SC Disposes Appeals after Department Issues C‑Form for Genuine Inter‑State Purchases Omitted from Revised Returns [Read Order]

The Supreme Court, in a recent decision, has disposed of a batch of appeals concerning the denial of C‑Forms for inter‑state purchases, after noting that the Department had already complied with Delhi High Court directions in the lead case.

The litigation arose from the refusal of the Department of Trade & Taxes, Government of NCT of Delhi, to issue C‑Forms to Ingram Micro India Pvt. Ltd. for inter‑state purchases made during 2010–11.

Under the Central Sales Tax Act, 1956, C‑Forms enable registered dealers to avail concessional tax rates on inter‑state transactions. The Department rejected the request, citing discrepancies in returns and purchase registers, arguing that the transactions were not properly disclosed.

Ingram Micro challenged the refusal before the Delhi High Court, which directed the Department to issue C‑Forms subject to indemnity bonds furnished by the assessee. The High Court reasoned that the denial of C‑Forms despite genuine transactions would prejudice the dealer without causing any revenue loss. Several subsequent High Court orders followed the same reasoning in connected cases. The Department appealed to the Supreme Court.

Before the Supreme Court, the Revenue, the respondents acknowledged that it had already complied with the High Court’s directions in the lead matter by issuing the required C-Forms and completing assessment proceedings.

Counsel for the respondents submitted that the remaining appeals merely followed this principal case and did not warrant independent reconsideration, particularly since the assessment years involved preceded 2016 and the transactions had undergone departmental verification.

The Court noted that the Revenue had in fact issued C-Forms upon receipt of indemnity bonds, and there was no surviving grievance relating to the implementation of the High Court’s findings.

The Supreme Court observed that the High Court had given extensive reasoning, emphasizing that genuine inter-State purchases cannot be denied C-Forms solely because they were omitted from revised returns.

The High Court had held that neither Rule 5(4)(i) nor Rule 5(4)(iv) of the CST (Delhi) Rules was attracted, since the omission did not amount to concealment and had caused no revenue loss. Further, the Department itself conceded that issuance of C-Forms in these circumstances would not adversely impact state revenue, whereas denial would unfairly burden the purchasing dealer through higher CST burdens passed on by suppliers.

The Supreme Court, therefore, saw no basis to reopen factual or legal determinations already implemented and accepted by both sides.

The division bench of Justice BV Nagarathna and Justice R Mahadevan, after hearing both sides, noted that the Department had already complied with the Delhi High Court’s directions in the lead case. Since subsequent High Court orders merely followed the same reasoning, the Court held that identical compliance should be extended in all connected appeals.

Accordingly, the Supreme Court disposed of the appeals by directing the Department to issue C‑Forms and F‑Forms subject to indemnity bonds being furnished by the assessees.

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