M/S. Laxmi Trading Company vs. State Of Telangana, And 5 Others

Held

The Court held that the exemptions granted by the State Government for furnishing C-Forms were explicitly for the period up to March 31, 2015. For the period thereafter, until the introduction of the GST regime on July 1, 2017, the petitioner was legally bound to furnish C-Forms to avail the concessional tax rate under Section 8(1) of the CST Act. The Court noted that if C-Forms were not furnished, the provisions of Section 8(2) of the CST Act would apply, making the dealer liable to pay tax at the rate applicable to sales within the appropriate State. The Court referred to the Supreme Court's decision in M/s. TVS Motor Company Limited vs. State of Tamil Nadu, which emphasized the purpose of Section 8(2)(b) of the CST Act as a safeguard against tax evasion. The Court further held that mere submission of representations did not confer a right to seek a waiver of C-Form filing, and the principle of legitimate expectation could not be invoked in a taxing statute. Additionally, the Court observed that the petitioner had an adequate and efficacious alternative remedy of appeal under Section 9(2) of the CST Act read with Section 31 of the VAT Act against the assessment orders, and therefore, the writ jurisdiction under Article 226 was not ordinarily invoked in such cases. Consequently, the writ petition was dismissed.

Facts

The petitioner, M/s. Laxmi Trading Company, is a dealer in dals and pulses. They procure goods from within and outside Telangana and export them to other states where VAT on these items is nil. To avail a concessional tax rate of 2% on inter-state sales under the Central Sales Tax Act, 1956 (CST Act), purchasers in the destination states are required to provide C-Forms. However, since VAT on dals and pulses is nil in those states, purchasers are not registered with tax departments and cannot issue C-Forms. The petitioner relied on Government Orders (G.O.Ms.No.294 dated 9.3.2007 and G.O.Ms.No.347 dated 17.3.2008) and subsequent Memos issued by the Government of Andhra Pradesh and later Telangana, which waived the requirement of C-Forms for specific periods up to March 31, 2015, subject to production of alternative documents. The petitioner continued to submit alternative documents after March 31, 2015, but the respondents insisted on C-Forms for assessment periods post-March 31, 2015, and prior to the GST regime (July 1, 2017). The petitioner challenged this insistence as illegal and arbitrary.

Key Issues

1. Whether the respondents' insistence on the production of C-Forms for inter-state sales of dals and pulses for the period after March 31, 2015, and prior to July 1, 2017, is illegal, arbitrary, and contrary to the doctrine of legitimate expectation, despite the petitioner submitting alternative documents as proof of inter-state trade? (Section 8 of the CST Act, 1956, and Rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957). Petitioner's arguments: The petitioner contended that the respondents' action in not considering the documents submitted in lieu of C-Forms was illegal and arbitrary. They argued that the previous Government Orders and Memos established a precedent for accepting alternative documents, creating a legitimate expectation. They sought a direction to consider these documents and grant concessions without insisting on C-Forms. Respondents' arguments: The respondents argued that the exemptions granted by the State Government for furnishing C-Forms were only up to March 31, 2015. For the period thereafter until the GST regime, the petitioner was bound to furnish C-Forms to avail the concessional rate under Section 8(1) of the CST Act. They also contended that the petitioner had an alternative remedy of appeal against the assessment orders.