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CST - Error apparent - If interstate sale not covered by Form C, tax rate to be equivalent to VAT rate applicable in particular State - Interstate sale without Form C - Application of wrong rate by grouping all items - Application for rectification not considered - Department directed to consider it: HC

By TIOL News Service

CHENNAI, APR 30, 2014: THE petitioner is a manufacturer of petroleum products like Bitumen, Hexane Slack wax etc., and filed returns for CST for assessment year 2007-08. The respondent passed assessment order dated 04.07.2012. On a perusal of the order, the petitioner found certain errors apparent on the face of the assessment order. In the assessment order, the respondent grouped interstate sale transactions of all the petroleum products without Form C and assessed the total turnover at 30%, even though the petitioner gave details of sales of individual items with name of each of the commodities sold. Whereas the respondent erroneously grouped the entire list of commodities under the nomenclature petroleum products and assessed the entire turnover to tax at 30% which is applicable for sale of petrol and not for other petroleum products like bitumen, Hexane slack wax etc.,. The petitioner then filed rectification application under Section 84 of the TNVAT Act, 2006 and sought for rectification of the error. However, despite repeated reminders the respondent did not pass any order on the rectification application and the petitioner filed Writ Petition praying for quashing the assessment order as arbitrary and illegal and to direct the respondent to consider the representation for rectification.

As per Section 8 of the CST act, if an interstate sales transaction is not covered by Form C, then the rate of tax would be equivalent to the rate of VAT applicable for the commodity in the particular state. Therefore, when the petitioner did not submit form C the respondent ought to have charged the respective rate of VAT for each of the commodities. Whereas, the respondent grouped the entire turnover and charged it to tax at 30%.

The High Court recorded the submission made by the respondent that under Section 84 of the TNVAT Act, 2006, read with Section 9(2) of the CST Act, 1956, rectification sought for by the petitioner has to be considered by the respondent as there is an error in the impugned order.

In the light of the above and considering the facts and circumstances and submissions made by the counsel for petitioner and counsel for the respondent, the High Court directed the respondent to consider the rectification application and pass appropriate orders in accordance with law.

(See 2014-TIOL-598-HC-MAD-CT)


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