TMI Blog2019 (6) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... of the court during the course of argument, no other State has any such provision in their Rules, like the one which is impugned in the present writ petition, i.e., Rule 17(20) of the Rajasthan Rules, conferring unto itself power for cancellation of validly issued declaration form/C-Form. The obligation of a registered dealer selling the goods to another registered dealer to avail the benefit of tax provided under Section 8(1) is only confined to furnish to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer to whom he sells the goods. Such declaration should contain the prescribed particulars in the prescribed form and manner. Proviso to Section 8(4) stipulates that the selling dealer has to furnish such declaration within the prescribed time or within such further time as the authority may, for sufficient reason, extend. Rule 12 of the Central Rules provides a form of declaration, the particulars to be contained therein, the period within which it has to be furnished, consequence of loss of the declaration form, and the course to be adopted in that event. The State has no authority to frame a rule providing for can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effective from the date of the order or the hoisting of such cancellation on the portal of the department and would not come into effect retrospectively. It is also prayed to declare the communication dated 27.12.2017 sent by the respondent no.2 to the Commissioner VAT/GST, Delhi as without the authority of law and thus quash and set aside the same. Lastly, prayer is made for a direction to the respondent no.1 to validate the C forms issued to the respondents no.4 and 5 on 06.07.2017 immediately thus enabling the petitioner to claim the benefit of Section 8(1) as he had already submitted the said C forms verified on TINXSYS on 14.09.2017. Briefly stated, the facts of the case are that the petitioner, as a registered dealer in Delhi, had made sales in the first quarter of 2017-18 under Section 8(1) of the Central Sales Tax Act, 1956 ( for short, the Act ) to respondent no.4 M/s. H.G. International, TIN No.08372171209 and respondent no.5 M/s. Saraswati Enterprises, TIN No.08942179286. As per petitioner, the said sales were duly recorded in the books of accounts against which payments had also been received through the banking channels. The ledger a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e State Government can make the Rules. As per clause (e) of Section 13(4) of the Act, the State could make rules as regards, (a) the authority from whom; (b) conditions subject to which; (c) the fee subject to payment of which any form or certificate prescribed under sub-section (4) of Section 8 (as relevant in this case) may be obtained. In addition, this clause also permits the State to frame Rules so as to decide the manner in which such form shall be kept in custody and records relating thereto maintained and the manner in which any such form may be used or any such certificate or declaration may be furnished. Therefore, the rule making power available to the State under Section 13(4)(e) does not confer any authority on the respondent no.1 to frame a rule so as to provide cancellation of the C form once issued. Rule 17(20) notified on 14.07.2014 by respondent no.1 is not only inconsistent with the Act but is also outside the scope of rule making power of the State. Invoking this Rule, the C forms issued by the respondents no.4 and 5 have been illegally cancelled for which no provision exists under the Act. Reliance in support of this argument is placed on the judgments of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C form once issued to the selling dealer, which would be evident from the set of rules of other States cited during the course of hearing. On the question of cancellation of registration certificate, it is submitted that the registration certificates of the respondents no.4 and 5 have been cancelled on 07.12.2017 under Section 16(4) of the RVAT and not under Section 7(4)(b) of the Act. Registration certificate under the CST Act cannot be cancelled by applying the provisions of the RVAT. For this, reference is made to Section 9(2) of the Act, which starts with the expressions subject to the other provisions of the Act and the Rules made thereunder . RVAT can only be resorted to where the matter relates to registration of the transferee s business and not for cancellation of registration under the Act. Thus, for cancellation of registration certificate under the Act, Section 7(4)(b) would be applicable where it has been made permissible at the instance of the department and Section 7(5) when it is at the instance of an assessee. Rules which contemplate the cancellation process are Rule 9(3) for Section 7(4)(b) and Rule 10 of the Rules for Section 7(5). In the rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso supported with the judgment of Delhi High Court in Jain Manufacturing , supra. The judgment of the Supreme Court in Commissioner of Sales Tax Vs. Shree Krishna Engg. - (2005) 2 SCC 692 , relied upon by the respondents, is not applicable inasmuch as it deals with the situation where no C forms have been issued and the selling dealers approached the Court for a direction to the concerned Sales Tax Department to issue of such C forms. In that case the court was dealing with a situation where no C-Form was issued and the selling dealer had approached the court for a direction to the concerned Sales Tax Department to issue such C-Form. In that context, the Supreme Court observed that the registration is really in the nature of a concession and not a matter of right and that it was conditional upon fulfillment of certain statutory requirements. The aforesaid judgment has been distinguished in Jain Manufacturing , supra. Lastly, Mr. Rajesh Jain, learned counsel, submitted that cancellation of C forms has adversely affected