Denial of benefit of C Forms, on ground of subsequent cancellation by Tax Authorities is void: Delhi HC [Read Order]

A division Bench of the Delhi High Court observed that the denial of benefit of C Forms, on ground of subsequent cancellation by the tax authorities is void.

The petitioner, Indo Silicon Electronic Pvt Ltd, has filed the present petition impugning the assessment order passed by the Assistant Value Added Tax Office for the third quarter of the Financial Year 2014-15. The petitioner is aggrieved by the said assessment order to the extent that the Assistant Value Added Tax Officer has framed a default assessment on the basis that the C Forms relied upon by the petitioner, were subsequently cancelled by the Rajasthan Tax Authority.

The Assistant Value Added Tax Officerhad reasoned that since C Forms had been cancelled by the Tax Authority that issued it, no benefit of such C Forms could be availed by the petitioner.

The only question that falls for consideration of the Court was whether the Assistant Value Added Tax Officer is justified in denying the benefit of C Forms to the petitioner that were issued by the Rajasthan Tax Authorities at the instance of the selling dealer located in the said State.

In the present case, there is no dispute that the purchasing dealer was duly registered with the Rajasthan Tax Authorities in respect of the goods sold by the petitioner. There is also no dispute that the C Forms are genuine and had been issued by the concerned authority at the material time.

The C Forms are an integral part of the consideration received by the selling dealer. The commercial bargain struck by dealers’ factors in the value of these forms. The effect of denying the benefit of the C Forms would amount to rewriting a commercial transaction that has been consummated. The cancellation of C Forms at a subsequent date would have a disruptive effect on the stream of commercial transactions, which is impermissible.

The Court of Justices Vibhu Bakhru and Amit Mahajan observed that “In the aforesaid view, the denial of the benefit of C Forms, on the ground that they have subsequently been cancelled, is not sustainable.”

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates