

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iable to be cancelled under Sub-Section (4)(b) of Section 7, if the dealer fails to pay any tax or penalty payable under the CST Act. 24. We have already indicated the scope of Sub-ections (1), (2) and (4) of Section 8. In short, Sub-section (2) of Section 8 obliges every dealer to pay tax on turnover, which relates to the sale of goods in the course of Inter-State trade or commerce, at the rate applicable to the sale or purchase of goods inside the appropriate State under the Sales Tax Law of t .....

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It is enough if such a person pays only 2%. 25. To establish that the twin conditions stipulated in Sub-section (1) of Section 8 are satisfied, the dealer is obliged under Sub-section (4) to furnish to the Prescribed Authority, a declaration duly filled and signed by the registered dealer. Therefore, it can be concluded that what is stipulated in Sub-section (1) of Section 8 is substantive in nature and what is stipulated in Sub-section (4) is procedural in nature. Alternatively, what is stipul .....

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dealer and the Prescribed Authority come together, the declaration contemplated in Sub-Section (4) cannot be issued. 27. Section 13(4) of the Act empowers the State Government to make rules, prescribing - (i) the Authority from whom (ii) the conditions subject to which and (iii) the fees, subject to payment of which, any form prescribed under Sub-section (4) of Section 8 may be obtained. The rules so framed by the State Government may also prescribe the manner in which, any such form may be used .....

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ure for the issue of such forms, the Prescribed Authority becomes obliged to perform a statutory duty. The expression "Prescribed Authority" is defined in Rule 2(cc) of the Central Sales Tax (Registration and Turnover) Rules, 1957 to mean the Authority prescribed by a State Government under Section 13(4)(e) of the CST Act. Though Rule 12(1) of the 1957 Rules stipulates that the declaration and the certificate referred to in Section 8(4) shall be in Forms 'C' and 'D', as .....

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o holds the key to the question of entitlement of the Oil Corporations to pay a lesser rate of tax. In such circumstances, it is not open to the Government of Puducherry to contend that they have nothing to do with the Oil Corporations and that these Corporations have no locus to question the refusal of the Puducherry Authorities to issue 'C' Form Declarations. The refusal of the Puducherry Authorities has a direct financial impact only upon the Oil Corporations and hence, the refusal of .....

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ate Governments. Therefore, if a right arises under the Act, such a right is not confined only as against the Central Government, but also as against the concerned State Government. Hence, the preliminary objections of the learned Additional Government Pleader (Puducherry) are overruled. RIGHT OR CONCESSION: 32. The next contention of the learned Additional Government Pleader (Puducherry) is that what is conferred by Section 8(1), is a concession and not a right. Therefore, it is contended by th .....

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e rate of tax will only be 2%. Thus the rate of tax at least in respect of sales covered by Section 8(1) is statutorily fixed at 2% and hence, the same cannot be termed as a concession. If the statute fixes the rate of tax, the payment of the same is a statutory obligation. Every obligation shall correspond only to a right and not to a concession. 34. Moreover, the Explanation to Sub-section (2) of Section 8 is a direct answer to the contention of the learned Additional Government Pleader. Under .....

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les tax at 2%, even if nothing is payable under the local Sales Tax Law of the appropriate State, we do not know how what is conferred by Section 8(1) can be called a concession. Therefore, the aforesaid contention of the learned Additional Government Pleader is rejected. CONTENTIONS OF THE APPELLANTS : 35. Having disposed of the preliminary objections of the learned Additional Government Pleader, we shall now take up for consideration the contentions of the appellants/assessees. Contention-1 : .....

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. In Chanda Paints (Madras) Ltd. v. Commercial Tax Officer, [(1986) 61 STC 335 (Mad.)], the question that arose was whether the petitioner, which had registered itself under the provisions of the CST Act, was entitled to the supply of C-Forms and declarations, upon a request being made for the supply of such forms or whether the respondent is entitled to refuse to supply such forms either on the ground that the materials to be bought from other States by use of such C-Forms, would be utilised in .....

