TMI Blog2018 (1) TMI 553X X X X Extracts X X X X X X X X Extracts X X X X ..... amended or cancelled, in terms of sub-section (4) of section 7 of the Act. In such eventuality, the registered dealer (UPPTCL) is required to provide declaration, dully filled and signed by it to the selling dealer (writ petitioner) containing the prescribed particulars in prescribed form. Such declaration and certificate has to be made in form 'C' appended to the Rules of 1957. In its absence, normal rate of tax would have to be paid by the selling dealer. This would be impermissible once the inter-state sale is covered by sub-section (1) and (3) of section 8 and a certificate is already issued under Form 'B'. Once a certificate has been issued by the competent authority, it was impermissible for the authorities to withhold issuance of certificate in Form 'C'. Denial of Form 'C' to the UPPTCL despite the certificate issued in Form 'B' was wholly unwarranted and illegal yet, it would be appropriate to examine the matter from another aspect before concluding the discussions. The Commercial Tax Authorities have been of the opinion that 'power transmission' is not covered within the express terms of section 8(3)(b) of the Act of 1956. For arriving at such an opinion the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39; at Unnao and Sirathu. An alternative prayer is also made to direct the UPPTCL to pay differential amount of tax, together with interest, in case it is found not entitled to Form 'C'. 2. The Writ Petition (Tax) No.762 of 2017 has been connected with Commercial Tax Revision No.269 of 2017, vide order passed in revision on 15.11.2017. Both the matters are therefore listed together and are being disposed of by this common judgment. 3. UPPTCL is an undertaking of the State of U.P. and is engaged in transmission of Power from the place of its generation to the distribution unit. The task of transmission is carried out by the UPPTCL across the State of U.P. by laying high voltage transmission lines, which are then stepped down by the local transformers (sub-stations) to supply power to the end consumer through distribution agency. For such purposes it engages contractors and sub-contractors. UPPTCL is a dealer registered under Section 2(b) of the Central Sales Tax Act, 1956 (hereinafter referred to as Act of 1956 ). It moved an application under Form 'A' of the Central Sales Tax (Registration and Turnover) Rules, 1957 (hereinafter referred to as Rules of 1957 ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Unnao (b) In other States - XX The dealer keeps warehouses at the following places within the State of registration: (1) DahiChowki Unnao This certificate will be valid w.e.f. 27.10.10 until its cancelled. Sd/- Dr. A.K. Kanaujia Assistant Commissioner Commercial Tax Ward- 2 Unnao Dated: 27.10.10 4. The UPPTCL entered into different contracts with the Writ Petitioner M/s CG Power and Industrial Solutions Limited for construction of 765 KV sub-station on turn-key basis which included supply of raw materials, processing materials, equipment, machinery, plant, tools, stores, spare parts etc. Such inter-state purchases are required to be made vide requisite declaration forms. It appears that different contracts have been awarded by UPPTCL to the writ petitioner for which inter-state sales were made. UPPTCL applied for issuance of Form 'C' for the purpose. While such Form 'C' was issued for six other contracts awarded within the State of U.P. itself, yet, the concerned authorities denied Form 'C' in respect of commissioning of sub-stations at Unnao and Sirathu. A specific order in that regard came ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 344;े हेतु आवेदन कर्ता एक सरकारी निगम है जिसके द्वारा पावर हाउस से विद्युत प्राप्त करके हाई वोल्टेज को लो वोल्टेज करके विद्युत सबस्टेशन को दिया जाता है। जिसके लिए उसमें प्रयुक्त होने वाली मशीनरी/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 2(b), provision contained under section 8(3)(b) as well as rule 13 of 1957 Rules has been referred to in order to hold that the claim for issuance of Form 'C' is not covered under the rules. The assessing authority ultimately concluded as under:- उपर्युक्त व्याख्या से स्पष्ट है कि पावर जनरेशन, पावर ट्रान्समिशन एवं पावर डिस्ट्रीब्यूशन पृथक- पृथक स्टेज है। केन्द्रीय अधिनियम के नियम 13 में Prescription of goods for certain purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 344;हीं है। अतः फार्म- सी प्राप्त करने हेतु दिया गया प्रार्थना पत्र अस्वीकार किया जाता है। आदेश की प्रति व्यापारी को सूचनार्थ भेजा जाय। 5. Revisionist as well as writ petitioner are both registered dealers within the meaning of section 2(b) of the Act of 1956. According to the revisionist it is entitled to purchase of raw materials/equipments for erecting its transmission infrastructure against Form 'C' at concessional rate of tax. It is contended that purchases of goods specified in Form & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el appearing for the writ petitioner has placed the statutory scheme under the Act of 1956, as well as Rules of 1957, in order to contend that once Form 'B' has been issued to a dealer registered under the Act of 1956, the inter-state sales of goods and materials specified therein would attract levy of tax at concessional rate under section 8(4) and the authorities are obliged to issue Form 'C' for the purpose. It is also stated that so long as the Form 'B' subsists and is not cancelled, for which only limited grounds otherwise exist and are not attracted otherwise in this case, the authorities cannot go behind the declarations made in Form 'B' while issuing Form 'C'. It is contended that it would be at the stage of final assessment that the authorities may at best examine as to whether Form 'C' were required for the purposes specified in Form 'B' and that such an equiry would be impermissible at the stage of issuance of Form 'C'. Submission is that authorities as well as the tribunal have misconstrued the statutory scheme and thereby have committed manifest error in law. The argument of Sri Gulati has been substantial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or by the principal or a nominee of the principal. Explanation 1-Every person who acts as an agent, in any State, of a dealer residing outside that State and buys, sells, supplies, or distributes, goods in the State or acts on behalf of such dealer as- (i) A mercantile agent as defined in the Sale of Goods Act, 1930 (3 of 1930) or (ii) An agent for handling of goods or documents of title relating to goods, of (iii) An agent for the collection or the payment of the sale price of goods or as a guarantor for such collection or payment, and every local branch or office in a State of a firm registered outside that State or a company or other body corporate, the principal office or headquarters whereof is outside that State, shall be deemed to be a dealer for the purposes of this Act. Explanation 2-A Government which, whether or not in the course of business, buys, sells, supplies or distributes, goods, directly or otherwise, for cash or for deferred payment or for commission, remuneration or other valuable consideration, shall except in relation to any sale, supply or distribution of surplus, unserviceable or old stores or materials or waste products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication one of such places as the principal place of business for the purposes of these rules and submit such application to the notified authority specified in respect of the principal place of business so named: Provided that any place so named shall not in any case be different from the place, if any, declared by him to be the principal place of business, by whatever name called, under the general sales tax law of the State. 14. It would be appropriate at this stage to take note of Form 'A' inasmuch as it contemplates disclosure by the applicant of its business and also the goods or classes of goods that are required to be purchased by the dealer in the course of inter-state trade or commerce. Clause 16 of Form 'A' which is referable to rule 3 and section 7(1) and (2) of the Act of 1956 is reproduced:- (16) The following goods or classes of goods are purchased by the dealer in the course of inter-state trade or commerce for - (a) resale.................... (b) use in the manufacture or processing of goods for sale................ (c) use in mining.................. (d) use in the generation or distribution of electricity o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of inter-State trade or commerce.- (1) Every dealer, who in the course of inter-State trade or commerce sells to a registered dealer goods of the description referred to in sub-section (3), shall be liable to pay tax under this Act, which shall be one per cent of his turnover or at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of that State, whichever is lower: Provided that the Central Government may, by notification in the Official Gazette, reduce the rate of tax under this sub-section. (2) The tax payable by any dealer on his turnover in so far as the 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This would be impermissible once the inter-state sale is covered by sub-section (1) and (3) of section 8 and a certificate is already issued under Form 'B'. 18. Issuance of Form 'C' is denied in the instant case for the reasons that inter-state sale of goods and material is not covered under section 8(3) of the Act. The question to be considered therefore is as to whether the authority concerned is entitled to examine correctness of the disclosures made in Form 'A' on the basis of which certificate in Form 'B' has already been issued at the time of issuing Form 'C' ? It has also to be seen as to whether 'power transmission' is covered within the ambit and scope of section 8(3)(b) or the provision is confined to generation or distribution of electricity alone. Implicit in the question would be the issue as to whether generation or distribution of electricity would include transmission of electricity or that it would be covered by the expression 'any other form of power' ? Question posed for consideration in the revision would be dependent upon the answer to these questions. 19. The provisions of the Act are clear ina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied cannot be used by the purchasing dealer for the purpose of its business. Para 13 to 15 of the judgment is reproduced:- 13. The authority issuing the certificate under Rule 5(1), as expressly stated in the rule, has, before issuing a registration certificate, to be satisfied after making such enquiry as it thinks necessary that the particulars contained in the application are correct and complete. The enquiry would obviously be made in the light of the nature of the business and goods which are likely to be needed either for resale, or for use in the manufacture of goods for sale, or for use in the execution of contracts. Satisfaction which is contemplated by r. 5 is objective, and may be arrived at upon a quasijudicial enquiry. This Court has in several cases had occasion to consider the legality of orders of the notified authority refusing to grant certificates of registration in Form 'B' in respect of cer- tain classes of goods which it was claimed by the tax-payer were necessary for the purpose of his business and were therefore requested to be specified in the certificate of registration: e.g. Indian Copper Corporation Ltd. v. Commissioner of Commercial Taxes, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions made to him. He must satisfy himself that the purchaser is a registered dealer, and the goods purchased are specified in his certificates but his duty extends no further. If he is satisfied on these two matters, on a representation made to him in the manner prescribed by the Rules. and the representation is recorded in the certificate in Form 'C' the selling dealer is under no further obligation to see to the application of the goods for the purpose for which it was represented that the goods were intended to be used. If the purchasing dealer misapplies the goods he incurs a penalty under section 10. That penalty is incurred by the purchasing dealer and cannot be visited upon the selling dealer. The selling dealer is under the Act authorised to collect from the purchasing dealer the amount payable by him as tax on the transaction, and he can collect that amount only in the light of the declaration mentioned in the certificate in Form 'C'. He cannot hold an enquiry whether the notified authority who issued the certificate of registration acted properly, or ascertain whether the purchaser, notwithstanding the declaration, was likely to use the goods for a purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of re- gistration of the purchasing dealer is not accurate. But whether the goods specified in the registration certificate in From 'B' can be used for the purpose is not for the selling dealer to determine. That is a matter which has already been determined by the notified authority issuing the certificate of registration. A similar view has been taken in Chunni Lal Parshadi Lal vs. Commissioner of Sales, U.P. Lko. (1986) 2 SCC 501. Para 31 to 33 of the judgment is also reproduced:- 31. This Court further observed that if the purchasing dealer held a valid certificate specifying the goods which were to be purchased and furnished the required declaration to the selling dealer, the selling dealer became on production of the certificate entitled to the benefit of section 8(1) of that Act. It was of course open to the sales tax authorities to satisfy themselves that the goods which were purchased by the purchasing dealer under certificate in Form 'C' were specified in the purchasing dealer's certificate in Form 'C'. These observations as has been noted before were made in the context of the rules and the provisions of the Central Act, which wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 non-compliance or violation of the terms of the registration certificate or as to whether the C forms issued have been misused by the registered dealer shall be considered only at the subsequent and appropriate stage and in accordance with section 10-A of the Central Sales Tax Act and it would be not only premature, but inappropriate to enter into an enquiry postulated under Section 10-A even at the stage of issue or the supply of C forms. In Commercial Taxation Officer Udaipur vs. Rajasthan Taxchem, (2007) 3 SCC 124, the Apex Court examined the issue once again and endorsed the submission that once the commodity is recorded in the registration certificate as raw material, then the department cannot role back from their stand to the detriment of assessee. Para 20, 24 to 28 of the judgment is reproduced:- 20. We have already reproduced the question raised before this Court by