the petitioner. When transactions were effected under Section 3 of the Act, which have also been accepted by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that the petitioner in the present case challenged validity of the Central Sales Tax Rule, 1957, even though he is not even a dealer registered in the state of Rajasthan. It is submitted that following a due inquiry, registration of two dealers, namely, M/s H G International and M/S Saraswati Enterprise was cancelled by the assessing authority vide an order passed under Rule 17(20) of Central Sales Tax rule, 1957, read with Rule 48, Rajasthan Value Added Tax Rules, 2006 and Section 16(4) Rajasthan Value Added Tax Act, 2003. The present petitioner is a stranger to the assessment/penalty order passed by the assessing authority and has no locus to challenge the vires of the Rules. Learned counsel argued that the said order was never challenged by the concerned dealers registered in Rajasthan before any appellate authority and hence has attained finality. Further, the registered dealers to whom the C-forms were issued have not even put in appearance before this court, raising a serious cloud of doubt on the actions of the present petitioner and filling of the present petition. It is a settled principle of law that no proceedings can be initiated by a person who is stranger to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case the court finds that the above presumptions stand rebutted and the impugned Regulations are relatable to the specific provisions contained in Section 86(1)(e) of the Act. Learned Counsel further submitted that the Supreme Court very recently in the case of TVS Company V/s. State of Tamil Nadu reported in (2018) AIR (SC) 5624 has reiterated the principle that the court should be slow in the reviewing the fiscal laws and any concession claimed should be strictly in accordance with law. Mr. R.B. Mathur, learned Counsel for the respondent, submitted that the Rajasthan Value Added Act, 2003 and the Central Sales Tax Act, 1956, each is a complete code. A bare perusal of the various provisions of either of the Acts, makes it amply clear that the rules envisaged under Rule 17(20) of the Central Sales Tax (Rajasthan) Rules, 1957, are in consonance therewith. Reference is made to various provisions of the Central Sales Tax Act, 1956, especially sections 8, 9, 13, 16 and Rules 9 and 17 of the Central Sales Tax (Registration and Turnover) Rules of 1967. Learned counsel, submitted that it is of utmost relevance that in an era of e-filing of documents and returns, the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Officer disallowed the same on the premise that registration of Sulekha Enterprises Corporation stood cancelled on 20.08.1967 with retrospective effect from 01.01.1967. The Bombay High Court reversed the decision of the Sales Tax Officer. The Supreme Court while affirming the decision of the Bombay High Court held as under:- .A purchasing dealer is entitled by law to rely upon the certificate of registration of the selling dealer and to act upon it. Whatever may be the effect of a retrospective cancellation upon the selling dealer, it can have no effect upon any person who has acted upon the strength of a registration certificate when the registration was current. The argument on behalf of the department that it was the duty of persons dealing with registered dealers to find our whether a state of facts exists which would justify the cancellation of registration must be rejected. To accept it would be to notify the provisions of the statute which entitle persons dealing with registered dealers to act upon the strength of registration certificates. The aforesaid decision of the Supreme Court was followed by the Delhi High Court in Shanti Kiran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s bring disrepute to the State and introduce uncertainty and lack of confidence into a true field of trust. It is high time that the State Government institutes appropriate enquiries, take such steps as are necessary to eliminate fictitious dealers from the field and also take strong action against persons connected with such matters so that there be no recurrence of it in future. The Supreme Court in State of Madras Vs. Radio Electricals Ltd. , supra, while considering as to what precaution a seller is required to exercise while entering into a transaction of sale with a buyer, observed as under:- .He (the seller) 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 mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsider necessary. However, there is no specific provision even under the aforementioned Rules which enables the Commissioner to cancel the C-Form that has already been issued. There is merit in the contention that one of the primary requirements for issuance of a C-Form is that the dealer to whom the C-Form is issued has to have a valid CST registration on the date that the C Form is issued. If the purchasing dealer does not possess a valid CST registration on the date of the transaction of sale, then the selling dealer cannot insist on being issued a CForm. In the present case, on the date of the transaction i.e. 10th March, 2015 the purchasing dealer viz., Respondent No. 2 did posses a valid CST registration. The name of the purchasing dealer as shown in the invoices, and the name and address of the registered purchasing dealer as reflected in the C-Forms issued by the DT T matched. The cancellation of the CST registration of Respondent No. 2 took place subsequently on 4th August 2015. Therefore , there was no means for the Petitioner as the selling dealer to suspect as of the date of sale or soon thereafter that the payments made to it RTGS was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er-State sales, who was assessed to sales tax for the year 1959-60 under Section 8 of the Central Sales Tax Act. Out of total turnover determined by the Sales Tax Officer, only a part thereof was