C G Power And Industrial Solutions ... vs Department Of Trade & Taxes & Ors.
2020 Latest Caselaw 246 Del

$~18.
*       IN THE HIGH COURT OF DELHI AT NEW DELHI

+                                             Date of Decision: 15.01.2020

%       W.P.(C) 3024/2019

        C G POWER AND INDUSTRIAL
        SOLUTIONS LIMITED                                ..... Petitioner
                          Through:     Mr. Tarun Gulati, Senior Advocate
                                       with Mr. Mohit D. Ram, Ms. Monisha
                                       Handa and Mr. Sachin Kaushal,
                                       Advocates.
                          versus

        DEPARTMENT OF TRADE & TAXES & ORS. ..... Respondents
                          Through:     Mr. Satyakam, ASC, GNCTD for
                                       respondents No.1 to 3.
                                       Mr. Prashant S. Kenjale and
                                       Mr.Ashutosh Chaturvedi, Advocates
                                       for respondent No.4.
                                       Ms. Rashmi Chopra and Ms. Asiya,
                                       Advocates for respondent No.5.

        CORAM:
        HON'BLE MR. JUSTICE VIPIN SANGHI
        HON'BLE MR. JUSTICE SANJEEV NARULA

VIPIN SANGHI, J. (ORAL)

1. We have heard learned counsels and proceed to dispose of the present writ petition.

2. The petitioner has preferred this petition to seek a mandamus directing respondent No.1 i.e. The Department of Trade and Taxes, GNCTD

to issue 'C' Forms to respondent No.5 i.e. Delhi Transco Limited - a GNCTD undertaking, with respect to purchases made by respondent No.5 from petitioner No.1 during the financial year 2012-13. The petitioner also seeks a direction to respondent Nos. 3 and 4 to accept 'C' and 'E1' Forms for the FY 2012-13 that respondent No. 5 may give to the petitioner No.1, and make assessments accordingly and thereby grant refund. The petitioner also seeks a restraint against respondent Nos. 3 and 4 from taking coercive steps against the petitioner, including levy of penalty, levy of interest, payment of differential tax, etc.

3. The case of the petitioners is that petitioner No.1 was awarded two contracts which involved On-Shore supply of equipments/ material on Ex- Works basis for the GIS Sub-stations. These two contracts - one dated 28.11.2011, related to Peera Garhi, and the other similar contract dated 15.06.2010 related to Lodhi Road. The conditions of the two contracts are similar. These conditions of contract, inter alia, provided as follows:

"14.5 In case of local supplies and services, all Customs Duties and Levies, Octroi, Excise Duties, Sales Tax payable on equipments, components, sub-assemblies, raw materials and any other items used for their consumption or dispatched directly to the Employer from their Sub-supplier(i.e. sale-in- transit at concessional rate) shall be included in the Bid price and any such taxes, duties, levies additionally payable will be to Contractor's account and no separate claim on this behalf will be entertained by the Employer.

However, octroi/entry tax as applicable for destination site/state on all items of supply including bought-out finished items, which shall be dispatched directly from the sub-vendor's works to the Employer's site (sale-in-transit), shall not be

included in the bid price. The applicable octroi/entry tax in respect of the said items of supply would be reimbursed to the Contactor separately by the Employer subject to furnishing of documentary proof.

The bidder shall·include Service tax and surcharge/cess etc, on it as applicable in their quoted bid price and employer would not bear any additional liability on this account. Employer shall however deduct such tax at sources as per the rules and issue necessary Certificate to the contractor.

14.6 In case of local supplies, Excise duty, sales tax (but not surcharge in lieu of sales-tax) local taxes and other levies solely in respect of the transaction between the Employer and the Contractor under the Contract, if any, shall not be included in the bid price, but those shall be indicated separately wherever applicable. These amounts will be payable (along with subsequent variation if any), by the Employer on the supplies made by the Contractor but limited to the tax liability on the transaction between the Employer and the Contractor. Employer shall, however, issue requisite sales tax, declaration forms."

4. The works under the contract were completed and completion certificates were issued by respondent No.5 to the petitioner on 05.04.2016 - in respect of the contract dated 28.11.2011 (in relation to Peera Garhi Contract). Mr. Gulati - learned senior counsel for the petitioner, states that in respect of the Lodhi Road contract as well, the operational acceptance was issued on 16.03.2018 and the completion certificate has since been issued, though the same has not been placed on record.

