THE HON'BLE THE CHIEF JUSTICE SRI UJJAL BHUYAN
AND
THE HON'BLE SRI JUSTICE C.V. BHASKAR REDDY
WRIT PETITION No.8243 OF 2021
ORDER: (Per the Hon'ble the Chief Justice Ujjal Bhuyan)
Heard Mr. S. Ravi, learned Senior Counsel representing
Mr. Pasham Mohith, learned counsel for the petitioner and Mr.
K. Raji Reddy, learned Senior Standing Counsel, Commercial
Tax Department for the respondents.
2. By filing this petition under Article 226 of the Constitution of India, petitioner seeks a declaration that the action of the respondents in not considering the various documents submitted by the petitioner as proof of inter-State trade in dals and pulses and insisting on submission of C-Forms as illegal, arbitrary and unjust.
3. Petitioner is a proprietorship firm represented by its proprietor A. Ravinder. Petitioner is a dealer engaged in the business of milling and trading in different kinds of dals and pulses. Dals and pulses are procured by the petitioner from the open market both in the State of Telangana and from outside the State of Telangana.
4. According to the petitioner, it exports dals and pulses to the purchasers in various States such as Maharashtra, Karnataka, Tamil Nadu, Orissa, Kerala, etc. In those States, 2 there is no Value Added Tax (VAT) on dals and pulses. In the course of such transactions, petitioner procures invoices, waybills and clearances from the Agricultural Market Committee and thereafter transports the same to the suppliers. In the course of inter-State trade, dals and pulses are also subjected to various checks at the state borders. Upon thorough scrutiny, goods are cleared for onward transit. Thereafter, goods are delivered to the purchasers.
5. For such inter-State transactions on dals and pulses, VAT is levied at the rate of 2% as against 5%, but for availing the said benefit purchasers in the supply State are required to issue C-Forms to the seller i.e., to the petitioner. Since VAT on dals and pulses is 'NIL' in those States, purchasers therein are not registered with the respective indirect tax department. Therefore, they could not furnish or issue C-Forms to the petitioner for the transactions.
6. Faced with such a situation, petitioner and similarly situated dealers approached the then Government of Andhra Pradesh. After due consideration, G.O.Ms.No.294 dated 9.3.2007 was issued by the Revenue (CT.II) Department, Government of Andhra Pradesh. As per the said G.O.Ms.No.294, Government ordered that the excess demand raised or to be raised over and above the tax leviable at the 3 rate of 4% by the Commercial Tax Department against the dealers in respect of inter-State sales on dals and pulses for non-production of C-Forms as prescribed under the Central Sales Tax Act, 1956 (briefly, ' the CST Act', hereinafter) for the period from 1.7.2002 to 31.3.2007 be waived for the purpose of assessment as well as for collection of tax by the Department.
7. This was followed by G.O.Ms.No.347 dated 17.3.2008 issued by the Revenue (CT.II) Department, Government of Andhra Pradesh extending such concession, rather dispensing with furnishing of C-Forms under the CST Act, for the further period from 1.4.2007 to 31.3.2009.
8. Government of Andhra Pradesh in the Revenue (CT.II) Department, issued Memo dated 8.6.2011 providing for the documents to be furnished in lieu of C-Forms. However, it was mentioned therein that rice millers would have to mandatorily furnish C-declaration Forms from 1.1.2011 onwards. It may be mentioned that the aforesaid Memo dated 8.6.2011 pertained to inter-State sale of rice which is also subject to non-levy of VAT in the purchasing States.
9. According to the petitioner, it had been submitting various documents in lieu of C-Forms and was accordingly 4 granted the benefit in terms of G.O.Ms.No.294 and G.O.Ms.No.347.
10. However, the composite State of Andhra Pradesh was bifurcated into the two States of Telangana and Andhra Pradesh on 1.6.2014 whereafter assessments were carried out by the assessing authorities under the Telangana Value Added Tax Act, 2005. Thereafter, demands were raised for the period from 2011 to 2015. In the absence of C-Forms, millers and traders like the petitioner were levied higher taxes. In this connection, petitioner as well as other dealers and their association had approached the 1st respondent to consider their grievance not to insist on C-Forms while levying concessional VAT. It appears that a grievance committee was constituted by the 1st respondent to look into the grievance expressed by the petitioner and others. As per the recommendation of the grievance committee, Government of Telangana in the Revenue (CT.II) Department issued Memo dated 4.4.2016 ordering that central sales tax for the period from 1.1.2009 to 31.3.2015 would be waived of in case of excess demand raised over and above the scheduled rate in the absence of C-Forms in respect of inter-State sale of dals and pulses, subject to production of relevant documents as proof.
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11. Petitioner and others had availed the benefit of the above G.O.Ms.No.294 and G.O.Ms.No.347 as well as Memos dated 13.7.2011 and 4.4.2016.
