Allowed

M/s. Sai Leela Granites v. Commercial Tax Officer

Telangana HC7 Jul 2021WP/8605/2021

Case brief

AI extract

What is this about?

The High Court allowed the writ petition, quashing an order that rejected defective declaration forms without returning them to the petitioner for rectification, as such action violated principles of natural justice.

What did the court decide?

Directing the respondent to return defective declaration forms with a notice pointing out deficiencies, allowing time for rectification and re-submission before passing a reasoned order.

M/s. Sai Leela Granites Vs Commercial Tax… — Pension and Retirement Benefits | Telangana HC (2021)

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HIGH COURT FOR THE S'I t'0";,;,'61E,35 lfnLfji3,*i^{Ar HYDERABAD}

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WE9NESDAY, THE SEVENTH DAY OF JULY TWo THoUSAND AND rwervrvl"."

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PRESENT

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THE HON'BLE SRIJUSTIC ,r= ro", "..:; ;f$r,,* T"^* ffil^*"

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WRIT P ETITto NNo. 860so F2021

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Between:

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lVl/s. Sai Leela Granites. r sy,No.137A4, or..,-rrrpdoipvii,Jr':: lLllifl:!|lr1%"0,e.r.^Narapuneni Upendar, AND "'PETlrloNER 21 mam. BLi:..*JSl:BBli!1;iiJrlVi"Uimb;;;i;?iltt,e,.n,enr,Revenue(cr_,)

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...RESPONDENTS

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Petition under Articre 226 0f the constitution of rndia praying that in the circumstances stated in the affidavit fired therewith, the High court may be preased to issue a Writ of certiorari or any other appropriate writ or order or direction, qriashing the impugned order of the 1st Respondent dated 3.3.2021 for the assessment year 20't 5-16 (csr) under Rule i 2(7) of the cST Rutes, 1956, and direct to 1tt Respondent to return the declaration forms, indicating the defects in the statutory declarations and allow the petitioner an opportunity of rectifying the same and re-submit before finalizing the assessment again.

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lA NO: 1 OF 2021

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Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to grant stay of collection of the disputed tax of Rs.2,95,9071 pursuant to the impugned order of the 1st Respondent dated 3.3.2021 for the assessment year 2015-16 under the CST Act, 1956, pending disposal of the Writ Petition, as otherwise the Petitioner will be put to severe loss and hardship.

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Counsel for the Petitioner: SRI K. P. AMARNATH REDDY

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Counsel forthe Respondent No.: SRI J. SAI^KRISHNA,

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ASSISTANT GOVERNMENT PLEADER^{FORADVOCATE GENERAL}

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The Court made the following:^ORDER

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THE HON,BLE^{SRI IUSTICEM'S'RAMACHANDRARAO}

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AND

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THE HON'BLE^{SRI ]USTICET'VINOD KUMAR}

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O R D^{E R:(perHonbleSri JusticeT'VinodKumar)}

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In the^{presentWrit Petition'the petitioner is challengingthe order'} dt.03.03.2021,^{passed by the l't iespondent' under Rule 12(7) of the} Central^{SalesTax (RegistrationandTurnover) Rules' 1957 (for short"the} CST Rules'),^{for the Assessment Year 2015-16'}

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petitioner contends that the 1st respondent^{had initiallypassed} Assessment Order,^{vide A.a.No.27762, dt.15'03'2020, without takinginto} consideration the^{claim of the petitioneras to concessionalrate of tax and} exemption on turnover^{representingInter-State sales and expoftsales} effected respectively and^{withoutissuingany noticeto the petitioner'}

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As this Court was setting aside^{such orders, which are passedin} violation of^principles of natural^{justice, the respondents had consideredit} appropriate to revise such assessment orders,^{which are passed in} violation of principles of natural^justice, by^permitting the dealer/assessee, like the petitioner, to seek re-assessment, and also enabling the dealers to file statutory declarations, by reopening assessments under Rule l2(7) ot the CST Rules.

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Even in the case of the petitioner, since, the lst respondent passed the assessment order without affording an opportunity, the assessment was also reopened, based on the application made by the petitioner on 033'3.S021.

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WP.No.86O5 of 2021

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It is contended by the petitioner that the petitioner had affected Inter-State and export sales to the tune of Rs.51,42,3621- and Rs.ll,49,202l- respectively. In respect of the said sales, the petitioner had claimed concessionar rate of tax and exemption by firing decrarations in forms 'C' and 'H', as prescribed under the Central Sales Tax Act, 1956. However, the lst respondent, in the Assessment Order dt.15.03 .2020, had considered the turnover as covered by^,C, declaration forms only to the tune of Rs. 44,01,405/- though the petitioner had submitted declaration forms for the entire turnover.