5. The case of the petitioner is that in respect of both these contracts, in terms of its obligations, respondent No.5 issued several 'C' Forms which were utilised by the petitioner to claim lower tax liability @ 2%. However,

respondent No.5 failed to provide the 'C' Forms in respect of certain supplies. The petitioner, accordingly, issued reminders on 05.07.2016 in respect of the supplies made for the Lodhi Road Sub-Station Project. The petitioner informed the respondent No.5 that it was facing an additional liability to the tune of Rs. 1,02,15,605/- due to non- issuance of 'C' Forms. Respondent No.5 was put to notice that the entire liability in that regard would fall on its shoulders. The petitioner issued another communication on the said date i.e. 05.07.2016 in respect of the Peera Garhi Sub-Station Project as well. It was pointed out that in respect of the said contract, it was facing an additional liability of Rs. 1,17,31,788/-/- due to non-issuance of 'C' Forms by respondent No.5. The petitioner followed up on the failure of respondent No.5 to issue 'C' Forms for amounts aggregating to Rs.12,39,30,099/- in respect of the aforesaid two contracts with respondent No. 5 but to no avail.

6. It appears that respondent No.5 addressed a communication dated 23.02.2018 to the VAT Officer on the subject of Issuance of old 'C' Forms for the F.Y. 2009-10, 2010-11, 2011-12, 2012-13, 2013-14, 2014-15 & 2015-16. The respondent No. 5, in this communication, stated as follows:

"Please find enclosed herewith the details of pending 'C' Forms for the above mentioned Financial Years. The above pending 'C' Forms were not issued to vendors. The vendors are pressing hard for issuance of old 'C' Forms for Settlement of their accounts, as the GST has also been implemented since 01.07.2017 the assessment of sales tax/ VAT of various vendors in various states are under process and VAT authorities are imposing the penalty on various vendors. The Delhi Transco Ltd.(DTL) is also a Govt. of NCT of Delhi Undertaking and if

any, penalty imposed by the Tax authorities, vendors will claim the penalty amount including interest from DTL for Settlement of their accounts.

The above mentioned 'C' Forms were not issued due to non- inclusion in 'C' Form Return for the respective Financial Year's inadvertently.

In this regard, M/s EMCO Ltd. has served a legal notice for the same, which create panic situation for DTL. An assessment order for the period 01.04.2012 to 31.03.2013 has also been passed by Dy. Commissioner of Sales Tax (E618) large tax payers unit - II, Mumbai with imposing of penalty and interest (copy of the same is enclosed) in the case of M/s CGL. In view of above you are therefore, requested to arrange issuance of pending 'C' Forms for the above said period to a void any inconvenience and litigations by vendors against DTIN AT Deptt.

This may be treated as most urgent, please." (emphasis supplied)

7. This communication also shows that respondent No. 5 stated that it was an undertaking of the GNCTD and the penalty, if any, imposed by the tax authorities on the vendors i.e. the petitioner, would ultimately fall on respondent No.5. Respondent No. 5 admitted its failure in applying for the 'C' Forms.

8. Since the said 'C' Forms have not been issued to the petitioner, this petition has been preferred.

9. Upon issuance of notice, respondent Nos. 1 to 3 have filed their counter-affidavit. The stand taken by respondent Nos. 1 to 3 in their counter-affidavit, inter alia, is that the 'C' Forms have not been issued to

respondent No. 5 due to non-inclusion of particulars of the purchases made by respondent No.5 from the petitioner No. 1 in its returns filed with the Department for the relevant period 2012-13. Reference is made to the aforesaid communication dated 23.02.2018 of respondent No. 5. Respondents No. 1 to 3 submit that by virtue of Section 28 of the DVAT Act, if any dealer or person discovers a discrepancy in a return furnished by him under Section 26 of the DVAT Act, then such dealer or person shall remove such discrepancy by way of filing the revised return within the period of one year, following the year of such tax period. The respondents submit that once the period of one year to revise the return expires under Section 28 of the DVAT Act, the dealer - in such circumstances, cannot be allowed to rectify any discrepancy by filing a revised returns, as there is an express provision prescribing limitation by statutory mandate, and there is no other enabling provision permitting any authority to relax the said limitation. Section 28 of the DVAT Act reads as follows:

"28 Correction of deficiencies If a person discovers a discrepancy in a return furnished by him for a tax period under this Act, he shall remove such discrepancy and furnish a revised return within the year following the year of such tax period:

PROVIDED that if, as a result of the discrepancy, the person has paid less tax than was due under this Act, he shall, pay the tax owed and interest thereon:

PROVIDED FURTHER that for the years 2008-09, 2009-10 and 2010-11, except for those returns pertaining to any tax period of 2010-11, which were scheduled to be furnished in the

year 2011-12, the revised return shall be required to be furnished by 31st December, 2012."

10. The submission of the respondents is that in terms of Section 9(2) of the Central Sales Tax Act, 1956, all the provisions relating to returns, assessments, refund etc. of local Act i.e. DVAT Act shall extend to the CST Act also. The respondents submit that, thus, the statutory period of one year under Section 28 of the DVAT Act shall also apply to the returns filed under the CST Act.

