COMBINED TRADERS Vs. STATE OF RAJASTHAN

JUDGEMENT

(1.) This writ petition has been filed by petitioner, namely, Combined Traders, praying for declaring Rule 17(20) of the Central Sales Tax (Rajasthan) Rules, 1957 (for short, 'the Rajasthan Rules'), as introduced through notification dtd. 14/7/2014, ultra vires of Sec. 8(4), 13(1)(d), 13(3) and 13(4)(e) of the Central Sales Tax Act, 1956. Further prayer is made to declare the website of the Department to respondents no.4 and 5, vide order dtd. 7/12/2017, as illegal, without the authority of law and violative of Article 19(1)(g) of the Constitution of India. Prayer is also made for quashing and setting aside the communications dtd. 20/11/2017 and 30/11/2017 sent by the respondent no.3 to the VATO Ward-17, New Delhi, as being preposterous and not sustainable as the said communications preceded the date of cancellation of 'C' form, which was 7/12/2017. The petitioner has further prayed for declaration that the registration certificates of the respondents no.4 and 5, which were cancelled on 7/12/2017 with retrospective effect from 1/5/2017, were valid during the period when transactions were made by the petitioner and that even according to Sec. 16(4) of the Rajasthan Value Added Tax Act, 2003 such cancellation can only be effective from the date of the order or the hoisting of such cancellation on the portal of the department and would not come into effect retrospectively. It is also prayed to declare the communication dtd. 27/12/2017 sent by the respondent no.2 to the Commissioner VAT/GST, Delhi as without the authority of law and thus quash and set aside the same. Lastly, prayer is made for a direction to the respondent no.1 to validate the 'C' forms issued to the respondents no.4 and 5 on 6/7/2017 immediately thus enabling the petitioner to claim the benefit of Sec. 8(1) as he had already submitted the said 'C' forms verified on TINXSYS on 14/9/2017.

(2.) Briefly stated, the facts of the case are that the petitioner, as a registered dealer in Delhi, had made sales in the first quarter of 2017-18 under Sec. 8(1) of the Central Sales Tax Act, 1956 ('for short, 'the Act') to respondent no.4 M/s. H.G. International, TIN No.08372171209 and respondent no.5 M/s. Saraswati Enterprises, TIN No.08942179286. As per petitioner, the said sales were duly recorded in the books of accounts against which payments had also been received through the banking channels. The ledger accounts of the respondents have been enclosed to the writ petition. To claim reduced rate of tax under Sec. 8(1), the petitioner had furnished 'C' forms, as per the requirement of Sec. 8(4) of the Act. As per second proviso to Rule 12(1) of the Central Sales Tax (Registration and Turnover) Rules, 1957 (for short, 'the Rules of 1957') a single 'C' form is required to be submitted for a quarter, which was issued by each of the respondents towards the transactions made in the first quarter of 2017-18. As per petitioner, the 'C' forms were obtained by the respondents no.4 and 5 online on 6/7/2017 after qualifying the conditions under Rule 17(8), (9), (10), (11), (12) and (13) of the Central Sales Tax (Rajasthan) Rules, 1957 (for short, 'the Rajasthan Rules'). The petitioner had claimed refund in the return filed on 11/7/2017 for the first quarter of 2017-18 under the Delhi Value Added Tax Act, 2004 (for short, 'the DVAT Act'). When the said refund was not given within a period of two months from the date of filing of return, petitioner approached the Delhi High Court by filing Writ Petition (Civil) No.8283/2017, which vide order dtd. 18/9/2017, directed the authorities in Delhi to refund the amount along with due interest within four weeks and two weeks thereafter respectively. On 25/10/2017, the respondent no.3 informed the VATO, Ward-17, Delhi about the cancellation of 'C' forms of the respondents no.4 and 5 on the ground that they have not been found functioning at their business premises. By another letter dtd. 30/11/2017, Delhi VAT authority was informed about cancellation of the said 'C' forms as well as the registration certificates of the respondents no.4 and 5. The registration certificates of respondents no.4 and 5 were cancelled on 7/12/2017, under Sec. 16(4) of the Rajasthan Value Added Tax Act, 2003 (for short, 'RVAT Act'). Hence this writ petition.

(3.) Mr. Rajesh Jain, learned counsel for petitioner, argued that while sub-sec. (1) of Sec. 13 of the Act confers power on the Central Government to make Rules, sub-sec. (4) of Sec. 13 gives that power to the State Government. Sec. 13(3) provides that the Rules framed by the State Government should not be inconsistent with the provisions of the Act and the Rules made under sub-sec. (1). Sub-sec. (4) in clauses (a) to (j) stipulates the purposes for which the State Government can make the Rules. As per clause (e) of Sec. 13(4) of the Act, the State could make rules as regards, (a) the authority from whom; (b) conditions subject to which; (c) the fee subject to payment of which any form or certificate prescribed under sub-sec. (4) of Sec. 8 (as relevant in this case) may be obtained. In addition, this clause also permits the State to frame Rules so as to decide the manner in which such form shall be kept in custody and records relating thereto maintained and the manner in which any such form may be used or any such certificate or declaration may be furnished. Therefore, the rule making power available to the State under Sec. 13(4)(e) does not confer any authority on the respondent no.1 to frame a rule so as to provide cancellation of the 'C' form once issued. Rule 17(20) notified on 14/7/2014 by respondent no.1 is not only inconsistent with the Act but is also outside the scope of rule making power of the State. Invoking this Rule, the 'C' forms issued by the respondents no.4 and 5 have been illegally cancelled for which no provision exists under the Act. Reliance in support of this argument is placed on the judgments of the Supreme Court in Sales Tax Officer, Ponkunnam and Another Vs. K.I. Abraham - 1967 (2) STC 367 (SC), India Carbon Vs. State of Assam - (1997) 106 STC 460 (SC), Dawar Brothers, Bhopal Vs. State of M.P. and Others - (1979) 44 STC 286 (MP). Learned counsel, Mr. Rajesh Jain also relied on the judgment of the Supreme Court in General Officer Commanding-in-Chief and Another Vs. Dr. Subhash Chandra Yadav and Another - (1988) 2 SCC 351, and submitted that the Supreme Court therein held Rule 5-C of the Cantonment Fund Service Rules, 1937 to be ultra-vires of Sec. 280(2)(c) of the Cantonment Act, 1924. Reliance is also placed on the judgment of the Supreme Court in Laghu Udyog Bharti and Another Vs. Union of India and Others - (1999) 6 SCC 418 and judgment of the Delhi High Court dtd. 22/10/2018 in Areness Foundation Vs. Government of NCT of Delhi and Another in Writ Petition (Civil) No.9123/2018.