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By the application filed on 03.03.2021, the^petitioner had brought to the notice of the^{1st respondentthat out of the'C'declarationforms} filed, by the^{petitioner earlier at the timeof original assessment,two(2)} 'C'declaration forms covering^{Inter StateSaleturnoverof Rs' 2,16,490/-} and one^{(1) 'H'} declaration^{form covering Export Sale turnover of Rs'} 11,48,2021- have^{not beenconsideredby extendingthe benefitof} concessional^{rate of tax} /^{exemptionon suchturnover and soughtfor re-} consideration^{of the same.}

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It is contended^{that the l't respondent by the impugnedorder'} dt.03.03.2021,^{passed in exerciseof powersconferred under Rule 72(7) ot} the CST^{Rules, had rejectedthe said two 'C' forms and one 'H' form} submitted^{by the petitioner earlier covering a turnover of Rs'2'16'490/-} and one^{H form coveringa turnover of Rs'11'48'202/-'on the groundthat} these declarations^{filed by the petitlonerare incomplete and being} defective,^{and as such,the exemption claimed by the petitioner cannotbe} a llowed.

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w.P,No.8605^{of 2021}

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B. It^{is the contentlon of the petitioner that the actionof the1st} respondent^{in rejecting the'C' and 'H'formson the groundof being} defective,^{without pointing out the defectby returningthe said decraration} forms, and^{without affording an opportunityto the petitioner to rectify the} defects,^{wouldmake the impugned orderpassed as without applicationof} mind.

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g.Itiscontendedthatthesedeclarationformsarefurnishedtothe petitioner, by the^{purchase(s) located outsidethe State in the courseof} Inter.Stateorexporttrade,byobtainingthesamefromtheirrespective authorities; and if any^{defect is noticed therein,the 1st respondentought} to have issued a notice,^{pointingout suchdefect.Further, it is contended} that the 1st respondent ought to^{have returned the defectivedeclaration} forms to the petitioner along with objection notice, to^{enable the} petitioner to approach the purchase(s) to have the same rectified from the concerned issuer, and re-submit to the lst respondent, to enable him to consider the same.

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It is also contended that despite the petitioner seeking return of the 'C' and 'H' forms, which are allegedly claimed to be defective, the lst respondent has refused to return the same, and, in fact, issued an Endorsement dt.19.03.2021, furnishing only Xerox copies thereof, thereby preventing the petitioner from sending such defective forms back to the purchasers who issued the same, to have the defects removed as pointed out by the 1st respondent, and to send back the duly corrected forms for being resubmitted to the 1st respondent.

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Sri l. Sai Krishna, learned Assistant Government Pleader attached to the office of the learned Advocate General appearing for the

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W.P.No.86A5 of 2O21

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respondents, would submit that the dealer claiming benefit of concessional rate of tax or exemption is required to furnish duly completed decraration forms prescribed under the Rures. If decrarations as prescribed under the CST Act and Rules or incomptetely filJed up declarations are filed, the same would have to be considered as invalid declarations entiUing for rejection of the same. However, he is not in a position to dispute the fact that before the impugned order is passed by the 1st respondent, the petitioner is required to be put on notice with regard to the aileged deFects in the decraration forms, which are sought to be rejected and the dearer ought to be afforded sufficient time to remedy such defects.

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We have considered the submissions made by the learned counsel appearing for the respective parties,

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Admittedly, it is not the case of the respondents, that the petitioner did not flle declarations covering the turnover on which it claimed either concessional rate of tax or exemption on^{interstatesales or expoftsales.} The declaration forms, in form^{'C' and 'H', were filed by the petitioner} much prior to the^passing of the^{assessmentorder originallyon} 15.03.2020 and the^{same were available in the record of the 1't} respondent. However, the^{lst respondent did not take the same into} consideration,^{nor rejected the same whilepassing the order'}

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It is only^{afterthis Couft's interventionin such mattersthat the} respondents chose^{to reopen the assessmentcompletedunder Rule 12(7)} of the CST Rules^{to considerthe declarationsfiled or affording an} opportunity to^{the dealer/assessee to file such declarations' since this}

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W.P.No.8605^{of 2021}

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Court^{in Godrei Agrovet Ltd' v' CTQ Elurul'had held that the} declaration^{formscan be filed even subsequent to the date of finalization} of the^{assessmentsand such declaration formsdeserveto be considered'}

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In^{the facts of the present case also' the lst respondenthad} reopened^{the assessment completed' and ought to have considered the} declaration^{forms filed by the petitioner craimingconcessionalrateof} tax/exemption.^{However,the 1st respondent'whileconsideringthe} declarationformsavailablewithhim,hadrejectedcertaindeclarations filed by the^{petitioner earlier,on the groundthat the sameare incomplete'} since the authority^{had noted certaindeficienciestherein'The lst} respondent, Without^{putting to petitionerthe deficienciesas noticedby} him in the said declarations,^{had straight away rejected the declarations,} and subjected the turnover^{covered by the said declarations to tax at} 14.5olo, without even affording^{an oppotunityto the petitioner to offer his} explanation or returning the defective^{declarationto enable the petitioner} to rectify such defects in the declaration and resubmit^{the same.}

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The 1st respondent ought to have considered the fact that the declaration forms are not generated by the^petit,oner, and on the other hand, are issued by the concerned authorities oF the petitioner's buyers, located in the other State. The petitioner cannot compel the authorities in the respective States to fill up the details before the same are issued to the petitioner, who merely on receiving the same, has filed with the l't respondent. IF only the 1st respondent had issued a notice pointing out the deficiencies and returned the defective 'C' and 'H' forms, the petitioner could take steps to get the same rectified by sending the original

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r 41 APSTJ 92 (AP): l2OO7) 7 VST 730

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I4t.P. No.860S of 202 j

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declarations to the issuer. If the lsr respondent had done so, such action could have been considered as in the interest ofjustice and fairplay.

