Many a times I receive queries on a common problem faced by many dealers all over India that what to do when the interstate purchaser of goods refuses or doesnot issue the requisite C forms after purchasing the goods at concessional rate of CST @ 2%.
The only solution many people feel is the filing of Civil suit for the recovery of such C forms or the balance tax along with the interest from the refusing buyer.
Now the Guahati High Court in OMIL-JSC-JV vs Union of India [2013] 61 VST 370 (GAUHATI) has held that a purchaser who has bought the goods at concessonal rate of CST @ 2% is under statutory obligation under Central sales Tax Act, 1956 to issue the C forms irrespective of the fact whether such commitment to give C form was there in the contract for sale or not and if such person refuses to issue the C forms then a writ petition is maintainable against such person before the High Court.
In this case a statutory corporation refused to issue the requisite C forms after purchasing the goods at concessional rate of CST @ 2% on the petext that there was no such provision for issuing the C form in the contract agreement.
On a writ petition in the High Court seeking a direction to the Corporation for issuance of the C forms the Gauhati High Court allowing the petition held as under:
"that the issue was with regard to issue of declaration form C by the Corporation to the dealer for availing of the concessional rate of tax under Central Sales Tax Act, 1956 which is a statutory exaction and a requirement for compliance of the provision of the Central Sales Tax Act and not the breach of any of the terms of the contract agreement. Therefore, the jurisdiction of the writ court was not barred. The court could not refuse to interfere on the ground that the question raised arose out of the contractual agreement and was one of enforcement of contractual obligation and should be referred to arbitration."
The High Court further held:
"That the Corporation was statutorily bound under the provisions of the Central sales tax act, 1956 to issue C forms to the dealer as claimed. Merely because the contract agreement did not stipulate issue of C forms it could not refuse to issue the forms to the dealer which was entitled to the benefit under section 8(1) of the Act only on production of such form. Moreover, the corporation, through its correspondence with the dealer, even prior to awarding the contract work, requested it to avail of concessional rates of taxes, gave assurances to the dealer time and again that it would issue C forms and even communicated to the Commissioner of Commercial Taxes, West Bengal, in connection with issue of C form in order to avoid any disruption of the supply of the contract materials, On the facts, it could not be allowed to deny the claim of the dealer on the pretext of absense of any provison in the contract agreement to issue C form. The letter dated October, 29, 2010, refusing to issue form C was unacceptable under the provisions of law and liable to be quashed and set aside."
Conclusion: Thus the above judgement makes it clear that once a dealer purchases interstate goods at concessional rate of CST, he is under a statutory obligation under CST Act to issue the C forms and such statutory obligation exist irrespective of the fact that terms of the contract are silent on the issuance of C forms, such statutory obligation can be enforced by a writ petition in the High Court.
Regards
Amit Bajaj Advocate
Bajaj & Bajaj Advocates
128, Sangam Complex,
Milap Chowk, Jalandhar(Punjab)
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