IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 19179 of 2010(V)
1. HINDUSTAN NEWSPRINTS LTD., VELLOOR,
... Petitioner
Vs
1. THE ASSISTANT COMMISSIONER, KVAT,
... Respondent
2. THE INSPECTING ASSISTANT COMMISSIONER(RR
For Petitioner :SRI.A.KUMAR
For Respondent :GOVERNMENT PLEADER
The Hon'ble MR. Justice P.R.RAMACHANDRA MENON
Dated :05/08/2010
O R D E R
P.R. RAMACHANDRA MENON, J
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W.P.C. No.19179 OF 2010
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Dated this the 5th day of August, 2010
J U D G M E N T
Petitioner, a Public Sector Undertaking, is before this Court,
challenging Ext.P3 assessment finalised by the first respondent, in
respect of the assessment year 2005-06 u/s.6(5) of CST Act.
Prima facie, it may appear that the petitioner is not justified in
approaching this Court directly, when the petitioner is having
effective alternate remedy by way of appeal. But then, the
question is whether this Court ‘should’ relegate the petitioner to
avail the statutory remedy, if the course pursued by the 1st
respondent is per-se wrong and unjustified.
2. The grievance projected by petitioner in the writ petition
as to the course pursued by first respondent, finalysing
assessment as per Ext.P3, is more involving a question of law,
rather than a question of fact. It is also stated that, by virtue of
the course pursued by first respondent, a total liability of
Rs.15,06,31,421/- has been thrust upon the petitioner, after
ignoring the ‘C forms’ produced by petitioner, observing that the
WPC. No.19179/2010 2
‘C forms’ produced were not in time.
3. The case of the petitioner is that petitioner is a registered
dealer under the KVAT and CST Act in the rolls of first respondent
and is engaged in the manufacture and sale of ‘newsprint’. In the
course of business, the petitioner manufactured and transported
the commodity to various places outside the State and was filing
necessary returns, effecting payment of tax, as prescribed. During
the assessment year 2005-06, there was no requirement to have
procured ‘C forms’ by the petitioner, which liability was to be
satisfied by purchasers themselves and the proceedings have
undergone a drastic change ever since 2005-06. Purchasers were
also not aware of the change in the provision of law and as a
natural consequence, there occurred some delay in the matter of
obtaining the ‘C’ forms and hence the petitioner could not
produce the same on time. It was in the said circumstance,
Ext.P1 notice of assessment was issued to the petitioner in
respect of the said assessment year 2005-06.
4. On receipt of Ext.P1 notice, the petitioner submitted
Ext.P2 reply stating as follows:
“Our’s is a Public Sector undertaking and the total
turnover for a particular year is nearly 250-300
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crores. We are paying considerable amount of tax
to the department in time without delay. Due to
the introduction of new provisions in the CST Act
and Rules in respect of the submission of C Form
within the next quarter following the quarter ended
30th September, 31st December and 31st March,
some of our customers were not aware of the new
provisions and hence they were not in a position to
issue the C Form in time. Moreover the required C
Forms were not available with their respective
Commercial Tax Departments in some customer’s
case. However, we had managed to collect the C
Forms due to our repeated requests to the
customers. The fact of delay in collection of C
Forms is not our intentional mistake but beyond
our control. This fact was reported to your good
office in time.
Considering the above facts, we request you to
kindly accept the C Forms and allow us to produce
the balance C Forms and request your good self to
drop he proposal to impose huge tax and interest
for 2005-06.”
After considering the said reply, the first respondent finalised the
assessment passing Ext.P3 order on 30.3.2010 holding that turn
over to an extent of Rs.3,24,56,693/- was not covered by ‘C
Forms’ and that the ‘C forms’ actually produced by petitioner
WPC. No.19179/2010 4
were much belated and not acceptable for the purpose of
assessment. It has been observed in Ext.P3, that by virtue of
Sec.9(2) of CST Act, read with Rule 12 (7) of the CST
(Registration and Turn over) Rules, a declaration in C Form shall
be furnished within three months after the end of the period to
which the declaration relates. Hence the balance turnover in
respect of which, C Forms were not produced and the turnover
for which the ‘C Forms’ were produced belatedly (coming to a
total Rs.152,26,61,437) were held as liable to be fixed at the
higher rate of 10%, fixing the total tax liability of Rs.15,06,
39,421/- as per Ext.P3, which is impugned in the writ petition.
5. Leaned counsel for the petitioner submits that the course
pursued by the 1st respondent issuing Ext.P3 is not correct or
sustainable and much contrary to the statutory provision, without
any regard to the power to condone delay as to the submission of
‘C forms’. The petitioner has extracted the provision under Rule
12(7) as it existed prior to the amendment and the position after
the amendment, as given in paragraph 7, which is reproduced
below:
WPC. No.19179/2010 5
Rule12(7) of the CST (R&T) Rules Rule 12(7) of the CST (R& T) Rules
(before amendment) (after amendment)
Rule 12(7). The declaration on Form C Rule 12(7). The declaration on Form
or Form ‘F’ or the certificate in Form I-I’ ‘C’ or Form ‘F’ or he certificate in
or Form ‘F-II’ shall be furnished to the Form ‘E-I’ or Form ‘E-II’ shall be
prescribed authority up to the time of furnished to the prescribed authority
assessment by the first assessing within three months after the end of
authority. the period, to which the declaration or
the certificate relates.
