By TIOL News Service

PATNA, APR 21, 2015: THE issue before the Bench is - Whether where no demand is made after scrutiny, it is open to Revenue at time of issuance of Form-C, to discover something beyond what is required and refuse to issue Form-C, even if assessee has paid tax. NO is the answer.

Facts of the case

The assessee is a dealer registered under the Bihar VAT, 2005 for the purpose of conduct of its business for purchasing raw skin from the dealers both registered and unregistered and after treating the same, the goods are transferred to its works at Dewas in the State of Madhya Pradesh. The said goods in terms of the provisions of Article 286 of the Constitution and Section 14 of CST Act have been declared as goods of special importance in inter-State trade and commerce. The assessee had been filing its returns for the said purchase made for different periods as per the requirement of law. The entire purchase made by assessee, the tax leviable in terms of the provisions of the CST Act had been paid either by the registered dealer from whom the purchases have been made or by the assessee itself where purchases have been made from unregistered dealers. However, in the returns being filed during the past years, it was admitted that for the period from 2006-07 to 2012-13, certain mistakes had cropped up in the returns in so far as filling up of the different columns was concerned which, however, did not lead to any evasion of tax or any payment of less tax by the petitioner. Under the provisions of Section 25 of Bihar VAT Act, the returns were to be scrutinized by the tax authorities in the manner prescribed and within a time limit as prescribed therein but upon such scrutiny made by the Sales Tax Authorities also nothing untoward was reported nor any demand for any extra amount of tax was made at any point of time against the assessee u/s 25(2). However, according to the assessee, for the reasons best known to the authorities of the Commercial Taxes Department, the application of the assessee electronically made for supply of Form-C was rejected.

Having heard the parties, the High Court held that,

++ the issuance of Form-C and Form-F is required under the provisions of the Central Sales Tax Act so that the dealer may be entitled to the benefit of the lower rate of tax with respect to sales made in the course of inter-State trade or commerce with regard to goods, which have been declared to be of special importance in the inter-State trade or commerce under the provisions of the Central Sales Tax Act. U/s 8(4) of the CST Act as also CST (Bihar) Rules, the requirement was only to see that the dealer has filed all the returns and had paid the tax as admitted in the said returns filed. Even after the amendment in Rule 9 of the Central Sales Tax Rules which has conferred power upon the CCT, there is nothing in the notifications dated 6.9.2012 and 30.3.2013 issued by the Commissioner which lays down anything to the contrary that any scrutiny is to be made apart from what is required under the provisions of the Bihar VAT, 2005 in the matter. There having been no demand made upon the assessee after scrutiny as provided u/s 25 of the VAT Act, it is not open to the authorities at the time of issuance of Form-C to discover something beyond what is required by the Bihar VAT Act and Rules and refuse to issue Form-C or Form-F applied for by the assessee so long as the assessee has filed the returns as required under the notification and has paid the tax as admitted in the returns;

++ this Court is not in agreement with the submission of counsel for Revenue that the tax payable would be what the authorities of the Commercial Taxes Department considered to be fit. They have not prior to the said date exercised their powers of scrutiny in the matter u/s 25 of VAT Act and demanded any additional tax to be paid by the assessee. So far as the assessments made after the date of the application and the recovery of tax thereon are concerned, the same stand on entirely different footings and they cannot be used for the purpose of denying of issuance of Form-C and Form-F, as efficacious mode of recovery of tax is available to the respondent authorities under the provisions of the Central Sales Tax Act read with Bihar Value Added Act and Rules. Thus, in the light of said discussions, the orders of authorities rejecting the application for issuance of Form-C are quashed.

(See 2015-TIOL-971-HC-PATNA-CT)