11. The respondents submit that respondent No. 5 cannot seek rectification or revision of its returns for the year 2012-13 at this belated stage in the light of the Section 28 of the DVAT Act. The communication dated 23.02.2018 was issued by respondent No. 5 after a lapse of a period of four years. The respondents also submit that the decision of this Court in M/s. Ingram Micro India Pvt. Ltd. v. Commissioner DT&T & Anr., W.P. (C.) No. 8272/2015 is under challenge before the Supreme Court in Civil Appeal No. 4573/2017. The Supreme Court has granted leave in the said matter vide order dated 27.03.2017. The respondents also point out that this Court rendered decisions in several similar cases, including W.P. (C.) No. 2633/2017, M/s. Indian Oil Corporation Ltd. v. Commissioner, VAT decided on 11.04.2017, which have been appealed against in the Supreme Court and the Supreme Court has stayed the operation of the judgment of this Court. The relevant orders passed by this Court and the Supreme Court have been placed on record. Similarly, the decision of this Court in Sony India Pvt. Ltd. v. Government of NCT of Delhi & Ors., W.P. (C.) No. 1406/2017, decided on 17.04.2017 has been placed on record, in which case

as well the Supreme Court has granted stay in Civil Appeal No. 19236/ 2017 on 25.08.2017.

12. Mr. Satyakam points out that in the light of the interim orders passed by the Supreme Court, while deciding another writ petition i.e. Ingram Micro India Ltd. v. Commissioner, Department of Trade and Taxes and Anr., W.P. (C.) No. 8435/2018, decided on 04.12.2018, this Court issued directions for issuance of segregated and separate 'C' Forms. However, the directions issued by this Court were suspended till the Civil Appeal pending before the Supreme Court were pending.

13. Same is the position in the decision of this Court in Allied Automation Engineering Services Pvt. Ltd. v. Commissioner of Trade and Taxes, W.P. (C.) No. 9474/2018 decided on 10.09.2018, in M/s. Samsung C&T Pvt. Ltd. v. The Commissioner, Trade & Taxes, & Anr., W.P. (C.) No. 4092/2017 decided on 15.02.2019 and in E.I. Dupont India Private Limited v. Commissioner, VAT, Delhi & Anr, C.M. No. 47356/2018 in W.P. (C.) No. 4952/2017 decided on 27.02.2019.

14. The submission of Mr. Gulati, learned senior counsel for the petitioner is that the position in the present case is slightly different, inasmuch, as, respondent No. 5 is also an undertaking of the GNCTD. He submits that due to the failure on the part of the respondent No.5 - which is a Government undertaking, in reflecting the sales made by petitioner No. 1 in their returns and in not seeking the 'C' Forms from respondent No. 1 to 3, the petitioner cannot be made to suffer. He points out that the respondents have already recovered tax to the tune of Rs. 87 lakhs in excess, and the

petitioner is facing the prospect of being penalised and prosecuted for no fault of its own.

15. Having heard learned counsels, we are of the view that the distinction from other cases sought to be drawn by learned senior counsel for the petitioner on the ground that respondent No.5 is an undertaking of the GNCTD, and respondents No.1 to 3 are also GNCTD, and thus, the omissions made by respondent No.5 could not be a ground for respondents No.1 to 3 not to issue the 'C' Forms, has no merit. This is for the reason that respondent No.5 - though an undertaking of the GNCTD, is an assessee under the law and is bound by the same discipline of law as any other entity would be, whether or not, the same is an instrumentality of the State. The provisions of the DVAT Act and the CST Act apply to respondent No.5 with the same force, as they would apply to any other dealer or entity, and do not treat state instrumentalities differently.

16. We can appreciate the grievance of the petitioner that it is suffering on account of respondent No.5 not disclosing the relevant sale transactions in their returns; not carrying out correction/ rectification in terms of Section 28 of the DVAT Act within one year, and; not applying for 'C' Forms within time. For the said omission, the petitioner may have a cause of action against respondent No.5. However, in our view, the petitioner cannot seek a direction to respondents No.1 to 3 to issue the 'C' Form for the Financial Year 2012-13 after over four years, when the transactions between the petitioner and respondent No.5 were not disclosed in the return filed by respondent No.5, and no rectification of the return was sought to be made

within the period of limitation. In any event, the best that we can do for the petitioner is to issue a direction in terms of the directions dated 11.04.2017 issued by this Court in Indian Oil Corporation (supra), which have been followed in other decisions taken note of hereinabove.

17. Accordingly, we direct the respondents No.1 to 3 to release 'C' Forms to respondent No.5 with respect to purchases made by respondent No.5 from petitioner No.1 during the Financial Year 2012-13. This direction shall, however, remain suspended till the Civil Appeals pending before the Supreme Court, taken note of hereinabove, are decided and this direction shall abide by the decision that the Supreme Court renders.

18. The petition stands disposed of in the aforesaid terms.

VIPIN SANGHI, J

SANJEEV NARULA, J

JANUARY 15, 2020 N.Khanna