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ion is well-founded. There is no provision in the Act which authorised the Commercial Tax Officer to refuse to provide the assessee with C forms. If the assessee misused the C form, that will be punishable under Section 10 of the Central Act. Beyond that, it has no effect, not even in tax. The Commercial Tax Officer was not constituted as a policeman to regulate and conduct the assessee along with virtuous path. If the assessee had registered himself under the provisions of the Central Act, he w .....

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certain equipments, parts and components, which were procured from suppliers outside the State and effected transit sales to the assessee. C-Forms were denied on the ground that the goods purchased by the assessee were entrusted to the seller under a bailment agreement for the erection of the project and that therefore, the assessee had camouflaged the transactions of supply and transferred the goods to the contractor as one under the bailment agreement. However, the Andhra Pradesh High Court, a .....

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ax. The Court also held that the Authorities would, however, be at liberty to make such enquiry, as it is necessary to see whether C-Forms had been properly issued and if not, what was the liability of the parties under the Central or State Enactment. But, the Court also added that such an enquiry need not be made at the stage of issuance of C-Forms. 39. Adverting to Rule 9 of the Central Sales Tax (Andhra Pradesh) Rules, the Court indicated the scope of the enquiry on the following lines: " .....

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follows that the petitioner is entitled to receive 'C' Form on the compliance of the above three conditions. This is without prejudice to the authorities making enquiry at the time of assessment as to the proper use of the 'C' Form." 40. Similarly, the Madras High Court also held in Quality Enterprises, Kamaraj Salai, Chennai v. Additional Deputy Commercial Officer, [(2002) 127 STC 504 (Mad.)] that once the requisite conditions for the issue of 'C' Forms were satisf .....

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allans in proof of having paid the amount for obtaining the "C" form. Once these conditions are satisfied, the authorities are bound to issue "C" form. Whether the "C" forms are properly used or misused, cannot be enquired into at the initial stage of issuance of "C" forms. If any person misused the "C" form, he is liable to the penalties as contemplated under the Act. Therefore, the authorities, which issue "C" forms have to issue the .....

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complied with by the respondents. The petitioner thereupon filed the writ petition, upon which, the respondent submitted that since the petitioner was a proprietor of a hotel, 'C' Forms were not required to be given to the petitioner. The Madras High Court allowed the petition and held that mere apprehension that a person applying for 'C' Forms was likely to misuse such forms was not a ground for rejection of the application. The respondents were directed to deal with the request .....

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STC 422 (Mad.)], it was observed as follows : "In my view, the petitioners are entitled to have themselves registered as dealers under section 7(2) and consequently are entitled to the supply of 'C' forms for use in their purchase of goods in the course of inter-State sale or trade or commerce at the concessional rate. The further question whether the goods have been rightly purchased for any one of the approved and permitted purposes and whether there was sufficient compliance or .....

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foresaid decisions, it is contended that the Prescribed Authority of the Union Territory of Puducherry was not entitled to refuse the issue of C-Forms. 43. But, we do not agree with the said contention. In all the decisions referred to above, the issuance of C-Declaration Forms, was not denied on the ground of non payment of local sales tax dues. The question of default under the local Sales Tax Act, was not the issue, with which, the Courts were concerned in Chanda Paints and AP Gas Power Corpo .....

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ned Senior Counsel for the Oil Corporations is that for a default committed by a registered dealer under a State Enactment, the Prescribed Authority cannot refuse to issue a declaration under a Central Enactment. 46. In order to understand the scope of the second contention raised by the learned Senior Counsel for the Oil Corporations, it is necessary to note that though the CST Act, 1956 formulates the principles for determining when a sale or purchase of goods takes place in the course of Inte .....

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e an application for registration to such Authority in the appropriate State, as the Central Government may specify. Sub-section (1) of Section 13 empowers the Central Government to make rules, prescribing the manner, in which, and the Authority, to whom, the application for registration may be made. In exercise of the power conferred by Section 13(1), the Central Government had issued a set of rules known as the Central Sales Tax (Registration and Turnover) Rules, 1957. Under Rule 3(1) of those .....

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empowered to assess, re-assess, collect and enforce the payment of any tax under the General Sales Tax Law of the appropriate State, shall also assess, re-assess, collect and enforce the payment of tax on behalf of the Government of India. Therefore, it is clear that though the levy is by the Government of India, everything else such as assessment, collection and enforcement of payment of any tax, is left to the concerned Authority under the General Sales Tax Law of the appropriate State. 49. T .....

