HDFC Bank Limited Vs Commissioner DVAT of Trade And Taxes & Anr (Delhi High Court)
Conclusion: Form ‘F’ was not issued in respect of inter-state stock transfers by assessee-bank due to default in paying Central Sales Tax and the order of Supreme Court restraining the respondents from taking any kind of coercive action against assessee for recovering the said demands could not ipso facto operate against the demand for the other financial years and on other issues.
Held: Assessee contended that as a part of its business operation, from April 2016 until June 2017, assessee moved “Bullion” stored in its branches located in the other states of India to its branch located in Delhi, to maintain a single reserve of Bullion instead of storing the same in a scattered manner in different branches. Assessee asserted that since the transactions did not involve sale of “Bullion” to a third party instead, it only involved the transfer of “Bullion” between the two branches of the assessee-Bank, therefore, assessee initiated the process of obtaining the “F‟ Forms for availing the benefit envisaged under Section 6-A of the Central Sales Tax Act, 1956 (“CST Act‟). Assessee accessed the said online facility, uploaded the relevant documents and also mentioned the required details, however, the F Forms were not issued to assessee. On approaching assessee was advised to clear all the outstanding VAT demands alongwith the applicable interest and penalty. The said demand for the financial years 2005-06; 2006-07; and 2008-09 was pending challenge before the Supreme Court in form of Special Leave Petition(s). Assessee also made representation to the respondents, however, to no avail. It was held that the Order of the Supreme Court restraining the respondents from taking any coercive action for recovery of demand was confined only to the financial years 2005-06, 2006-07, and 2008-09 and that too, only on the issue of sale of repossessed motor vehicles by assessee. In prima facie opinion, the said Order could not ipso facto operate against the demand for the other financial years and on other issues. It could not therefore, at least be said that Rule 5(4)(ii) of the CST (Delhi) Rules was ultra vires the CST Act. Thus, the relief claimed by assessee was in fact, tantamount to granting the final relief to assessee in the petition itself. Therefore, the same was dismissed.
FULL TEXT OF THE JUDGMENT/ORDER of DELHI HIGH COURT
1. This application has been filed by the petitioner praying for the following relief:
“Allow the present application and grant an interim relief to the Petitioner by directing the Respondent No. 2 to issue the requisite ‘F’ Forms to the Petitioner in respect of the interstate stock transfers undertaken by the Petitioner during the period starting from April 2016 until June 2017.”
2. It is the case of the petitioner that as a part of its business operation, from April 2016 until June 2017, the petitioner moved „Bullion‟ stored in its branches located in the other states of India to its branch located in Delhi, to maintain a single reserve of „Bullion‟ instead of storing the same in a scattered manner in different branches. The petitioner further asserts that since the transactions do not involve sale of „Bullion‟ to a third party instead, it only involved the transfer of „Bullion‟ between the two branches of the petitioner Bank, therefore, the petitioner initiated the process of obtaining the „F‟ Forms for availing the benefit envisaged under Section 6-A of the Central Sales Tax Act, 1956 (hereinafter referred to as the „CST Act‟).
3. In Delhi, the VAT Authorities have created an online platform for the purpose of issuance of „F‟ The petitioner accessed the said online facility, uploaded the relevant documents and also mentioned the required details, however, the „F‟ Forms were not issued to the petitioner. Each time the online portal denied the issuance of the „F‟ Forms on the ground that, “Your following demands are pending. Kindly pay the due amount and update the information on Payment Reconciliation link before submitting request for Central Declaration Forms”. On approaching the respondent no. 2, the petitioner was advised to clear all the outstanding VAT demands alongwith the applicable interest and penalty. The petitioner also made representation to the respondents, however, to no avail.
4. The learned counsel for the petitioner submits that the VAT demands against the petitioner is primarily on account of VAT on sale of vehicles repossessed by the petitioner from its customers. The said demand for the financial years 2005-06; 2006-07; and 2008-09 is pending challenge before the Supreme Court in form of Special Leave Petition(s), being SLP(C) 40 of 2017; 37919 of 2016; and 38220 of 2016. The Supreme Court, vide its Order dated 05.01.2017, has restrained the respondents from taking any kind of coercive action against the petitioner for recovering the said demands. He submits that demand on similar basis, for the financial years 2009-10; 2011-12; and 2012-13, is pending challenge before this Court in the VAT Appeal(s), being 04 of 2021; 01 of 2021; and 05 of 2021, respectively. He submits that though there is no stay of demand granted by this Court in the said appeals, in view of the Order of the Supreme Court in the abovementioned Special Leave Petitions, the said demand cannot be enforced against the petitioner. He submits that demand on the similar issue, for the financial year 2013-14, is pending challenge before the Objection Hearing Authority under the Delhi Value Added Tax Act, 2004 (hereinafter referred to as the DVAT Act) and an Order of stay has been granted in favour of the petitioner subject to pre-deposit, which has duly been complied with. For the financial years 2014-15; 2015-16; and 2016-17 the same is again in challenge before the Objection Hearing Authority, however, there is no stay in operation against the demand.
5. The learned counsel for the petitioner further submits that the demand against the petitioner also relates to the deduction of tax at source in case of a supply of „works contract service‟ and tax treatment of securitisation in terms of the provisions stipulated under the DVAT Act. He submits that such demands are also pending before various authorities under the DVAT Act and therefore, cannot form a basis for denial of issuance of the „F‟ Forms to the petitioner.
6. The learned counsel for the petitioner further submits that the respondents failed to comply with the provisions of Rule 5(4)(ii) of the Central Sales Tax (Delhi) Rules, 2005 [hereinafter referred to as the „CST (Delhi) Rules‟] which mandate an opportunity of hearing being granted to the petitioner and passing of a reasoned order before denial of the „F‟ Forms to the petitioner. He places reliance on the judgments of this Court in Infiniti Retail Limited Government of NCT of Delhi & Anr., WP(C) 3984 of 2020 dated 07.07.2020 and Otis Elevator Company (India) Ltd. v. Commissioner of Value Added Tax & Ors., WP(C) 5626 of 2019 dated 24.09.2021. He submits that it is only after notice had been issued in the present petition by this Court that the respondents passed an Order dated 16.06.2021, declining the request of the petitioner for downloading of the „F‟ Forms from the web portal, however, again taking the ground of pendency of demands against the petitioner. He submits that this Order cannot be treated as one complying with the mandate of Rule 5(4)(ii) of the CST (Delhi) Rules.
7. The learned counsel for the petitioner further submits that the Rule 5(4)(ii) of the CST (Delhi) Rules insofar as it permits the withholding of issuance of the „F‟ Forms on account of same pending demand, is ultra vires the CST Act. He submits that the State Government is only empowered to „administer‟ the CST Act and therefore, cannot prescribe extraneous conditions for grant of „F‟ Forms on which no tax liability is otherwise owed to the State Government. He submits that in terms of Section 6-A of the CST Act read with Rule 12(5) of the Central Sales Tax (Registration and Turn Over) Rules, 1957, there is no tax demand accruing in favour of the respondents on the „Bullion‟ transfer. The respondents, therefore, cannot withhold the „F‟ Forms to recover its alleged outstanding demands from the petitioner on other transactions. He submits that such condition does not exist in Rules framed by the other State Governments.
8. On the other hand, the learned counsel for the respondents has taken us through a chart depicting the status of demand raised against the petitioner for various financial years. The learned counsel for the petitioner does not deny the said chart. The same is reproduced herein below:
