M/S Everest Kanto Cylinders Ltd. vs M/S Agro Impex (I) Pvt. Ltd.
2011 Latest Caselaw 5959 Del

$~22
*IN THE HIGH COURT OF DELHI AT NEW DELHI

+     CS(OS) 564/2009 & I.A. No. 3680/2010 (u/O 12 R 6 CPC)


                                   Decided on: 7th December, 2011


      M/S EVEREST KANTO CYLINDERS
      LTD.                                    ..... Plaintiff
                         Through: Mr. S.S. Jauhar and
      Mr. Rajesh Narula, Advs.
                  versus

      M/S AGRO IMPEX (I) PVT. LTD.      ..... Defendant
                   Through: Mr. Pramod Jalan, Adv.

CORAM:
HON'BLE MR. JUSTICE A.K. PATHAK


A.K. PATHAK,J. (ORAL)

1. By this application plaintiff has prayed that a decree in the

sum of `34,00,747/- together with pendente lite and future interest

@ 12% per annum be passed in favour of the plaintiff and against

the defendant, in view of the admissions made by the defendant in

his written statement.

2. Plaintiff has filed this suit for recovery of `34,00,474/-

together with pendent lite and future interest @ 12 % per annum. It

is alleged that the plaintiff had supplied CNG cylinders to the

defendant on credit basis. Defendant represented that it was

registered under the Delhi Sales Tax vide Sales Tax Registration no.

LC/97/208279/0898, thus, ST-1 Forms will be issued against the

purchase of CNG cylinders. Accordingly, plaintiff did not charge

sales tax from the defendant. At the relevant time, sales tax @ 8%

on the sale price was chargeable.

3. Plaintiff supplied CNG cylinders to the defendant vide

following bills :-

       Bill No.      Date                 Amount (in `)

       1080          05.05.2002           20,17,008.00

       1100          14.05.2002           11,20,560.00

       1140          29.05.2002           11,20,560.00

       1147          05.06.2002           16,80,840.00

       1163          12.06.2002           22,41,120.00

       1171          19.06.2002           16,80,840.00

       1179          24.06.2002           11,20,560.00

       1180          24.06.2002           21,01,050.00

       1205          13.07.2002           22,41,120.00

       1296          02.12.2002           28,01,400.00

       1300          07.12.2002           22,13,106.00

       1302          13.12.2002           22,13,106.00

       1309          25.12.2002           19,23,744.00

       1316          06.01.2003           19,48,800.00

       1325          15.01.2003           19,48,800.00

       1334          24.01.2003           9,74,400.00,




        1335          24.01.2003              9,61,872.00

       1356          20.02.2003              19,48,800.00

       1373          17.03.2003              5,72,460.00

                     Grand Total             3,28,30,146.00

4. Defendant failed to supply the ST-1 Forms to the plaintiff

despite repeated requests of the plaintiff. Sales tax @ 8% on the

total bills amounting to `3,28,30,146/- comes to `26,26,411.68.

On account of non-production of ST-1 Forms in respect of the

aforesaid bills, the Sales Tax Department vide assessment order

dated 25th May, 2006, directed the plaintiff to deposit `26,27,412/-

along with penalty of `1,000/-. Accordingly, plaintiff had to deposit

`26,27,412/- with the Sales Tax Department on 6th September,

2006. It is alleged that defendant is legally bound to pay this

amount with interest @ 12% per annum. Interest on `26,27,412/-

with effect from 6th September, 2006 till the filing of the suit comes

to `7,73,335/-, thus, making a total amount of `34,00,747/- as due

and payable by the defendant.

5. In the written statement, defendant has not disputed the fact

that plaintiff had supplied CNG cylinders to it vide the bills

mentioned in the plaint, details whereof have been given in para 3

hereinabove. It has also not been disputed that ST-1 Forms have

not been given by the defendant to plaintiff. It is alleged that

defendant was to supply ST-1 Forms to the plaintiff as and when

the same are issued by the Sales Tax Department to the defendant.

Sales Tax Department had not issued the ST-1 Forms to the

defendant which fact was duly notified to the plaintiff vide letter

dated 23rd February, 2006. The plea of the defendant is that ST-1

Forms could not be supplied to the plaintiff as the Sales Tax

Department did not issue the same to the defendant.

6. From the above, it is clear that the defendant has admitted the

supply of CNG cylinders worth `3,28,30,146/- by the plaintiff vide

bills mentioned in the plaint. This admission is unambiguous and

categorical. Similarly, defendant has also admitted non-issuance of

ST-1 Forms by it to the plaintiff. Since the defendant was

registered under the Delhi Sales Tax with registration no.

LC/97/208279/0898, the amount of sales tax @ 8% was not added

in the bills by the plaintiff. Thus, defendant was under legal

obligation to supply ST-1 Forms to the plaintiff so as to enable it to

submit before the Sales Tax authorities to claim exemptions. Since

ST-1 Forms were not produced, Sales Tax Officer vide assessment

order dated 25th May, 2006 has assessed `26,27,412/- towards the

sales tax @ 8% on the bills amounting to `3,28,30,146/-. This

amount has been deposited by the plaintiff with the Sales Tax

Department and the original challan has been placed on record. Ex.

