Allahabad High Court Upholds Tax Authority's Decision On Concessional Rate For Inter-state Sales Based On Incomplete Form - C Verification

CASE TITLE:-

M/S Amrit Steels vs. Commissioner Commercial Tax (Sales/Trade Tax Revision No: 377 of 2022

DATE OF ORDER:

4^th October, 2023

BENCH:

Hon’ble Justice Piyush Agrawal

PARTIES:-

Revisionist: M/S Amrit Steels

Opposite Party: Commissioner Commercial Tax

IMPORTANT PROVISIONS:-

1. Section 6 of the Central Sales Tax Act, 1961: -

This section deals with the imposition of tax on inter-state sales and can be relevant to determining the tax rate and the conditions for concessions.

2. Section 8(4) of the Central Sales Tax Act, 1961:-

This section address the use of Form C for claiming concessional rates and the verification process.

3. Section 9 of the Central Sales Tax Act, 1961: -

This section address the burden of proof and obligations of the dealer when claiming concessional rates.

4. Rules and regulations related to the Central Sales Tax Act, 1961: -

These provide specific guidelines on how Form C is to be used, verified, and the conditions under which concessional rates apply.

5. U.P. Sales Tax Act, 1948:-

Indicates that the case involve the tax laws of the state of Uttar Pradesh.

SUBJECT: Sales Tax Concession Rate Dispute

OVERVIEW:-

This case pertains to a dispute concerning the application of a concessional sales tax rate by the revisionist in the state of Uttar Pradesh, India. The revisionist conducted central sales to a registered dealer, M/s Yash Traders, located in Rajasthan, and claimed a concessional tax rate on these sales based on the submission of Form - C, a document used for inter-state sales in India. The dispute arose when the Assessing Authority sought verification of the Form - C from the corresponding State tax authorities in Rajasthan. This verification revealed that only one sale for a smaller amount was confirmed. Consequently, the Assessing Authority accepted the concessional rate for that single sale while imposing a higher tax rate on the remaining 22 sales. The revisionist, dissatisfied with this decision, appealed to the Commercial Tax Tribunal, which subsequently dismissed the appeal. The revisionist then brought the case for revision.

ISSUES RAISED:-

1. Whether the Tribunal correctly granted the benefit of Central Sales Tax concession on a sale against Form C when the actual amount received was significantly lower than the declared value.

2. Whether the revisionist (appellant) should be held responsible for the accuracy of the information provided by the purchasing dealer in another state.

3. The burden of proof in original proceedings when claiming a concession rate of tax based on Form C.

CONTENTIONS RAISED BY REVISIONIST:-

• The revisionist argued that they made sales against 23 invoices, and they transported the goods from Uttar Pradesh to Rajasthan, justifying the application of the concessional rate.
• They claimed that the use of Form - C by the purchasing dealer, M/s Yash Traders, justified the concessional rate. Form - C was in proper order without any alterations or overwriting and bore the stamp of the issuing authority in Rajasthan.
• The revisionist contended that they had no control over how the purchasing dealer recorded the purchases in their books or used the goods subsequently.
• The revisionist cited a precedent, Star Paper Mills Limited vs. Commissioner of Sales Tax, in support of their position.

CONTENTIONS RAISED BY ADDITIONAL CHIEF STANDING COUNSEL:-

• ACSC argued that the revisionist failed to substantiate their sales before the authorities below. The sales made by the revisionist were not conclusively covered by Form - C.
• They emphasized that these proceedings were regular, and the onus was on the revisionist to prove their claim of the concessional tax rate.
• The ACSC highlighted that the Form - C submitted by the revisionist was duly verified by the corresponding State (Rajasthan) tax authority, which found that only one sale had been accounted for by the purchasing dealer in their records.
• They requested the revision to be dismissed.

ANALYSIS BY COURT:-

The court observed that the revisionist claimed a concessional tax rate based on the submission of Form - C for sales made to M/s Yash Traders, Rajasthan. However, when the corresponding State authorities in Rajasthan verified the form, they found that only one purchase had been recorded by the purchasing dealer. This led the Assessing Authority to grant the concession rate for that particular sale but impose a higher tax rate for the remaining 22 sales.

The court emphasized that in original proceedings like this, the onus is on the dealer to prove their case beyond a doubt when claiming a concessional tax rate. The burden was not shifted to the Revenue as it might be in reassessment proceedings.

JUDGMENT:-

In conclusion, the court found that the revisionist had failed to provide sufficient evidence to substantiate their claim for the concessional tax rate on all 23 sales. As the revisionist had not discharged their burden, the court dismissed the revision, effectively upholding the decisions of the lower authorities. The question of law was answered accordingly, affirming the higher tax rate on the majority of the sales.

CONCLUSION:-

The revision stands dismissed, and the question of law is answered accordingly.