the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase price of raw material, the following conditions were to be satisfied: (1) The purchaser should be a registered dealer, (2) the purchase should be of raw material, (3) the raw material should be for manufacture of goods in the State and (4) the goods so manufactured should be sold within the State or in the course of inter- State trade. The entry in the registration certificate issued to the dealer-assessee showed that hydrochloric acid was purchased as raw material for manufacture of the radiators and unless and until it was cancelled or modified it was binding on the department and was conclusive proof of the fact that hydrochloric acid was raw material for manufacture of radiators by the dealer assessee. Further, there was nothing to show that the dealer assessee had committed any breach of the conditions attached to the concession that was made available to it and in this view penalty under section 5C(2) could not be imposed . 25. The Bench also held as under:- We agree with the view taken in Bowen Press's case (1977) 39 STC 367 (Bom) that the entry in the registration certificate of the dealer-assessee that certain articles are raw material for the man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue at all and the holder of a recognition certificate might find it liable to be altered in effect in proceedings in which he would not even be heard. 27. It is also stated that the State's SLP against the CTO vs. Hindustan Radiators was dismissed by this Court which was registered as SLP (Civil) No. 1538 of 1988. 28. Thus, in view of these judgments, it was submitted that once the commodity is recorded in the registration certificate as raw material then the department cannot roll back from their stand to the Department of the assessee as the assessee has not violated any condition but acted on the belief of the Department. It was also contended that the appellant is entitled to charge additional tax of 1% under Section 10(2) only where the registered dealer had purchased any commodity as raw material by paying a concessional rate of tax for a specified purpose and the goods are not utilized by him for the purpose specified. In the instant case, it can be seen that the respondent has purchased diesel as raw material and utilized the same for the purpose specified in the registration certificate and thus no condition is violated for invoking the provisions of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the registration certificate had not been amended. The authority, therefore, committed a manifest error in rejecting the petitioner's application for issuance of Form-C on the ground that the certificate had been amended. The Supreme Court in M/s Sivalik Collulose Ltd., Gajraula, District Moradabad and another vs. State of U.P. and others, 1992 UPTC 1, held that the action under Section 7(4) of the Central Sales Tax Act by the authority granting the certificate of registration can only be prospectively and cannot operate retrospectively is fully applicable in the instant case. 22. Learned counsel has also invited attention of this Court to a decision of the Apex Court in State of U.P. vs. Universal Exporters and another, (1997) 7 SCC 531. The provisions of Rule 12-A(5) of U.P. Sales Tax Rules in the context of issuance of blank forms has been examined. Rule 12-A(5) of the Rules has been quoted and is reproduced:- 12-A. (5) If the Sales Tax Officer is satisfied that the requisition of the dealer for blank forms is genuine and reasonable, he may issue the same in such number as he deems fit. If the fee paid is more than the fee payable for the number of forms issued, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of power'. Generation of electricity would connote production of electrical energy whereas its distribution would mean its actual supply to the end consumer of power. Transmission is the stage occurring between generation and distribution of electricity. Distribution of power would be wide enough to include transmission itself inasmuch as distribution itself cannot take place without transmission of power from its place of generation. The legislature has otherwise not confined the expression to 'generation or distribution of electricity' alone but has widened it by the use of expression 'any other form of power'. This, in my opinion, would also be wide enough to include 'transmission of power'. Even if transmission is not included in the term 'generation or distribution of electricity', it would definitely be covered by the last part of the expression i.e. 'any other form of power'. The very premise, therefore, for the authorities to suspect applicability of section 8(3)(b) in the instant case is based upon misconstruction of the provision itself. Even otherwise there would be no justification for the authorities to deny issuance of Form ..... X X X X Extracts X X X X X X X X Extracts X X X X
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