• Jul
  • 08
  • 2013

Issuing C form is statutory obligation of buyer, can be enforced by a writ petition in HC

Posted In GST | | 17 Comments »

Many a times I receive queries on a common problem faced by many dealers all over India that what to do when the interstate purchaser of goods refuses or does not issue the requisite C forms after purchasing the goods at concessional rate of CST @ 2%.

The only solution many people feel is the filing of Civil suit for the recovery of such C forms or the balance tax along with the interest from the refusing buyer.

Now the Gauhati High Court in OMIL-JSC-JV vs Union of India [2013] 61 VST 370 (GAUHATI) has held that a  purchaser who has bought the goods at concessional rate of CST @ 2% is under statutory obligation under Central sales Tax Act, 1956 to issue the C forms irrespective of the fact whether such commitment to give C form was there in the contract for sale or not and if such person refuses to issue the C forms then a writ petition is maintainable against such person before the High Court.

In this case a statutory corporation refused to issue the requisite C forms after purchasing the goods at concessional rate of CST @ 2% on the pretext that there was no such provision for issuing the C form in the contract agreement.

On a writ petition in the High Court seeking a direction to the Corporation for issuance of the C forms the Gauhati High Court allowing the petition held as under:

” that the issue was with regard to issue of declaration form C by the Corporation to the dealer for availing of the concessional rate of tax under Central Sales Tax Act, 1956 which is a statutory exaction and a requirement for compliance of the provision of the Central Sales Tax Act and not the breach of any of the terms of the contract agreement. Therefore, the jurisdiction of the writ court was not barred. The court could not refuse to interfere on the ground that the question raised arose out of the contractual agreement and was one of enforcement of contractual obligation and should be referred to arbitration.”

The High Court further held:

” That the Corporation was statutorily bound under the provisions of the Central sales tax act, 1956 to issue C forms to the dealer as claimed. Merely because the contract agreement did not stipulate issue of C forms it could not refuse to issue the forms to the dealer which was entitled to the benefit under section 8(1) of the Act only on production of such form. Moreover, the corporation, through its correspondence with the dealer, even prior to awarding the contract work, requested it to avail of concessional rates of taxes, gave assurances to the dealer time and again that it would issue C forms and even communicated to the Commissioner of Commercial Taxes, West Bengal, in connection with issue of C form in order to avoid any disruption of the supply of the contract materials, On the facts, it could not be allowed to deny the claim of the dealer on the pretext of absense of any provison in the contract agreement to issue C form. The letter dated October, 29, 2010, refusing to issue form C was unacceptable under the provisions of law and liable to be quashed and set aside.”

Conclusion: Thus the above judgement makes it clear that once a dealer purchases interstate goods at concessional rate of CST, he is under a statutory obligation under CST Act to issue the C forms and such statutory obligation exist irrespective of the fact that terms of the contract are silent on the issuance of C forms, such statutory obligation can be enforced by a writ petition in the High Court.

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Read Other Articles from Advocate Amit Bajaj

(Author – Amit Bajaj Advocate, Bajaj & Bajaj Advocates, 128, Sangam complex, Milap chowk, Jalandhar City (Punjab), Email: amit@amitbajajadvocate.com, M +919815243335)

17 Responses to “Issuing C form is statutory obligation of buyer, can be enforced by a writ petition in HC”

  1. nitish says:

    If person do not give c.form and on claiming the amount of c.form he show bogus voucher that he had paid tax difference for the same in that case what to do but he do not have any cash receipts of my firm pls suggest

  2. Viswanath says:

    Can we issue once C form for one full year instead of quartely for the year 2008-09 and 2009-10?

  3. C form harrassed says:

    I clearly see the following
    1. The purchaser has no legal/financial obligation or binding since on the very basic front he has gone back on his own commitment and hence very difficult to recover the form or cost forget the penalty and interest.
    2. The state in which the purchaser is located stands to benefit more if they do not issue “C” form as their share still stands and it is better than 2%.
    3. Seller state government is also happy as they collect more CST and get more share.

    So moral of the story is if you sell under cst @ 2% against form “C” only you are the loser and every one else gains.

    simple remedy according to me.

    1. If the buyer is eligible and not issuing “C” form for any reason his vat registration should be suspended till he clears all “C” form issues.
    2. Cancel his registration if he is a defaulter in more than 3 occassions.
    3. Make a mandatory indemnification that no “C” form claims are pending before completion of assesment.

    R

  4. Akriti says:

    would be grateful if you could mail me a copy of the judgment or upload it here itself… additionally i was intrigued by the discussion regarding maintainability of writ in case the buyer is a private body.. does anyone know of a case when such a writ was allowed against a private body.. further if writ is not maintainable then what steps can the seller take in a situation where purchaser refuses to issue form C.

  5. Mohit Goyal says:

    Dear Sir,

    Kindly suggest what will happened if the buyer does not issue C form and there after seller has deposited the differential tax to sales tax authority.

    what are the right to recover the differential tax with interest from buyer by seller.

  6. Jyoti Raj says:

    Bajajji
    can you mail me the scan copy of judgment

  7. Milan says:

    If purchaser refused to issued “C” form as well as the difference of taxes then what?

  8. Suryakant says:

    If purchaser is ready to pay difference between CST and VAT will it do ? (In case of small purchsaes)

  9. vswami says:

    contd.
    @http://www.topcafirms.com/index.php/white-paper/5163-writ-against-private-body-is-not-maintainable-in-law
    The opening paragraph of that write-up adequately sums up what really are the criteria to be satified for taking up a matter in writ proceedngs.
    If perspectively observed, one cannot fail to note that in order to so seek a writ,the matter of grievance must be one necessarily relatable to /strictly partake the nature of a “fundamental rught” as guaranteed/ envisaged by , and within the meaning of our nation’s basic charter.

    One thinks that,in the HC case cited therein, the following cryptic observations, implicitly, though not explicitly,are seen to touch upon, in essence, the same basics:

    Q
    The High Court held that testing the present case in the light of the case laws relied on by the petitioners and the respondents it could be seen that the two traits/exceptions viz.,
    1. The rights are purely of a private character; and
    2. The company is purely a private body

    UQ

    In one’s conviction, even if it is directly or indirectly related to or has the charaeristic of a “lawful right” attached to a “statutory obligation”,- such as a dealer’s right to ‘C’ Form under the CST law,-still may not strictly qualify as a “fundamental right” for the purpose of “writ”.

    This is a subject on which, it appears, law experts, having an insightful exposure to the law of Constitution, may have immensely wide scope to devotedly study, analyse and throw more guiding light.

  10. vswami says:

    @Shanker Mundhra

    While it can be said that he has touched the proverbial “tip of the iceburg”, there is a lot more to it- that is, in what circumstances, the EXTRA ORDINARY WRIT jurisdiction of courts could be rightly (in its profond sense; but not meaning sucessfully or otherwise, that too as a straight jacketed or all-time -applicable rule or proposition)invoked. For some useful clues, however,anyone interested to go deeper, may go through the so-styled ‘white paper’ in public domain @ …..

  11. vswami says:

    “,…. such statutory obligation can be enforced by a writ petition in the High Court.”
    Impromptu (viewing from a different perspective) :
    One is not at all clear, rather finds it difficult to believe that, for forcing, instead of through coercive tactics or any other alternate recourse as may be available, and less expensive, also time and energy saving, the party to discharge any such mandated obligation under a statute has to be taken to court. Regardless of , whether it is by way of ordinary civil litigation, or by invoking the extraordinary writ jurisdiction or its ilk.
    As common sense may tell, court litigation, because of its inherent repulsive and abhorring facets, may have to be prudently thought of, if at all, only as the ultimate resort or legal recourse.
    As specially noted, the faulted party is a ‘statutory corporation’. The primary responsibility to tell the erring party to ‘behave’ is that of the government, itself being the creator of the statute. Further, this being clearly a statutory obligation, the power or fundamental duty to implement and enforce is presumably vested in the competent authority (ies) as named there under. By no logic or reasoning, court can be rightly looked upon as the ‘enforcing’ authority- in any sense normally understood.
    On the obvious disadvantage of court litigation, nothing else can be more revealing or illuminating than among others the following random chosen Quote:
    Q
    The greatest illusion of our people is the infantile belief in the legal solubility of all problems. In the wise words of Lord Halisham, the former Lord Chancellor of the UK, “We might do well to remember that in the whole realm of human relations there is no field more vulnerable to corruption, dishonesty, chicanery, and sheer quackery and charlatanism than contested litigation.. real, imagined or invented”. We might also do well to consider that few of the safeguards we have achieved against these evils…” (italics/underlining SUPPLIED)

    UQ
    (< As the greatest legal luminary and exponent of our nation’s constitutional law, Nani A Palkhivala, voicing his long-nurtured, -cherished wisdom said in his published article (titled,- Crisis of Public Faith in the Judicary) in TOI, july 9, 1990; Source: Book-We, the Nation )

    An Entreaty: Recommended to usefully read also his other writings and speeches in, inter alia, Chapter 11 of same Book -The law, Judges and Lawyers)

  12. Vishal Nikam says:

    Thanks Amitjji

    I always had face this Problem while in CST Assessments, but now its more useful article to me Now.

    Cell +91 955 288 22 18

  13. Mr Rao says:

    Dear Sir,
    This is general problem faced by many of the inter state suppliers in our country particularly by SMEs . Filing writ petitions also is difficult for SME’s un less the the supply volume is bigger.However the information provided is very useful since the courts can admit the Writ Petetions with out any queries as there is a reference.

  14. shanker Mundhra says:

    As far as my understanding writ petition are only against government not against public establishment can you clarify how I can file against companies ltd or pvt ltd or partnership concern

  15. S.L.Goyal says:

    The Judgement is welcome but to compel the purchaser to issue C Forms you have to make writ petition to the High Court,this is the problem. Why can’t the VAT Dept of the Purchaser’s state direct hte purchaser to get C Forms issued and provide to the seller on receiving a Request from the Seller. To give benefit of this judgement, the mechanism should be simplified.

  16. Nilesh D says:

    agreed but why the buyer is not able to issue the form C… the reason is our goverment employee’s is asking for money for this every time and therfore byuer’s is getting Harass from them.

    so why we not think on another way to solve this issue.

  17. pulkit sharma says:

    If we see logically. C form should be mendatory. Its a control but what i feel is in this age of everything electronic, goverment should come up with a solution that no physical c form to be given. I believe GST would be the right solution for that.

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