In a recent ruling, a division bench of Justice Vibhu Bakhru and Justice Amit Mahajan of Delhi High Court has set aside the order denying benefits under C forms due to its subsequent cancellation.
The bench observed the decision in the case Jain Manufacturing (India) Pvt. Ltd. v. The Commissioner Value Added Tax & Anr., where it was ruled that cancellation of C Forms with retrospective effect is not permissible.
From the view observed from the above-mentioned case, the panel acknowledged that the denial of the benefit of C Forms on the ground that they have subsequently been cancelled is not sustainable.
A C Form is a document that a registered dealer issue to another registered dealer in order to claim a tax exemption on the sale of goods.
The assessment order for the fiscal year 2014–15 caused the petitioner aggravation in that the respondent established a default assessment on the rationale that the C Forms relied upon by the petitioner were subsequently cancelled by the Rajasthan Tax Authority.
It was submitted by the petitioner that the respondent 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.
It is not an issue that the selling dealer who had furnished the C Forms was registered with the Rajasthan Tax Authorities in respect of the goods purchased by the petitioner at the material time.
The panel cited the ruling in M/s Pentex Sales Corporation v. Commissioner of Sales Tax, Delhi, which held that a selling dealer had no further obligations and could not be denied the benefit of the C Forms once he confirmed that the purchasing dealer is a registered dealer and has a certificate of registration for the goods sold to him.
There is no doubt that the purchasing dealer in the present case was properly registered with the Rajasthan Tax Authorities with regard to the goods offered by the petitioner. Furthermore, there is no issue that the C Forms were authentic and issued by the appropriate government authority at the relevant time.
However, the respondents contended that the tax authorities in the National Capital Territory of Delhi have no control over the dealer who has furnished the C Forms or the tax authorities (Rajasthan Tax Authorities) which have cancelled the C Forms.
In the case Surinder Pal and Sons HUF, the court observed that “The declaration of the court that the provisions of law – i.e. the Central Sales Tax Act or the Rules do not authorize the concerned authority (or the form issuing authority) to resort to cancellation retrospectively, is one in rem. If it is stated that no power exists to cancel a C Form retrospectively, no authority at least in Delhi can give effect to such order.”
Consequently, by observing the decision of the case Surinder Pal and Sons HUF, the panel set aside the contested order.
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