12. With effect from 1.7.2017 the earlier indirect tax regime got subsumed in the new Goods and Services Tax (GST) regime. Central Goods and Services Tax Act, 2017 and the relevant acts were enacted in this regard.
13. In the above scenario, petitioner and others submitted representations to the 3rd respondent on 18.6.2019 for exemption from filing C-Forms and for continuing the earlier procedure of submitting other documents in lieu of C-Forms as proof of inter-State sale for exempting levy of higher taxes. This was followed by another representation dated 1.7.2019 for waiver of required submission of C-Forms from 1.4.2015 onwards till implementation of GST.
14. The above representations were not considered by the concerned authorities. On the other hand, respondents 5 and 6 i.e., the assessing authorities issued show-cause notice to the petitioner on 7.6.2019 for filing of CST returns for the assessment periods from April, 2016 to March, 2017 and from April, 2017 to June, 2017. Additionally, the said respondents also issued demand notices to the petitioner raising demand of full tax (VAT) without any exemption.
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15. It is in such circumstances that the present writ petition came to be filed.
16. This Court by order dated 1.4.2021 had admitted the writ petition for hearing and passed an interim order in I.A. No.1 of 2021 directing the state authorities to consider the representations of the petitioner. Till a decision was taken thereon, respondents 5 and 6 were directed not to finalize or give effect to the assessments conducted for the period from 1.4.2015 to 30.6.2017.
17. Respondent No.5 has filed counter-affidavit. It is stated that petitioner is engaged in the business of trading in all kinds of dals. It was registered as a dealer under the Telangana Value Added Tax Act, 2005 (VAT Act) as well as under the CST Act. Petitioner is assessed by respondent No.5. Assessments for the period 2015-2016 and 2016-2017 under the CST Act were completed by the said respondent determining the tax payable by the petitioner at Rs.9,36,705/- and Rs.9,83,697/- respectively. However, assessments for the period from 2017 - 2018 (i.e., upto June, 2017) is pending. Show-cause notice dated 7.6.2019 was issued for the purpose of assessment for the period 2017-2018 (i.e., upto June, 2017). The said assessment has been kept in abeyance in view of the interim order of this Court.
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18. Petitioner without filing any statutory documentary evidence like C-Forms in terms of Section 8(1) of the CST Act has claimed concessional rate of tax at 2% on inter-State sales of the above goods. In the absence of C-Forms, the entire turnover would be exigible to higher rate of tax at 5% under Section 8 (2) of the CST Act.
19. Though the petitioner was served show-cause notice dated 7.6.2019, it did not file any objection nor sought for time to file objection. Respondent No.5 as the jurisdictional assessing authority completed the assessments of the petitioner for the periods 2015-16 and 2016-17 on 11.3.2019 and 31.3.2021 respectively confirming the turnovers proposed in the show-cause notice under Section 8(2) of the CST Act. Thereafter, demand notices were issued to the petitioner. However, the same has not been paid.
20. Answering respondent has further contended that if petitioner is aggrieved by the assessments finalized for the periods 2015-16 and 2016-17, petitioner has got an adequate and efficacious alternative remedy by way of appeal under Section 31 of the VAT Act read with Section 9(2) of the CST Act. Instead of availing the alternative remedy as provided under the statute, the petitioner has filed the present writ petition before this Court. But importantly the writ petition 8 came to be filed after expiry of the limitation period for filing appeal. Therefore, the writ petition is not maintainable and it should be dismissed.
21. Petitioner has asserted that as per Sections 8 (1) and 8 (4) of CST Act and Rule 12 of Central Sales Tax (Registration and Turnover) Rules, 1957, levy of concessional rate of tax at 2% on the sale of goods to registered dealers outside the State is only upon proof of statutory declaration in Form-C from the purchasing dealers outside the State. However, the Government upon consideration of various representations made had earlier issued orders exempting filing of C-Forms for availing concessional rate of tax. Instead of C-Forms, other documentary evidence were allowed to be submitted. This benefit was available upto the assessment period 2014 - 2015. Thereafter, no orders were passed by the Government extending levy of concessional tax without C-Forms. Thus, from the assessment period from 2015 - 2016 onwards furnishing of C-Form is absolutely necessary for availing concessional rate of tax on sale of dals and pulses in the course of inter-State trade. Mere pendency of any representation with the Government would not confer any right on the petitioner to seek levy of concessional rate of tax 9 at 2% without C-Forms. Therefore, the writ petition should be dismissed.
22. Mr. S. Ravi, learned Senior counsel for the petitioner submits that grievance of the petitioner was duly considered by the State Government and accordingly exemption from filing C-Form to avail concessional rate of tax was granted to the petitioner upto 31.3.2015. With effect from 1.7.2017, GST has come into operation. For this intervening period i.e., from 01.04.2015 to 30.06.2017, there can be no justifiable reason to deny the same benefit to the petitioner.
23. Mr. K. Raji Reddy, learned Senior Standing Counsel for Commercial Tax appearing for the respondents, on the other hand, submits that exemption from filing C-Form was granted by the State Government upto 31.3.2015. Thereafter, there is no exemption. Therefore, petitioner is bound to file C-Form if it wants to avail concessional rate of tax.
24. Submissions made by learned counsel for the parties have received the due consideration of the Court.
25. Section 8 of the CST Act deals with rates of tax on sales in the course of inter-State trade or commerce. As per sub- section (1), every dealer, who in the course of inter-State trade or commerce, sells to a registered dealer goods of the description referred to in sub-section (3), shall be liable to pay 10 tax under the CST Act which shall be 2% of his turnover or at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of that State, whichever is lower. Sub-section (2) says that the tax payable by any dealer on his turnover or any part thereof relates to the sale of goods in the course of inter-State trade or commerce not falling within sub-section (1), shall be at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of that State. Sub-section (4) of Section 8 stipulates that the provisions of sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form.
26. Rule 12 (1) of the Central Sales Tax (Registration and Turnover) Rules, 1957 (briefly, 'the Rules', hereinafter) provides that the declaration and the certificate referred to in sub-section (4) of section 8 shall be in Forms C and D respectively. The format of Form-C i.e., Form of Declaration is appended to the Rules.
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27. As per the above, it is evident that if a dealer seeks to avail concessional rate i.e., 2% of the tax on his turnover he has to produce/file Form-C. If he fails to furnish Form-C, sub- section (2) of Section 8 of CST Act would be attracted and the dealer would be liable to pay tax at the rate applicable to the sale or purchase of goods inside the appropriate State under the sales tax law of that State. This position has also been clarified by the Supreme Court in the case of M/s. TVS Motor Company Limited Vs. State of Tamil Nadu (Civil Appeal No.10560 of 2018 decided on 12.10.2018) wherein the views of the High Court vis-à-vis Sections 8 (1) and 8 (2) of the CST Act were approvingly referred to as under:
"27. Discussing the provisions of Section 8(1) and (2) of the CST Act, the High Court pointed out that Section 8(1) gives preferential treatment to sale by a dealer to a registered dealer. Vires of this provision has also been upheld in Gwalior Rayon Silk Manufacturing (Wvg.) Co., Ltd. vs. Assistant Commissioner of Sales Tax and others [(1974) 4 SCC 98].
28. Discussing ratio of the aforesaid judgments, the High Court pointed out that this Court noted the proposition that the aforesaid provision was to check the evasion of tax on inter-State sales and to prevent discrimination between the rates in one State and those in other States, the Parliament thought fit to enact Section 8 (2) (b) of the CST Act and further held that the object of the law apparently is to deter inter-State sales to unregistered dealers as such inter- State sales would facilitate evasion of tax and the fixation of the rate of local sales tax is essentially a matter for the 12 State legislatures and the Parliament does not have any control in the matter. It has been further held in the said decision that it is in public interest to see that in the guise of freedom of trade, they do not evade the payment of tax and it is an effective safeguard against the evasion of tax."
28. It is true that State Government had exempted furnishing of C-Forms for the period upto 31.3.2015. But there is no such exemption for the period thereafter till coming into force of GST regime with effect from 1.7.2017. In the absence of such exemption, petitioner is bound to furnish the C-Forms if it wants to avail concessional rate of tax under sub-section (1) of Section 8. Since it failed to do so, for whatever reason, the rigour of sub-section (2) of Section 8 comes into play. Mere submission of representation cannot confer any right on a dealer to seek waiver of filing C-Forms. Principle of legitimate expectation cannot be invoked in a taxing statute.
29. That apart, if the petitioner is aggrieved by the orders of assessment dated 11.3.2019 and 31.3.2019, petitioner had the remedy under Section 9 (2) of the CST Act read with Section 31 of the VAT Act to file appeal. In a writ proceeding under Article 226 of the Constitution of India, legality and validity of the assessment proceedings are not ordinarily examined when the statute provides for adequate and 13 efficacious alternative remedy. It is not a case of violation of the principles of natural justice or violation of any law to invoke the writ jurisdiction in spite of having adequate and efficacious alternative remedy. That apart, there cannot be any equitable consideration in so far taxation statutes are concerned.
30. For the aforesaid reasons, we do not find any merit in the writ petition. Consequently, the Writ Petition is dismissed. However, there shall be no order as to costs.
31. Miscellaneous applications, pending if any, shall stand closed.
______________________________________ UJJAL BHUYAN, CJ ______________________________________ C.V. BHASKAR REDDY, J Dt. 04.11.2022 gbs 14 THE HON'BLE THE CHIEF JUSTICE SRI UJJAL BHUYAN AND THE HON'BLE SRI JUSTICE C.V. BHASKAR REDDY WRIT PETITION No.8243 OF 2021 (Order of the Division Bench delivered by Hon'ble the Chief Justice Sri Ujjal Bhuyan) Date: 04-11-2022 gbs