supported by proper declaration Form C , with regard to which tax was imposed at concessional rate, and remaining part was not so supported with regard to which tax was imposed at higher rate on the premise that he did not file the declaration form on or before the prescribed date, i.e., 16.02.1961, but actually filed the declaration forms on 08.03.1961 but before the order of assessment was made. The assessee sought to explain the delay by submitting that he had received the declaration form late from the purchaser in Madras. Both the appeal and the revision filed by the assessee before the respective authorities were dismissed. The Kerala High Court, however, allowed his writ petition and quashed the orders of assessment of sales tax and directed the Sales Tax Officer to make a fresh order of assessment after taking into consideration the declaration forms furnished by the assessee on 08.03.1961. The State of Kerala in exercise of its powers delegated to it by Section 13(3) of the CST A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax on the petroleum coke, which was the subject of inter-State sales. The appellants were required by the respondent State, in exercise of its powers conferred under Section 35-A of the Assam Sales Tax Act, 1947, to pay interest at the rate of 24% per annum on the delayed payment of the tax for the assessment years 1974 to 1980. The appellants in the writ petition challenged imposition of such interest on the premise that there being no mention of interest in the first part of Section 9(2) of the CST Act, the appellants were not liable to pay interest. Considering the question of competence of the State in demanding the interest while interpreting Section 9(2) of the CST Act, and relying on its earlier Constitution Bench judgment in Khemka Company Vs. State of Maharashtra 1975 (3) SCR 753 , the Supreme Court in para 14 of the report held as under:- Now, the words charging or payment or interest in Section 9(2) occur in what may be called the letter part thereof. Section 9(2) authorises the sales tax authorities of a State to assess, reassess, collect and enforce payment of the Central sales tax payable by a dealer as if it was payable under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laration Form(s) or Certificate(s) by misrepresentation of facts or by fraud or in contravention to the provisions of the Central Sales Tax Act, 1956 and rules made there under, the assessing authority or any officer authorised by the Commissioner, after affording such dealer an opportunity of being heard cancel such declaration Form(s) or Certificate(s), and the list of declaration Form(s) or Certificate(s) so cancelled shall be published on the official web-site of the Department. The declaration Form(s) or Certificate(s) so cancelled shall be deemed to have not been generated through the official web-site of the Department. Section 7(4)(a) of the CST Act provides that a certificate of registration granted under this Section either on the application of a dealer to whom it has been granted or, where no such application has been made, after due notice to the dealer, be amended by the authority granting it. Section 7(4)(b) and Section 7(5) of the CST Act are the only provisions in the Act which provide for cancellation of the registration once granted. Section 7(4)(b) stipulates that such registration can be cancelled by the granting authority, where he is satisfied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a date subsequent to the date of the order and not a date prior to the date of the order. In General Officer Commanding-in-Chief , supra, the Supreme Court held that any rule must conform to the provisions of the statute under which it is framed. It must also come within the scope and purview of the Rule making power of the authority framing the Rules. If either of the two conditions is not fulfilled, the Rules so framed would be void. Applying these two tests, the Supreme Court held that Rule 5-C framed by the Central Government was in excess of its Rule making power as contained in Clause (c) of sub-section (2) of Section 280 of the Cantonment Act before its amendment by the substitution of Clause (c). It is therefore void. The Supreme Court in State of Tamil Nadu Vs. P. Krishnamoorthy (2006) 4 SCC 515 , delineated the law on the scope of judicial review while examining the validity of a subordinate legislation in the following terms:- 15. There is a presumption in favour of constitutionality or validity of a subordinate legislation and the burden is upon him who attacks it to show that it is invalid. It is also well recognised t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 8(4) stipulates that the selling dealer has to furnish such declaration within the prescribed time or within such further time as the authority may, for sufficient reason, extend. Rule 12 of the Central Rules provides a form of declaration, the particulars to be contained therein, the period within which it has to be furnished, consequence of loss of the declaration form, and the course to be adopted in that event. However, this provision does not provide for cancellation of Form C issued. No doubt, Section 13(3) of the CST Act empowers the State to make the Rules but with the rider that such Rules should not be inconsistent with the provisions of the CST Act and the Rules made by the Central Government under Section 13(1), to make the Rules to carry out the purpose of the Act. Section 13(4) of the CST Act inter-alia provides that in particular and without prejudice to the powers conferred by sub-section (3), the State Government may make rules for all or any of the purposes listed therein from Clauses (a) to (g). Clause (e) provides that the State Government may make rules prescribing the authority from whom, the conditions subject to which and fees, subject to p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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