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al Sales Tax Law of the State, are also empowered to assess, re-assess and enforce the payment of tax under the Central Enactment. 51. In other words, an officer of the State Government empowered to assess and enforce the provisions of the Local Sales Tax Law of the State, performs a dual role, one under the Local Sales Tax Law of the State and another under the CST Act, 1956. Therefore, it is not possible for him to compartmentalise his mindset and ignore the default committed under one Enactme .....

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prescribe the procedural provisions for the collection of the tax under the Central Enactment and hence, the States cannot go beyond their competence. 53. This contention is actually a collateral attack on Section 43 of the Puducherry VAT Act, 2007, without challenging the vires of the provision. Therefore it is necessary now to take a look at Section 43, which reads as follows:- "43. Withholding issue of statutory forms and seizure of goods - (1) Notwithstanding that any recovery proceedi .....

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t payable under this Act, is due." 54. It is seen from the language employed in Section 43(1) that the power conferred upon the Assessing Officers is general in nature, to withhold the issue of statutory or other declaration forms, to a dealer, from whom, any tax, penalty, interest or any other amount is due. Since Section 43(1) uses the only expression 'statutory or other declaration forms', without particular reference to C-Declaration Forms issued under the CST Act, 1956, the ass .....

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is confined only to the forms under the State Enactment, the assessees contend as a corollary that the role of the State Government, as contemplated by Section 13(3) and (4) of the CST Act, 1956, is limited only to prescribing the procedural provisions. The procedural provisions, as seen from Section 13(4) do not extend to the withholding of any declaration form under the CST Act, 1956. Therefore, the third contention of the learned Senior Counsel for the Oil Corporations is that withholding of .....

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urported exercise of their power under Rule 8(1-A)(f) of the M.P. Sales Tax (Central) Rules, 1957. These rules had been issued by the State Government under the rule-making power conferred on it by the Central Act. The said Rule 8(1A)(f) of the M.P. Sales Tax (Central) Rules, 1957, was challenged by the petitioner to be ultra vires the rule-making power conferred on the State Government by the Central Act. The Madhya Pradesh High Court, emphasizing that the State Government was merely an agency .....

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to carry out the assessment, reassessment, collection and enforcement of tax and penalty payable by a dealer under the Central Act, and as regards the phrase "in the prescribed manner" occurring in Section 8(4), being confined only to prescribing rules as regards "what particulars are to be mentioned in the prescribed form, nature and value of the goods sold, the parties to whom they are sold and to which authority the form is to be furnished", it follows very clearly that t .....

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entral Act. The said rule-making power cannot be used by the State Government as a device for the realisation of its own dues under the State Act. The provisions in question of the impugned rule are not capable of being related to any of the purposes of the Central Act. The said provisions are inconsistent with the role as mere agents of the Government of India conferred by the Central Act on the State Government for the purposes of the said Act. In fact, the said provisions have the effect of m .....

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rn under the M.P. General Sales Tax Act, 1958, or that he was in arrears of tax under the said State Act. Therefore, the appellants/ assessees contend that the ratio laid down in this decision would apply with all force to the cases on hand. 58. We have carefully considered the above submissions. 59. This contention of Mr.C.Natarajan, learned Senior Counsel for the Oil Corporations actually has two facets. The first revolves around Sub-Sections (3) and (4) of Section 13 of the CST Act, 1956 that .....

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x is retained by the Government of India under the CST Act, 1956, all procedural aspects such as registration of dealers, assessment, re-assessment, collection and enforcement of payment of tax are all left to the Authorities nominated by the respective State Governments. Since these procedural aspects are left at the hands of the Authorities of the respective States, the CST Act, 1956 also confers rule making power upon the State Government. 61. The rule making power is again compartmentalized. .....

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n of goods, etc., used in the generation and distribution of electricity and (viii) the terms and conditions of service of the Chairman and the Members of the Appellate Authority. 62. Sub-Section (3) of Section 13 empowers the State Government to make rules not inconsistent with the provisions of the Act and the provisions of the rules issued by the Central Government. The purposes, for which, the State Government may make rules under Sub-Section (3) are enumerated in Sub-Section (4). In simple .....

