Levying of CST on transactions treating them as central sales upheld, HC

Facts in Brief:

1. Applicant is a registered dealer under the U.P. VAT Act, 2008 as well as under the Central Sales Act, 1956.

2. The applicant is a dealer of nonferrous metal scraps and metal utensils.

3. Applicant disclosed stock transfer of non-ferrous metal scraps and utensils for sale on commission agency basis, against which Forms-F have been received by the applicant from M/s Rajdhani Traders, New Delhi for a sum of Rs.4,98,43,435/-.

4. Likewise, stock transfer of non-ferrous metal scraps of Rs. 3,01,73,690/- was disclosed on commission agency basis to M/s Radhika Enterprises, New Delhi, against two Forms-F No. 03Q725091 and 03Q725092, said to have been received by the applicant.

5. It is the case of the applicant that entire details as required under Rule 4(4) of the Central Sales Tax (U.P.) Rules, 1957 were maintained and the said provision was fully complied with.

6. It is also the case of the applicant that these Forms were bonafidly received by him from their aforesaid two agents at Delhi and on the strength of these Forms, a claim was made under Section 6A of the CST Act that these transactions are not sale liable to tax under the CST Act. The books of account were produced by the applicant before the Assessing Authority.

7. On enquiry from the concerned Delhi VAT Authorities, an intimation was received through the Assistant Commissioner (SIB), Commercial Tax, Unit-I, Ghaziabad vide Letter No. 431 dated 8.9.2010 accompanied with the letter of the Commercial Tax Department and IP State, New Delhi. As per report of concerned Delhi VAT Officers "Form 'F' No. 03Q873645, 04Q715866, 03Q982073 and 03Q982074 were not issued from Zone-08 CFC (Ward-84) as per record available". The case of the applicant is that these Forms-F were received by him from his agents M/s Rajdhani Traders, Delhi for Rs.4,98,43,435/-. Likewise, verification was sought of Form-F No. 03Q725091 and 03Q725092 said have been received from the agent M/s Radhika Enterprises, New Delhi for Rs.3,01,73,690/-.

8. Report was received from the concerned, Commercial Tax Authority under the Delhi VAT Act through the Deputy Commissioner (SIB) Commercial Tax -Unit-I, Ghaziabad vide D.O. Letter No.03630, dated 13th November, 2010 that these two Forms-F have not been issued by the Delhi VAT Authorities to the aforesaid M/s Rakhika Enterprises, New Delhi rather these forms were issued to another firm M/s A.K. Technical Power Limited having TIN No. 07290176998. Thus, the total amount covered by the aforesaid six Forms-F was of Rs.8,00,17,125/-. The assessing authority, vide assessment order 31st March, 2011 levied central sales tax on these transactions treating them as central sales.

9. Aggrieved with the assessment order dated 31st March, 2011, the applicant filed First Appeal No.243/2011 before the Additional Commissioner Grade-II, ( Appeals) Commercial Tax, Mirzapur who dismissed the appeal vide order dated 21st June, 2011 observing that the aforesaid six Forms-F were not issued by the prescribed authority to M/s Rajdhani Traders, Delhi and M/s Rakhika Enterprises, New Delhi rather these forms are either stolen or forged and as such no benefit of these form can be given to the applicant.

On Revision HC held as under,

10. A case involving claim under Section 6 A of the CST Act stands on different footing than the case of interstate sale against Form- C, in which case, it may be possible that selling dealer has bona fidely effected interstate sale and bona fidely received Form-C to avail concessional rate of tax. So far as judgement of this Court in Kanha Vanaspati Ltd. (Supra) is concerned, it is suffice to say that the said judgement was rendered by this Court on 19th December, 2001 while the law on the issue has been subsequently settled by Hon'ble Supreme Court in the case of Ashok Leyland Ltd (Supra), which is binding on this Court.

11. The next judgment relied upon by the learned counsel for the applicant is in the case of Misri Lal Oil Mills Ltd. (Supra), in which, the controversy involved was entirely different. In that case, the genuineness of Form F was not in doubt. The transactions were accepted by the agent initially.

12. It was not in dispute that Form F was obtained by the agent from the prescribed authority and the said declaration in Form F was given to the transferrer dealer. Initially, the transferee accepted the transactions, but subsequently, he denied the transactions. Thus the facts of the present case are entirely different and therefore, the judgment of this Court in the case of Misri Lal OIl Mills (Supra) has no application on the facts of the present case.

13. In view of above discussions, I do not find any infirmity in the impugned order of Tribunal. The question of law no. (i) and (ii) are answered in affirmative i.e. in favour of the revenue against the assesse. Question No. 3 is answered in negative i.e. in favour of the Revenue and against the assessee.

14. In result, revision fails and is hereby dismissed. 

Case Reference - M/S Kunj Bihari Lal Radheyshyam vs The Commissioner, Commercial.