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U.P. Power Transmission Corporation Ltd. Versus Commissioner Of Commercial Tax And M/s CG Power And Industrial Solutions Ltd. Thru' P/A Holder Versus U.P. Power Transmission Corporation Ltd. & 5 Others

2018 (1) TMI 553 - ALLAHABAD HIGH COURT

Concessional rate of tax - sale or purchase of goods in inter-state trade or commerce - certificate of registration granted in Form 'B' - CST Act, 1956 - A declaration is sought in the writ petition that UPPTCL is entitled to be issued Form 'C' for the financial year 2010-11 to 2016-17, for the purchases to be effected for the contract work specified in Form 'B' at Unnao and Sirathu - An alternative prayer is also made to direct the UPPTCL to pay differential amount of tax, together with interes .....

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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 issu .....

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thin the express terms of section 8(3)(b) of the Act of 1956. For arriving at such an opinion the provision itself has been taken note of and construed as being limited to 'generation or distribution of electricity' alone. While taking such view the authorities have not examined the expression occurring in the statute itself. - The tribunal has committed manifest error of law in upholding denial of Form 'C' to the revisionist, notwithstanding the fact that registration certificate issued in .....

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- Hon'ble Ashwani Kumar Mishra, J. For the Applicant : Mahboob Ahmad For the Opposite Party : C.S.C. ORDER 1. U.P. Power Transmission Corporation Limited (hereinafter referred to as "UPPTCL"), 765 KV Transmission Division, Dahi Chowki, Unnao, has filed instant Commercial Tax Revision No.269 of 2017, assailing the order passed by the Commercial Tax Tribunal, Bench- 4, Kanpur, in second appeal no.154 of 2015. Proceedings pertained to assessment year 2010-11. The Tribunal vide its ord .....

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017, filed by M/s CG Power and Industrial Solutions Ltd. (hereinafter referred to as the 'Writ Petitioner'). Writ Petitioner was awarded contract by UPPTCL for construction of 765 KV sub-station, on turn key basis, as part of its Power Transmission Infrastructure. A declaration is sought in the writ petition that UPPTCL is entitled to be issued Form 'C' for the financial year 2010-11 to 2016-17, for the purchases to be effected for the contract work specified in Form 'B' .....

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ged 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 (hereinaft .....

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that are to be purchased for use in manufacture or processing of goods for sale and for use in generation or distribution of electricity or any other form of power on concessional tax under section 8(4) of the Act of 1956. The certificate of registration issued in Form 'B' is extracted for the facility of reference:- "(Form B) [See Rule 5 (1)] Registration Certificate [u/s 7(2)] No._______________ (Central) It is certified that M/s. Vidyut 765 KV Transmission Center UP Power Transm .....

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subject to the provisions of sub-section (4) of the said section: (a) for resale; XXX (b) for use in the manufacture or processing of goods for sale - Equipments for construction of Electrical Power House, parts and material, Electrical Material Equipment, Transformer, Apparatus and Parts only. (c) for use in mining; XXX (d) for use in the generation or distribution of electricity or any other form of power. Electrical material equipments, parts and apparatus, transformer and transformer oil onl .....

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nnao (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 o .....

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uthorities denied Form 'C' in respect of commissioning of sub-stations at Unnao and Sirathu. A specific order in that regard came to be passed on 30.1.2013. Following reasons have been assigned in it for denial of form:- "व्यापारी के द्वारा प्रस्तुत लिखित उत्तर पर व .....

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75; माध्यम से आयात किया गया है लेकिन उसकी कोई पुनः बिक्री नहीं दिखायी गयी है। डिस्ट्रीबî .....

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#2339;तः पावर ट्रान्समिशन के लिए प्राप्त किया गया है। फार्म सी प्राप्त करने हेतु आवेदन कर .....

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79; वोल्टेज करके विद्युत सबस्टेशन को दिया जाता है। जिसके लिए उसमें प्रयुक्त होने वाली म .....

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री न तो निर्माता है न ही ट्रेडर ही श्रेणी में आते हैं और न ही केन्द्रीय अधिनियम में यथाê .....

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2366;ण में प्रयुक्त सामग्री अथवा अनुरक्षण कार्य हेतु फार्म-सी जारी किया जाना विधिक रुप स .....

