HC directs issue of C Forms as petitioner was paying taxes on regular basis & no tax arrear

JMC Project India Ltd. Vs Joint Commissioner of State Tax (Telangana High Court)

Heard Mr. S.R.R.Viswanath, learned counsel for the petitioner and Mr. K.Raji Reddy, learned Senior Standing Counsel for Commercial Tax for the respondents.

2. By filing this petition under Article 226 of the Constitution of India, petitioner has prayed for the following reliefs:

i) A writ, order or direction one more in the nature of mandamus directing the respondent authorities to issue to the petitioners 17 ‘C’ declaration forms prescribed by sub-sections (3) & (4) of section 8 of the Central Sales Tax Act, 1956 and sub-rules (1) & (6) of Rule 12 of the Central Sales Tax (R&T) Rules, 1957 and Rule 9 of the Central Sales Tax (Telangana) Rules, 1957 forthwith within certain specified time; and

ii) direct the respondent authorities to pay the costs of this petition; and

iii) pass such other order or orders as are deemed fit and proper in the facts and circumstances of the case and do justice.

3. Thus, sum and substance of petitioner’s prayer is issuance of 17 ‘C’ forms in terms of sub-sections (3) and (4) of Section 8 of the Central Sales Tax Act, 1956, and sub-rules (1) and (6) of Rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957.

4. Petitioner is a limited company registered under the provisions of the Companies Act, 1956. It carries on the business of infrastructure development including construction of highways, expressways, bridges, flyovers etc. It is a registered dealer under the Telangana Value Added Tax Act, 2005, as well as under the Central Sales Tax Act, 1956. Following enactment of the Central Goods and Services Tax Act, 2017, with effect from 01.07.2017, ushering in the Goods and Services Tax (GST) regime, petitioner has migrated to GST.

5. For the financial years 2016-17 and 2017-18 (from 01.04.2017 to 30.06.2017) petitioner had executed several projects in the State of Telangana. For such execution, it had procured goods both from within the State of Telangana as well as from outside the State of Telangana.

For the goods procured from other states, petitioner is entitled to concessional rate of tax at 2% in terms of sub­section (3) of Section 8 of the Central Sales Tax Act, 1956, subject to furnishing of ‘C’ declaration forms in terms of sub-section (4) of Section 8 of the Central Sales Tax Act, 1956, read with Rule 12(1) of the Central Sales Tax (Registration and Turnover) Rules, 1957.

5.1. Grievance of the petitioner is that despite payment of taxes on regular basis and there being no arrear tax due, respondents did not issue the ‘C’ declaration forms. Petitioner had furnished proof of inter-state sale and transport of goods. Aggrieved, present writ petition has been filed seeking the reliefs as indicated above.

6. On 20.10.2022, this Court had directed learned Senior Standing Counsel to obtain instructions as to why ‘C’ forms were not being issued to the petitioner though according to the petitioner there are no arrears and it has been filing regular returns under the statute.

7. Respondent No.1 has filed counter affidavit through Mr. V.Srinivasa Reddy, Joint Commissioner (ST), Hyderabad Rural Division. It is submitted that till issuance of circular by the Commissioner of Commercial Taxes dated 17.08.2020, facility to obtain the ‘C’ forms from the portal was open and it was accessible to every dealer. Writ petitioner did not choose to issue the ‘C’ forms to their inter-state sellers. By the circular dated 17.08.2020, it is stated that sufficient caution has to be exercised in allowing the dealer to obtain the ‘C’ forms from the portal. All logins to access ‘C’ forms by the dealer have been disabled. If any dealer requires ‘C’ forms, he has to apply to the jurisdictional officer and the same shall be forwarded to the Commissioner of Commercial Taxes by following the instructions issued therein.

7.1. The online facility was withdrawn after a lapse of more than three years, whereafter petitioner approached the jurisdictional authority for issuance of ‘C’ forms when COVID-19 pandemic was at its peak. Answering respondent has stated that the above circular dated 17.08.2020 is binding on him. Writ petitioner did not file the lorry receipts (LR) issued by the transporter to establish inter-state movement of goods.

8. On due consideration, we are of the view that explanation given by respondent No.1 is not adequate to deny ‘C’ forms to the petitioner. There is no allegation of short deposit of any taxes by the petitioner or suppression/misstatement of goods while availing concessional rate of tax.

9. That apart, issue raised in the writ petition is no longer res integra. A Division Bench of this Court in P.Gas Power Corporation Ltd. v. Assistant Commercial Tax Officer¹ has held that at the stage of issuance of ‘C’ declaration form, the notified authority is not required to conduct an enquiry into the nature of the transaction as to whether the petitioner needs the forms for use in the course of inter-state trade or for avoidance of payment of tax which he would be liable to pay. The authorities will, however, be at liberty to make such an enquiry as it is necessary to see whether the ‘C’ forms have been properly issued and if not what is the liability of the parties under the erstwhile Andhra Pradesh General Sales Tax Act, 1957, or the Central Sales Tax Act, 1956, as the case may be. Such an enquiry need not be made at the stage of issuance of ‘C’ form. All that is required to be examined at that stage as contemplated under Rule 9 of the Central Sales Tax (Registration and Turnover) Rules, 1957, is whether the person who had applied for ‘C’ form is a registered dealer; whether the goods in respect of which ‘C’ form is used are included in the certificate of registration; and whether such a person has paid the amount for the ‘C’ form and produced necessary challan in proof of the payment. Even such a requirement, it is submitted, has since been dispensed with.

10. The aforesaid decision of this Court has been followed by various High Courts. Recently, the High Court of Jharkhand in Tata Steel Limited v. State of Jharkhand² has held that once a dealer satisfies the conditions that he is a registered dealer authorised to purchase goods mentioned in the certificate of registration and charges for obtaining ‘C’ forms have been paid, the authorities are bound to issue him the ‘C’ forms.

11. Consequently and in the light of the above, we direct the respondents to issue the 17 ‘C’ forms to the petitioner for the period 2016-17 and 2017-18 (from 01.04.2017 to 30.06.2017) within a period of fifteen days from the date of receipt of a copy of this order.

12. This disposes of the writ petition.

Miscellaneous applications pending, if any, shall stand closed. However, there shall be no order as to costs.

Notes:-

¹ (1998) 109 STC 625 (AP)

² 2018 SCC Online Jhar 1741