P-28, is a letter written by the defendant to plaintiff whereby

defendant has admitted that ST-1 Forms were not supplied by it to

plaintiff. The plea taken by the defendant that ST-1 Forms were

not supplied to the plaintiff as the same had not been issued to it by

the Sales Tax Department is of no consequence. Had the defendant

not promised the plaintiff for supplying ST-1 Forms, sales tax @

8% would have been included in the bill. Plaintiff has statutory

liability to pay the sales tax or to produce ST-1 Forms issued by the

buyer. Since ST-1 Forms were not supplied by the defendant the

same could not be produced by the plaintiff before the Sales Tax

Department and as a result whereof, plaintiff had to pay sales tax

amounting to `26,27,412/- from its own pocket, which otherwise is

the liability of the defendant. Buyer has to pay the sales tax and not

the seller.

7. In Prince Plastics & Chemical Industries vs. Commissioner

of Sales Tax 2002(6) AD (Delhi) 341, a Division Bench of this

Court has observed that "The embargo on charging tax under the

Act is only in those instances where the Purchasing Dealer

contemporaneously offers ST-1 Form to the Selling Dealer. The

Sales Tax Department is neither privy to nor is it concerned with

any assurances that might have been exchanged inter se these

parties. Quite frequently ST-1 Forms are obtained from Sales Tax

Department by the Purchasing Dealer, but for sundry reasons are

not forwarded to the Selling Dealer. The only legal recourse is for

the Selling Dealer to file a suit for the recovery of the Sales Tax

from the Purchasing Dealer. There is no reason to deviate from this

position merely because, by a mutual arrangement between the

dealers, the supply of the ST-1 Forms is procrastinated to future

dates. It should be recalled that, for the benefit of the assessed, the

Rules permit the filing of exemption Forms till the time of

assessment, this is probably the reason why dealers postpone their

obtainment. There is no reason for the consequence of the dealer's

acts of omission or commission to visit the Department. The Act or

the Rules do not prohibit the simultaneous furnishing of ST-1

Forms; they in fact envisage it. We are reproducing the Application

Form for issue of declaration in Form ST-1 admittedly adopted by

the Sales Tax Department for over thirty years. The Form

specifically envisages the supply of such Forms to the dealer in

advance of transactions." Thus, in my view, it is obligatory on the

part of purchasing dealer to arrange for and supply ST-1 Forms to

selling dealer and in case he fails to do so, selling dealer can

recover the component of sales tax from the purchasing dealer by

initiating recovery proceedings.

8. Order 12 Rule 6 of the Code of Civil Procedure reads as

under:-

"Judgment on admissions.- (1) Where admissions of fact have been made either in the pleading or otherwise, whether orally or in writing, the court may at any stage of the suit, either on the application of an party or of its own motion and without waiting for the determination of any other question between the parties, make such Order or give such judgment as It may think fit, having regard to such admissions.

(2) Whenever a judgment is pronounced under sub-rule (1) a decree shall be drawn up in accordance with the judgment and the decree shall bear the date on which the judgment was pronounced."

9. Plain reading of Order 12 Rule 6 CPC makes it abundantly

clear that it is open to the court to pass a judgment on admissions in

the pleadings or otherwise. The said provision clearly indicates that

it is open to the court to pronounce judgment on statement made by

the parties and documents on record can be taken note of dehors the

pleadings. Admission may be made either specific or

constructively. If the court is satisfied that the admission made by a

party is unambiguous, a decree can straightaway be passed without

taking recourse to trial.

10. In the instant case, admittedly sales tax @ 8% has not been

included in the bills since the defendant represented that it was

registered with the Sales Tax Department. It was the obligation of

the defendant to issue ST-1 Forms which it has failed to do. It is

also a fact that Sales Tax Officer had assessed `26,27,412/- towards

the sales tax at the rate of 8% which has been duly deposited by the

plaintiff way back on 6th September, 2006. This fact is borne out

from the documents issued by a Government Department. In this

suit plaintiff has only claimed the sales tax @ 8% on the bills in lieu

of non supply of ST-1 Forms by the defendant. Accordingly, a

decree can be passed straightway with regard to amount of sales tax

paid by the plaintiff on account of non supply of ST-1 Forms by the

defendant, on the admission of the defendant, regarding supply of

CNG cylinders worth `3,28,30,146/- and non supply of ST-1

Forms.

11. As regards interest, plaintiff has claimed the same @ 12 %

per annum. Plaintiff has paid `26,27,412/- on account of default of

defendant for not furnishing ST-1 Forms. Since this amount has

been illegally retained by the defendant, it is liable to pay the

interest to the plaintiff, in view of present transaction being

commercial in nature. However, in my view, interest @ 12% per

annum is on a higher side. It would be appropriate to award interest

@ 9% per annum.

12. For the foregoing discussions, a decree is passed in favour of

the plaintiff and against the defendant for `26,27,412/- along with

interest @ 9% per annum with effect from 6 th September, 2006 till

realization of the decretal amount. Plaintiff shall also be entitled to

costs. Decree sheet be drawn accordingly.

13. Application as well as suit is disposed of.

A.K. PATHAK,J DECEMBER 07, 2011/ga