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d under the rules. The assessing authority ultimately concluded as under:- "उपर्युक्त व्याख्या से स्पष्ट है कि पावर जनरेशन, पावर ट्रान्समिशन एवं प& .....

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35;्रिसिटी जनरेशन एवं डिस्ट्रीब्यूशन का उल्लेख है, ट्रान्समिशन का नहीं, जबकि आपके द्वा .....

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67;यम में कोई व्यवस्था नहीं दी गयी है। व्यापारी केन्द्रीय अधिनियम में यथापरिभाषित डील& .....

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;ात करने की अनुमति दिया जाना न्याय संगत नहीं है। अतः फार्म-सी प्राप्त करने हेतु दिया गय .....

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2404;" 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 'B', upon which concessional tax under section 8(4) is leviable, would have to be made vide Form 'C' or el .....

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ealizing normal rate of tax. The writ petitioner has been contesting such proceedings on the ground that only concessional rate of tax is payable on such inter-state sales made in Maharashtra and Madhya Pradesh. It is otherwise claimed by the writ petitioner that in the event UPPTCL is not found entitled to issuance of Form 'C' for inter-state sales, then such higher rate of tax is liable to be reimbursed to it by UPPTCL. A prayer in the alternative is also made in that regard in the wri .....

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of certificate in Form 'C' is valid. The argument, in substance, is that Form 'C' can be issued only if a dealer undertakes the work of generation and distribution of electricity and not if it undertakes work of transmission, notwithstanding certificate of registration issued in Form 'B' as per which concessional tax is leviable. The stand taken in the counter affidavit virtually questions the issuance of Form 'B' to the UPPTCL insofar as concessional tax under se .....

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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 contend .....

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ned counsel appearing for the UPPTCL. Learned counsels have also referred to various decisions in support of their submissions, which shall be dealt with later. 9. Per contra, Sri A.C. Tripathi, learned Standing Counsel contends that the certificate issued in Form 'B' cannot travel beyond provisions contained under section 8(3)(b) of the Act of 1956, and the authorities as well as tribunal have taken a correct view in the matter. 10. Following question of law has been framed for consider .....

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in the Act of 1956 as well as Rules of 1957. Act of 1956 was enacted to provide principles for determining sale or purchase of goods in inter-state trade or commerce and for providing levy or collection of tax on such inter-state trade or commerce or in course of import into or export from India. Section 2(b) defines dealer in following words:- "2(b). "Dealer" means any person who carries on (whether regularly or otherwise) the business of buying, selling, supplying or distributi .....

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before mentioned or not, who carries on the business of buying, selling, supplying or distributing, goods belonging to any principal whether disclosed or not; and (iii) An auctioneer who carries on the business of selling, or auctioning goods belonging to any principal, whether disclosed or not and whether the offer of the intending purchaser is accepted by him 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 o .....

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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 .....

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tion dealers. -(l) Every dealer liable to pay tax under this Act shall, within such time as may be prescribed for the purpose, make an application for registration under this Act to such authority in the appropriate State as the Central Government may, by general or special order, specify and every such application shall contain such particulars as may be prescribed. (2) Any dealer liable to pay tax under the sales tax law of the appropriate State, or where there is no such law in force in the a .....

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Rules is relevant and is reproduced:- "3. Certificate of registration.- (1) An application for registration under section 7 shall be made by a dealer to the notified authority in Form 'A' and shall be- (a) signed by the proprietor of the business, or, in the case of a firm, by one of its partners, or, in the case of a Hindu undivided family, by the karta or manager of the family, or, in the case of a company by a director, managing agent or principal officer thereof, or, in the cas .....

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t 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 .....

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......... (d) use in the generation or distribution of electricity or any other form of power; (e) used in the packing of goods for sale/resale. 15. Rule 5 of the Rules of 1957 then provides for necessary satisfaction to be arrived at, by the notified authority, after making such enquiry as it thinks necessary, with regard to correctness of the particulars contained in the application, as also deposit of fee, referred to in sub-rule (3) of rule 4. It is thereafter that the dealer shall be regist .....

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place of business within the State other than the principal place of business mentioned therein. (2) When the said authority is not satisfied that the particulars contained in the application are correct and complete, or where the fee referred to in sub-rule (3) of rule 4 has not been paid, he shall reject the application for reasons to be recorded in writing: Provided that before the application is rejected, the applicant shall be given an opportunity of being heard in the matter and, as the c .....

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tion (4) the provisions of sub-section (1) is to apply only if the dealer selling the goods furnishes to the prescribed authority, in the prescribed manner, a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority. Section 8(1), (2), (3) and (4) of the Act of 1956 are reproduced:- "8.Rates of tax on sales in the course of inter-State trade or commerce.- (1) Every .....

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s 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 t .....

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] 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 for the packing of goods for sale; (d) are containers or other materials used for the packing of any goods or classes of goods specified in the certificate of registration referred to in [****] clause (b) or for the packing .....

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uthority: Provided that the declaration is furnished within the prescribed time or within such further time as that authority may, for sufficient cause, permit." 17. Admittedly, UPPTCL is the registered dealer to whom a certificate has been issued by the competent authority in Form 'B'. Such inter-state sales attract concessional rate of tax as per the description given in the Form. It is an admitted position that registration certificate issued to UPPTCL in Form 'B' subsist .....

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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 w .....

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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 inasmuch as the dealer at the time of seeking registration under section 7 of the Act is required to make detailed disclosure as per Form 'A'. Dealer has to disclose as to who is the person deemed to be manager in relation to the business of the dealer in the State concerned; status or relationship of the person who .....

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ncial year and whether accounts of sale are prepared monthly/quarterly/half yearly/yearly. The disclosure in clause 16 requires specification of the goods or classes of goods that are being purchased by dealer in the course of inter-state trade or commerce. While furnishing such details the dealer also has to specify as to whether purchases are for resale, use in manufacture or processing of goods for sale, use in mining, use in generation or distribution of electricity or any other form of powe .....

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ed in the certificate. The authority who is approached to issue Form 'C' cannot be permitted to question the correctness of such recitals contained in the certificate in Form 'B' or else the very premise and object of issuing Form 'B' would be frustrated. 20. In State of Madras vs. Radio and Electricals, AIR 1967 SC 234, such an issue came to be examined by the Apex Court. It was clearly observed that once certificate of registration is issued in Form 'B', it is n .....

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ld 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 r .....

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only be issued after an objective satisfaction by the notified authority that the specified goods are likely to be needed for the purpose of the business of the registered dealer, and that satisfaction is open to challenge in an appropriate proceeding before the High Court and even before this Court. Correctness or propriety of satisfaction of the notified authority in issuing the certificate in Form 'B' that the goods are likely to be required for the purpose of the business would not h .....

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his busi- ness. It is open to the Tax Officer to ascertain whether the goods in respect of which a claim for concessional rate is made are specified in the certificate of registration, but if the class of goods is included in the certificate of registration in Form 'B' he cannot say that the class of goods should not have been specified. 14. The Act, seeks to impose tax on transactions, amongst others, of sale and purchase in inter-State trade and commerce. Though the tax under the Act .....

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s take place in the course of inter-State trade or commerce. Indisputably the seller can have in these transactions no control over the purchaser. He has to rely upon the representations 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 reco .....

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ble 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 other than the purpose mentioned in the certificate in Form 'C'. There is nothing in the Act or the Rules tha .....

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nd that no enquiry whatever may be made by the assessing authority. He invited our attention to the following passage from the judgment which is under appeal in Civil Appeal No. 335 of 1965: " We are of the opinion that whether or not the goods were in fact used for the stated purposes or even usable for such a purpose, so long as the purchasing dealer has furnished the required declaration to the selling dealer, the selling dealer becomes under law entitled to the benefit of section 8(1) o .....

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or even is or is not within the certificate. of registration of that dealer." It is implicit in the context in which these observations occur that if the purchasing dealer holds a valid certificate specifying the goods which are to be purchased, and furnishes the required declaration to the selling dealer, the selling dealer becomes on production of the certificate entitled to the benefit of S. 8(1). It is of course open to the sales tax authority to satisfy himself that the goods which are .....

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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 .....

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h their provisions were not in parinateria. 32. But it was contended by counsel for the dealer that in order to make the provisions of the Act operative and effective, this was the intention in the instant case and though the rule did not say so that it raised an irrebuttable presumption. We are of the opinion that this submission has to be accepted. After all the purpose of the rule was to make the object of the provisions of the Act workable i.e. realisation of tax at one single point, at the .....

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examine whether certificate is "farzi" or not, or if there was any collusion on the part of selling dealer but not beyond - i.e. how the purchasing dealer has dealt with the goods. If in an appropriate case it could be established that the certificates were "farzi" or that there was collusion between the purchasing dealer and the selling dealer, different considerations would arise. But in the facts of this case as noticed before, the facts have been found to the contrary by .....

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d v. C.T.O.(85 S.T.C. 422), a similar prayer for issue of "C" forms was made. The only difference is that in that case, the claim was made prior to purchase of the goods. In that case, the Supreme Court has held that, " .....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 .....

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ot 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, .....

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ider that before purchasing any goods as raw material, it is necessary for the purchaser to apply to the Assessing Officer concerned for issuance of registration certificate specifically mentioning such items as raw material. In the instant case, the respondent accordingly approached the appellant who granted the registration certificate after considering all the aspects of the matter and taking a conscious decision. It is not the case of the appellant that at the time of grant of such registrat .....

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ision Bench of the Rajasthan High Court at Jodhpur. In this case, the assessee was carrying on the business of manufacture of motor radiators and was a registered dealer under the Sales Tax Act, 1954. The assessee purchased hydrochloric acid which has been included in the registration certificate as raw material, by furnishing a declaration to use it as raw material for manufacturing of radiators and, therefore, was entitled to pay concessional rate of tax. The Commercial Taxes Officer took the .....

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ate of tax on the sale or 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 mate .....

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so 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 manufacture of goods is conclusive and in face of the entry in the registration certificate, it is not open to the assessing authority to contend that though a particular article has been mentioned in the registration certificate as raw material, is not in fact a raw material wi .....

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ales Tax Officer, he has to determine whether the dealer is entitled to get the certificate of recognition. Before granting the recognition certificate in form 7, the officer has necessarily to determine whether the goods mentioned in the list are goods in respect of which a recognition certificate can be granted, for which the officer has to make such enquiry as he thinks fit. When a recognition certificate is granted by the officer and any particular goods are included in the list appended to .....

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recognition certificate, to dispute the inclusion of any particular item in the recognition certificate and to come to a conclusion that to that extent the recognition certificate was incorrectly granted. If this were permitted, it would lead to confusion and chaos, because different Sales Tax Officers assessing different third parties, who had sold goods to such a dealer holding a recognition certificate, might come to different conclusions regarding the same item. Moreover, the result of allo .....

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tted 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 .....

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hich are to similar effect. In view of the settled position, however, I am not inclined to refer to all such judgments. Recently, a Division Bench of this Court in Vadilal Enterprises Ltd. vs. State of U.P. and others, (2016) 89 VST 108 (Alld), had an occasion to examine the issue and it was observed that once a certificate has been issued by the competent authority, it was impermissible for the authorities to withhold issuance of certificate in Form 'C'. Para 26 to 28 of the judgment is .....

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e of Form-C and the goods are indicated in the registration certificate issued under Section 8(3)(b) of the Act, the assessing authority could not stall the said request for an unreasonable period and is required to issue the certificate within a reasonable period. 27. This Court, in a series of decisions, have issued a mandamus directing the authorities to issue Form-C where it was found that the authority was not issuing Form-C. In Unitech Ltd. vs. Commercial Tax Officer, Gajuwaka, Visakhapatn .....

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ectively and the order, if any, could only apply to an application filed after the amendment. Applications which are pending prior to the amendment of the registration are required to be considered as if 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 Mo .....

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. 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, the balance shall be credited to the account of the dealer to be adjusted against any future iss .....

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tted, along with such other proof as the dealer adduces. It is only then that the assessing authority may consider whether such proof, along with the filled in form is sufficient to rebut the presumption drawn under the provision." 23. Section 9-A otherwise provides that no registered dealer shall make any collection of tax on account of inter-state sale except in accordance with the Act and the Rules. In case tax over and above the rate specified under section 8(1) is allowed to be collect .....

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his Court is thus of the opinion that 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 provision itself has bee .....

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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 inclu .....

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