Regd. Seller cannot be Denied Tax Deduction because Regd. Dealer Stole ST-15 Forms: Punjab & Haryana HC [Read Order]
The High Court also noted that there were no statutory provisions requiring the petitioner to verify the genuineness of the certificates.
The Punjab and Haryana High Court at Chandigarh recently clarified that a registered seller cannot be denied tax deduction benefits merely because the ST-15 forms furnished by a purchasing dealer were later found to be stolen, as the seller had no knowledge of such theft.
The decision was given by the High Court while adjudicating a writ petition filed by MMTC Ltd., a Government of India Public Sector Undertaking, challenging the orders of the lower authorities by which its deduction claims for the Assessment Year (A.Y.) 1993-94 were rejected under the Haryana General Sales Tax Act, 1973.
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MMTC Ltd. had declared Registered Dealer (RD) sales amounting to ₹6,37,52,964 during A.Y. 1993-94 and submitted ST-15 declaration forms obtained from its purchasing dealers in support of its claim for tax deduction. Its purchasing dealers included M/s Shree Anand Enterprises as well as M/s Jagdamba Metals (P) Ltd.
The Assessing Authority rejected the claim on two principal grounds: first, that the forms received from M/s Shree Anand Enterprises were stolen, and secondly - that the forms issued by M/s Jagdamba Metals (P) Ltd. were invalid since that firm’s registration certificate had expired on 31 March 1992.
Aggrieved by this rejection, MMTC approached the Haryana Tax Tribunal, which upheld the Assessing Authority’s view, observing that as a Public Sector Undertaking, MMTC ought to have verified the certificates after registering an FIR regarding the theft of blank ST-15 forms in 1991.
Senior Advocate Sandeep Goyal and Ambika Jindal, appeared for MMTC, while Deputy Advocate General Mamta Singla Talwar represented the State.
The Division Bench comprising Justice Jagmohan Bansal and Justice Amarinder Singh Grewal that the concerned ST-15 forms were genuine departmental forms, even though they had been stolen. The Court noted that the situation would have been different had the forms been forged or fabricated and that there were no statutory provisions requiring the petitioner to verify the genuineness of the certificates.
The Bench held that there was neither evidence nor allegation that MMTC had any knowledge of or role in the theft of the forms. Therefore, denying deduction would amount to punishing a party without fault. The Court clarified that verification of a buyer’s certificate is not the statutory duty of the seller, and there exists no provision in the Act that empowers authorities to deny deduction solely on the ground that the forms furnished were stolen.
The Bench also noted that for the previous assessment year 1992-93, the same issue involving the same parties had been decided by the Tribunal in MMTC’s favour, and the Department had accepted that decision. The Court referred the Supreme Court decision in Godrej Sara LeeLtd. Vs. Excise and Taxation Officer-cum-Assessing Authority and Ors. (2023TAXSCAN (SC) 122) where it was held that order with respect to one assessment year is applicable to other assessment years.
Following this reasoning and relying on its earlier ruling in State of Haryana v. INALSA Ltd. and Anr. (2011), the Court held that the authorities had erred in rejecting MMTC’s claim.
Accordingly, the High Court set aside the impugned orders of the Assessing Authority and the Tribunal and allowed the petition, granting MMTC the deduction on its RD sales.
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