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nd the conditions, subject to which, any form of certificate prescribed by Section 6(2) or declaration under Section 6A or Section 8(4) may be obtained (vii) the form and manner, in which, an appeal is to be preferred and the procedure for hearing such appeals and (viii) the procedure for intimating the change of ownership. 63. In particular, we may have to take note of Clause (d) of Sub-Section (1) and Clause (e) of Sub-Section (4) of Section 13 for resolving the issue raised by the learned Sen .....

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articular and without prejudice to the powers conferred by Sub-Section (3), the State Government may make rules for all or any of the following purposes namely - (e) the Authority, from whom, the conditions, subject to which and fees, subject to payment of which, any form of certificate prescribed under Clause (a) of the First Proviso to Sub-Section (2) of Section 6 or of declaration prescribed under Sub-Section (1) of Section 6A or Sub-Section (4) of Section 8 may be obtained, the manner, in wh .....

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namely Section 13(4)(e) speaks about the form of certificate prescribed under Section 6(2). It also speaks of a declaration prescribed under Section 6A(1) and a declaration under Section 8(4). 66. Therefore, Section 13(1)(d) should be construed to refer only to the declarations and certificates not covered by Section 13(4)(e). In other words, the procedure for the issue of any declaration under Section 8(4), is left by the Central Enactment entirely to the rule making power of the State Governme .....

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ubject to payment of which, such declarations may be obtained (iv) the manner in which, such declarations shall be kept in custody and the records relating thereto to be maintained and (v) the manner in which, any such declaration may be furnished or used. 67. In such circumstances, we are of the considered view that it is this distinction between the scope of Section 13(1)(d) and Section 13(4)(e) that clinches the issue on hand. If the State Government alone is competent, by virtue of Section 1 .....

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onditions such as (i) that it is in a prescribed form (ii) that it is obtained from the Prescribed Authority (iii) that it contains the prescribed particulars and (iv) that it is furnished within the prescribed time. The expression 'prescribed' is repeated thrice in the substantive part of Sub-Section (4) and once in the Proviso to Sub-Section (4) of Section 8. The power to prescribe is conferred upon the State Government under Section 13(4)(e). Therefore, it is not correct to state that .....

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of tax, but also a power conferred upon the State to prescribe the conditions, subject to which 'C' Form declarations can be given. 69. The second facet of the third contention of the learned Senior Counsel for the Oil Corporations is the one that revolves around Section 43 of the said Act. As we have seen earlier, Sub-Section (1) of Section 43 empowers the Assessing Officers and even any other officer authorized in this regard, to withhold the issue of statutory or other declaration for .....

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ld have been subject to a challenge as made in the case of Dawar Brothers in the State of Madhya Pradesh. Therefore, the Legislature itself has enacted a specific provision under Section 43 and we do not find any justification to limit the meaning of the expression 'statutory and other declaration forms' appearing in Section 43(1) only to those, that are dealt with by the Pondicherry Enactment. 70. The above conclusion that there is no scope for giving a restricted meaning to the words & .....

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r penalty, interest or any other amount payable'. In other words, the power conferred by Section 43(1) to withhold the issue of statutory or other declaration forms, can be exercised (i) notwithstanding any recovery proceeding initiated under this Act and (ii) if any tax or penalty, interest or any other amount payable under this Act is found due from a dealer. 71. The Law Makers, who thought fit to use the words 'under this Act' in two places in Section 43(1), carefully omitted to u .....

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Unless we supply the words 'under this Act', to follow the words 'statutory or other declaration forms', we cannot reach the same conclusion that the appellants want us to reach. Therefore, the second facet of the third contention of the learned Senior Counsel for the Oil Corporations cannot be sustained. 73. That takes us to the next part of the third contention, based upon the decision of the Madhya Pradesh High Court in Dawar Brothers. It is true that in Dawar Brothers, the vi .....

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rived at the aforesaid conclusion based upon three reasonings. They are (i) that the phrase 'in the prescribed manner' appearing in Section 8(4) of the CST Act, 1956, has a restrictive meaning; (ii) that by virtue of Section 9(2) of the CST Act, 1956, the role of the State Government is merely that of an agency of the Central Government to carry out the assessment, re-assessment, collection and enforcement of payment of tax and nothing more and (iii) that for the entitlement of a concess .....

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e decision of the Supreme Court in Sales Tax Officer, Ponkunnam Vs. K.I.Abraham [AIR 1967 SC 1823]. In that case, the Supreme Court held a provision in the Central Sales Tax (Kerala) Rules, 1957, which prescribed a time limit, within which, a registered dealer was obliged to file the declaration under Section 8(4) of the Central Act, to be ultra vires Section 8(4) read with Section 13(3) and (4) of the Central Act. 77. But, the Madhya Pradesh High Court has omitted to take note of one important .....

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ther time as that Authority may, for sufficient cause, permit." 78. Therefore, if any State, after the Amendment Act 61 of 1972, had issued a rule in exercise of the power conferred by Section 13(4), prescribing a time limit for the declaration under Section 8(4) of the Central Act to be furnished, the said rule could not have been held to be ultra vires Section 8(4), as held in K.I.Abraham. The effect of the insertion of the Proviso under the Amendment Act 61 of 1972, upon the ratio laid d .....

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t in Dawar Brothers is that by virtue of Section 9(2) of the CST Act, 1956, the role of the State Government is merely that of an agency of the Central Government to carry out the assessment, re-assessment, collection and enforcement of payment of tax and nothing more. This conclusion was reached by the Madhya Pradesh High Court on the basis of another decision of the Supreme Court in Khemka and Co. Pvt. Ltd. Vs. State of Maharashtra [AIR 1975 SC 1549]. 80. But, the decision of the Supreme Court .....

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of dues under the Central Act, it was not open to the Assessing Officer to invoke the deeming fiction under Section 9(2) of the CST Act, 1956, to impose a penalty under Section 16(4) of the Bombay Sales Tax Act. For coming to the said conclusion, the Supreme Court pointed out that for the applicability of the doctrine of ejusdem generis, the genus in Section 9(2) of the Central Act is in the phrase 'for this purpose'. In other words, the purpose is merely the assessment, re-assessment, .....

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nd reason is that what applies to the case of penalty, cannot be applied to a case of issue of a declaration form, for the purpose of entitling the assessee to pay a reduced rate of tax. 82. As a matter of fact, Beg,J pointed out in his separate opinion in Khemka & Co. that a penal provision would stand in contrast to a provision for rebate. While rebate is a concession, penalty is an imposition. Therefore, the Court held that a rebate can form part of the procedural provision, but penalty c .....

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dhya Pradesh High Court in Dawar Brothers is that for the entitlement of a concessional rate of tax under Section 8(1), one cannot look beyond the Central Enactment. This reasoning, in our considered view, is also not in tune with the scheme of the Act. As we have indicated earlier, Section 8(1) makes every dealer, who sells goods of the description referred to in Sub-Section (3) to a registered dealer, in the course of Inter-State trade and commerce, to pay tax at the rate of 2% of his turnover .....

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n Sub-Section (4) is made subject to certain other restrictions such as (i) that the declaration should be in the prescribed form (ii) that it should have been obtained from the Prescribed Authority (iii) that it should contain the prescribed particulars and (iv) that it is furnished within the prescribed time. These conditions are left to the rule making power of the Government under Section 13. 84. In any case, the Division Bench of the Madhya Pradesh High Court appears to have laid emphasis, .....

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13. This Sub-section prohibits the State Government not to make any rules inconsistent with the provisions of the CST Act, 1956 and the rules made under Section 13(1). If the Parliament was so touchy about the matter and decided to keep away the State Governments from having any role in the matter of issue of declaration forms, Clause (e) should not have found a place in Sub-section (4) of Section 13. 86. Once it is found that the Prescribed Authority is the Authority of the State Government and .....

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n 9(2) and Section 13(4)(e) have to be looked into. Therefore, we are unable to accept the third reasoning given by the Madhya Pradesh High Court for taking the view that it did in Dawar Brothers. Contention-4 : 87. The fourth contention of the learned Senior Counsel for the Oil Corporations is that when there are effective provisions available to the State Authorities for the recovery of the dues under the State Enactment and when the State Authorities are empowered even to cancel the certifica .....

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C-Forms under the CST Act and delivery notes in Form 26 under the Kerala General Sales Tax Act to the petitioner, a registered dealer under both Acts, on the ground that the petitioner company was engaged in execution of works contract and that it had not paid tax for the previous years. Granting relief to the assessee, a learned Judge of the Kerala High Court held that the delivery notes, C-Forms etc., are required by every dealer in the regular course of his day to day business transactions e .....

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s, in which event, it may amount to total restriction, which is impermissible under the law. Therefore, the Kerala High Court held that the non-payment of tax for any year is not a ground for withholding or not issuing the delivery notes and C-Forms under the provisions of the relative Acts and Rules. The payment of tax and issue of delivery notes and C-Forms are different processes in the business adventure and the former is a duty of the dealer and the latter is the duty of the Assessing Autho .....

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e his right for the issue of a declaration form, should not be a defaulter. In any case, a defaulter cannot come to court and seek the issue of a Writ of Mandamus, to compel the Statutory Authorities to perform a statutory obligation. It is well settled that the jurisdiction to issue a Writ, is a discretionary jurisdiction. Therefore, the Court would certainly ensure, before issuing a Writ, that the person, who seeks such a relief, is not a defaulter. We are conscious of the fact that the Oil Co .....

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Mad.)]. The petitioner in that case was also a dealer of petroleum products and the dealership was granted by the Indian Oil Corporation. The petitioner was denied C-Forms on the ground that it had arrears of tax. The short question that arose for consideration was whether non-payment of arrears of tax and penalty would dis-entitle the petitioner from getting C- Form license. This Court held that when the respondent could proceed against the petitioner for non-payment of tax or the penalty by at .....

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C-Form license to the petitioner. 92. But, unfortunately, the decision in Sri Rajeswari Agencies, has not taken note of the entire scheme of the CST Act, 1956. Though the learned Judge took note of Section 43 of the Puducherry VAT Act, 2007, the learned Judge held that Section 9(2) of the CST Act, 1956 does not contemplate the withholding of C- Form Declaration. As a matter of fact, the learned Judge did not even go into the question whether the phrase 'statutory or other declaration forms& .....

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rissa Value Added Tax Act, 2004 and the Central Sales Tax Act. When the dealer applied for supply of C-Forms, the Sales Tax Officer called for an explanation as to why C-Forms shall not be refused on the ground of non-payment of entry tax on the goods purchased from outside the State. The petitioner submitted that they were not liable to pay entry tax on purchase of goods from outside the State, as they were not producers or manufacturers inside the State in view of an earlier decision of the Or .....

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94. When the matter landed up before the High Court of Orissa, the Court held that once a dealer satisfies the condition that he is a registered dealer, authorized to purchase goods mentioned in the certificate of registration, charges for obtaining C-Forms were paid and a true copy of the accounts of the forms last supplied were furnished, the Authorities are bound to issue C-Form and could not refuse to do so on any ground other than those stipulated in Rule 6 of the Central Sales Tax (Orissa .....

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43(1). Therefore, the decision in Chowhan Machinery Mart cannot be followed. 96. The availability of different modes for the recovery of a tax due, is actually for the benefit of the State and not intended to benefit the assessee. Neither the assessee,nor the person to whom the assessee owes an obligation, can dictate to the State, the mode of recovery to be chosen by them. The power available to the State for the cancellation of the registration of a defaulting dealer, is actually in addition .....

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not prescribe a mode of recovery of the tax due, it is certainly an effective provision that would hit the dealer where it hurts. The power available under Section 43 is akin to the power available to the Electricity Boards to disconnect power supply, whenever a default is committed by the subscriber. As a matter of fact, the Courts have affixed the seal of approval on the power of the State Electricity Boards to disconnect power supply, even in respect of consumers whose dues have become time b .....

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appropriate Assessing Authority to withhold, after affording an opportunity and for reasons to be recorded in writing, the declaration forms, if the applicant for the declaration forms had defaulted in furnishing any return or defaulted in payment of tax or penalty or he had been found to have some adverse material suggesting any concealment of sale or purchase or of furnishing inaccurate particulars. One of the main grounds of challenge to the said Rule was that the selling dealers are made to .....

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