Provided that if the prescribed authority Provided that if the prescribed
is satisfied that the person concerned was authority is satisfied that the person
prevented by sufficient cause from concerned was prevented by sufficient
furnishing such declaration or certificate cause from furnishing such declaration
within the aforesaid time, authority may or certificate within the aforesaid time,
allow such declaration or Certificate to authority may allow such declaration
be furnished within such further time as or Certificate to be furnished within
that authority may permit. such further time as that authority may
permit.
The substantial change that has been brought by the
amendment is that the time limit for filing the ‘C Form’ has been
restricted to ‘three months’ after the end of the period to which
the declaration or the certificate relates. The ‘proviso’ to the
unamended rule, enabling the concerned authority to condone
the delay, if satisfied over the reasons to be stated, stands rather
unaltered; by virtue of which, if sufficient cause is shown for the
delay, the authority can accept the C forms after condoning the
delay. This power has not been exercised by the 1st respondent,
considering the explanation offered from part of the petitioner
vide Ext.P2, while finalising the assessment and hence is under
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challenge. Learned counsel also places reliance on the decision
rendered by Apex court, State of Andhra Pradesh Vs. Hydrabad
Asbestos Cement Production Ltd. [94 STC 410] (at page 421),
the decision rendered by a Division Bench of this Court in Deputy
Commissioner of Sales Tax Vs. Abdul Salam [69 STC 144] and
also the decision rendered by the Karnataka High Court in A.S.
Nasiruddin Vs. Commissioner of Commercial Taxes in
Karnataka, Bangalore [94 STC 399] contending that the power is
very much vested with the authority and the delay can be
condoned by the same authority, if the reason is satisfactory.
6. Learned Government Pleader appearing for the
respondents submits that Ext.P3 is a reasoned order and that the
factual position, that the petitioner did not file any application to
condone the delay within prescribed period stands rather
conceded. It was after considering the explanation offered by
Ext.P2, that the 1st respondent passed Ext.P3, which is supported
with reasons and hence is not liable to be treated as a non-
speaking order. It is also pointed out that petitioner, if at all
aggrieved, has an alternate remedy by way of appeal and that
interference to this Court is not unwarranted.
7. This Court has already observed that there is no much
WPC. No.19179/2010 7
factual dispute in the case in hand and that the issue is only with
regard to the interpretation of the relevant provisions of law and
as to the exercise of power for condoning the delay in filing the
‘C forms’ by virtue of the ‘proviso’ to Rule 12(7). With regard to
the disputed turnover of Rs.3,24,56,695/-, the learned counsel
for petitioner submits that the petitioner has already procured
necessary ‘C forms’, which fact has been adverted to by the 1st
respondent in the impugned order itself and the only reason
stated for rejecting the ‘C forms’, is that they were produced
belatedly.
8. The question to be considered is whether the reason
offered by the first respondent for rejecting the ‘C forms’ as
belated, is correct or sustainable. The only reason in Ext.P3 is
that on verification of the assessment records, it was revealed
that there was no application filed by assessee “during
corresponding quarter” requesting time for filing ‘C form’.
Whether the explanation offered by petitioner for the delay vide
Ext.P2 was correct, sustainable or satisfactory to the assessing
authority is not seen discussed anywhere in Ext.P3. Similarly,
there is no reference as to the power vested with the authority to
have condoned the delay, by virtue of the ‘proviso’ to Rule 12(7)
WPC. No.19179/2010 8
of the ‘Rules’.
9. It is relevant to note that, when a substantive provision
was changed by causing amendment to Rule 12(7), limiting the
period for submission of C form, to ‘three months’, the law-
makers left the ‘proviso’ as it was, without any change. This
shows that, it is a conscious action of the legislators intending to
have the proviso for condonation of delay to be retained as it
originally existed. The scope and extent of power in respect of
condoning the delay, under the ‘unamended’ provision, has
already been considered by different Courts and also by this
Court in the decisions cited already, explaining the fact that, it is
rather a beneficial provision and the purpose of legislation is not
denial of the benefit. Applying the very same logic and
reasoning, it cannot be said that the dictum is not applicable to
post-amendment scenario. More so, since the ‘proviso’ has not
undergone any change, even after the amendment.
10. As observed hereinbefore, there is no discussion at all in
Ext.P3 order, as to the power of the assessing authority to
condone the delay by virtue of the ‘proviso’ to ‘Rule 12(7)’ and
as such the rejection of the ‘C forms’ furnished by petitioner
holding that they are belated is not correct or proper. The matter
WPC. No.19179/2010 9
requires to be reconsidered by the first respondent, with
reference to the relevant provisions of law, in the light of the
different judicial precedents and the observations made
hereinbefore. Accordingly, Ext.P3 is set aside and the matter is
remitted to the first respondent to consider the matter afresh and
to pass appropriate orders, after hearing petitioner, which
exercise shall be finalised within two months from the date of
receipt of copy of this judgment.
The Writ Petition is allowed. No costs.
P.R. RAMACHANDRA MENON,
JUDGE.
Sou.