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IN THE HIGH COURT OF RAJASTHAN AT JAIPUR BENCH
Mohammad Rafiq and Goverdhan Bardhar, JJ.
Combined Traders - Appellant
Versus
State Of Rajasthan - Respondent
Civil Writ Petition No. 11580 of 2018; Civil Misc Stay Application No. 8862 of 2018
Decided On : 01-05-2019
CENTRAL SALES TAX ACT, 1956 - RULE 17(20) OF THE CENTRAL SALES TAX (RAJASTHAN) RULES, 1957 - VALIDITY - CANCELLATION OF DECLARATION FORM/C-FORM - POWER OF THE STATE - SCOPE OF RULE MAKING POWER - SECTION 8(4), 13(1)(D), 13(3) & 13(4)(E) OF THE CENTRAL SALES TAX ACT, 1956 - INTERPRETATION - SECTION 7(4)(B) & 7(5) OF THE CENTRAL SALES TAX ACT, 1956 - CANCELLATION OF REGISTRATION CERTIFICATE - RETROSPECTIVE EFFECT - SECTION 9(2) OF THE CENTRAL SALES TAX ACT, 1956 - APPLICABILITY - SECTION 16(4) OF THE RAJASTHAN VALUE ADDED TAX ACT, 2003 - SCOPE - ARTICLE 14 & 19(1)(G) OF THE CONSTITUTION OF INDIA - VIOLATION.
Fact of the Case:
Petitioner, 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 to respondents no.4 and 5. The said sales were duly recorded in the books of accounts against which payments had also been received through the banking channels. To claim reduced rate of tax under Section 8(1), the petitioner had furnished 'C' forms, as per the requirement of Section 8(4) of the Act. The 'C' forms were obtained by the respondents no.4 and 5 online on 06.07.2017 after qualifying the conditions under Rule 17(8), (9), (10), (11), (12) and (13) of the Central Sales Tax (Rajasthan) Rules, 1957. The petitioner had claimed refund in the return filed on 11.07.2017 for the first quarter of 2017-18 under the Delhi Value Added Tax Act, 2004. When the said refund was not given within a period of two months from the date of filing of return, petitioner approached the Delhi High Court by filing Writ Petition (Civil) No.8283/2017, which vide order dated 18.09.2017, directed the authorities in Delhi to refund the amount along with due interest within four weeks and two weeks thereafter respectively. On 25.10.2017, the respondent no.3 informed the VATO, Ward-17, Delhi about the cancellation of 'C' forms of the respondents no.4 and 5 on the ground that they have not been found functioning at their business premises. By another letter dated 30.11.2017, Delhi VAT authority was informed about cancellation of the said 'C' forms as well as the registration certificates of the respondents no.4 and 5. The registration certificates of respondents no.4 and 5 were cancelled on 07.12.2017, under Section 16(4) of the Rajasthan Value Added Tax Act, 2003.
Finding of the Court:
Rule 17(20) of the Rajasthan Rules is ultra vires Section 8(4), 13(1)(d), 13(3) and 13(4)(e) of the CST Act. The communications dated 20.11.2017 and 30.11.2017 sent by the respondent no.3 to the VATO Ward-17, New Delhi, with regard to cancellation of 'C' Form, are declared illegal and consequently quashed and set aside. The cancellation of 'C' Forms made vide order dated 07.12.2017 is also quashed and set aside. The petitioner is held entitled to avail benefit of rates of tax under Section 8 of the CST Act.
Issues: 1. Whether Rule 17(20) of the Central Sales Tax (Rajasthan) Rules, 1957 is ultra vires Section 8(4), 13(1)(d), 13(3) & 13(4)(e) of the Central Sales Tax Act, 1956? 2. Whether the cancellation of 'C' Forms made vide order dated 07.12.2017 is valid? 3. Whether the petitioner is entitled to avail benefit of rates of tax under Section 8 of the CST Act?
Ratio Decidendi: 1. The State has no authority to frame a rule providing for cancellation of validly issued declaration form/form-C. 2. The cancellation of 'C' Forms made vide order dated 07.12.2017 is not valid. 3. The petitioner is entitled to avail benefit of rates of tax under Section 8 of the CST Act.
Final Decision: Writ petition allowed. Rule 17(20) of the Rajasthan Rules is declared ultra vires Section 8(4), 13(1)(d), 13(3) and 13(4)(e) of the CST Act. The communications dated 20.11.2017 and 30.11.2017 sent by the respondent no.3 to the VATO Ward-17, New Delhi, with regard to cancellation of 'C' Form, are declared illegal and consequently quashed and set aside. The cancellation of 'C' Forms made vide order dated 07.12.2017 is also quashed and set aside. The petitioner is held entitled to avail benefit of rates of tax under Section 8 of the CST Act.
JUDGMENT
Mohammad Rafiq, C.J. - This writ petition has been filed by petitioner, namely, Combined Traders, praying for declaring Rule 17(20) of the Central Sales Tax (Rajasthan) Rules, 1957 (for short, 'the Rajasthan Rules'), as introduced through notification dated 14.07.2014, ultra vires of Section 8(4), 13(1)(d), 13(3) & 13(4)(e) of the Central Sales Tax Act, 1956. Further prayer is made to declare the cancellation of 'C' forms permitted to be downloaded on the website of the Department to respondents no.4 and 5, vide order dated 07.12.2017, as illegal, without the authority of law and violative of Article 19(1)(g) of the Constitution of India. Prayer is also made for quashing and setting aside the communications dated 20.11.2017 and 30.11.2017 sent by the respondent no.3 to the VATO Ward-17, New Delhi, as being preposterous and not sustainable as the said communications preceded the date of cancellation of 'C' form, which was 07.12.2017. The petitioner has further prayed for declaration that the registration certificates of the respondents no.4 and 5, which were cancelled on 07.12.2017 with retrospective effect from 01.05.2017, were valid during the period when transactions were made by the petitioner and that even according to Section 16(4) of the Rajasthan Value Added Tax Act, 2003 such cancellation can only be 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.
2. 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 accounts of the respondents have been enclosed to the writ petition. To claim reduced rate of tax under Section 8(1), the petitioner had furnished 'C' forms, as per the requirement of Section 8(4) of the Act. As per second proviso to Rule 12(1) of the Central Sales Tax (Registration and Turnover) Rules, 1957 (for short, 'the Rules of 1957') a single 'C' form is required to be submitted for a quarter, which was issued by each of the respondents towards the transactions made in the first quarter of 2017-18. As per petitioner, the 'C' forms were obtained by the respondents no.4 and 5 online on 06.07.2017 after qualifying the conditions under Rule 17(8), (9), (10), (11), (12) and (13) of the Central Sales Tax (Rajasthan) Rules, 1957 (for short, 'the Rajasthan Rules'). The petitioner had claimed refund in the return filed on 11.07.2017 for the first quarter of 2017-18 under the Delhi Value Added Tax Act, 2004 (for short, 'the DVAT Act'). When the said refund was not given within a period of two months from the date of filing of return, petitioner approached the Delhi High Court by filing Writ Petition (Civil) No.8283/2017, which vide order dated 18.09.2017, directed the authorities in Delhi to refund the amount along with due interest within four weeks and two weeks thereafter respectively. On 25.10.2017, the respondent no.3 informed the VATO, Ward-17, Delhi about the cancellation of 'C' forms of the respondents no.4 and 5 on the ground that they have not been found functi
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