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On the contrary, the reFusal oF the 1st respondent to return the original declarations to the petitioner and in its place Furnishing only Xerox copies thereof under Endorsement dt.19.03.2021 would serye no purpose, as in the absence of returning of the original declarations, the petitioner would not be in a position to return the same to the issuer to get the defects as pointed out by the 1$ respondent, rectified.

¶51

The action of the 1st respondent in refusing to return the original .C, and 'H'declaration forms submitted wourd arso deprive the petitioner to claim the difference of tax from the purchaser, if they fair to provide the duly rectified declaration forms and would result in loss to the petitioner.

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19, It is settled position of law that whenever declaration forms filed are found to be defective in nature, the authority is duty bound to^return the same to the dealer/assessee^{who filed the same to enablehimto} rectify such defects.

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ln Tirukoilur^{Oil Mitts Ltd., v. State of Madra*, it was held}

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that -

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" Even the principles of^natural iustice^{require that when} something^{is discoveredeven at the appellate stage which} exposed the^{assesseeto a higher rate of tax, the dealer} should be^{given an opportunity to rectifiithe defects withina} stiputated^{time grantedfor that purpose"'}

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7n C.5.7. v.^{Darasha Mancheriee & Sonf} '^{a Full Bench of}

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Madhya Pradesh^{HighCourt heldthat -}

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, {1967) 20 STC 388 lMad l^{= AIR 1968Mad 311} 1(198it47 sTC 251{MP FB)

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W.P.No.8605^{of 2021}

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"The reiecilon^{of declarailons'it is not disputed'witl result in} denying^{the deater the benefit of the concessionalrate of} tax.^{The rejection would/ therefore' adversely affect a} dealer^{who claimed the benefit of concessionalrate' The} order^{of rejection cannotbe passed by an assessing} authority^{arbitrarity' ft is a quasi-judicialact and it is thus} inherent^{in the very nature of an order' expresslyor} inpliedty^{rejecting the declaration furnishedby the dealer'} that it^{should be passed after givingthe dealer an} opportunity^{of being heardin the matter' Such oppoftunity} cannot be^{held to be an emptyfornality but would} necessarily^{carry with it the opportunityto remove the} defects in^{the declarationto the satisfactionof the assessing} authority.^{Denial of such opportunitywould mean that even} a defect in^{the declarationarisingout of an inadveftent} mistake or omission^{in the declaration could not be cured'} Such a construction of^{Section B(4)of the Central SalesTax} Act, 1956, would be too^{technical and is, in our opinlon, not} warranted by the^provisions of that^section."

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Thus, the action oF the lst respondent^{in rejecting the claimof the} petitioner for concessional rate of tax / exemption on the^ground of declarations being defective and also not returning the'C'and^'H' declaration forms to the petitioner to rectify such defects, in our considered view, is highly objectionable and violative of principles of natural^justice, resulting in serious prejudice to the petitioner.

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In view of the above, we are satisfied that the action of the lst respondent in passing the impugned order is in violation of prlnciples of natural^justice and calls for interference by this Court.

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Accordingly, the Writ petition is allowed. The impugned order in A.O.No.15606 dt.03.03,2021 passed by the lsr respondent under Rule 12(7) ot the CST Rules for the Assessment year 2015-16 under the

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W.p.No.86OS of 2o2 i

Central Sales Tax Act/ 1956, js set asidei the mafter i^ -^- ,,,. .ls rernitted back to the Ist respondent with a direction to the l't respondent to return the defective 'c'and 'H', decraration torms to the petitioner by issuing a notice pointing out the deficiencies; the petitioner shalr be afforded reasonabre time to remove/ rectify the defects/deficiencies and re_submit; upon re_ submission, the 1st respondent shall pass a reasoned order after affording personal hearing to the petitioner in accordance with law and communicate the same to the petitioner.

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Pending miscellaneous petitions, if any, shall stand closed in the light of this final order. No order as to costs.

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SDAT.KRISHNA KUMAR ASSISTANT REGISTRAR i/TRUE COPY// ,,\-."' SECTION OFFICER

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To,

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'1 . The Commercial Tax Officer,, Khammam _ lll Circle, Khammam. 2. one cc to Sri x. p amarnaih n"Jjv, rilr"irjljj6,pucf t lyS":rfi:rt",rhe,Advoiate^{d,-;;, ii;sn c;i,h'"i.' the State or reranganaar} 4. Two CD Cooies.^'

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