M/S Laxmi Narayana Srikishan And 14 Others vs. State Of Telangana And 11 Others

Facts

The petitioners, various traders and industries dealing in dals and pulses, filed writ petitions challenging the action of the respondents (State of Telangana and its tax authorities) in insisting on the production of 'C' Forms for inter-state sales to grant concessions, exemptions, and waivers. The petitioners argued that they had submitted other documents as proof of inter-state trade. The tax authorities, however, were not considering these alternative documents and were strictly demanding 'C' Forms. The petitions sought a direction to the respondents to consider the submitted documents and grant the benefits without insisting on 'C' Forms, and to set aside any consequential actions. The period under dispute was primarily from April 1, 2015, to June 30, 2017.

Held

The Court noted that a similar issue had been decided in W.P.No.8243 of 2021 (M/s. Laxmi Trading Company v. State of Telangana) by a previous judgment dated November 4, 2022. In that case, the Court had rejected the petitioners' contention, holding that while State Governments had exempted the furnishing of 'C' Forms up to March 31, 2015, there was no such exemption thereafter until the GST regime. The Court had stated that in the absence of such exemption, petitioners were bound to furnish 'C' Forms to avail concessional tax rates under Section 8(1) of the CST Act. Failure to do so would attract Section 8(2), and mere representations could not confer a right to waive the filing of 'C' Forms. The Court had also emphasized that the principle of legitimate expectation cannot be invoked in a taxing statute and that an alternative appellate remedy was available. However, the Court then took note of a subsequent development: the Government of Telangana, vide Memo dated November 28, 2022, had ordered the waiver of Central Sales Tax for the period from April 1, 2015, to June 30, 2017, in cases of excess demands raised over 2%, subject to the submission of relevant documents. For cases where demands were not raised, the Commercial Tax Department was directed to accept other relevant documents as proof. Given this subsequent government order, the Court found that the petitioners' cases would now be covered by this memo, and thus, all writ petitions were disposed of accordingly.

Key Issues

1. Whether the respondents' insistence on 'C' Forms for inter-state sales, while disregarding other submitted documents as proof of inter-state trade, is illegal, arbitrary, and contrary to the doctrine of legitimate expectation, thereby warranting intervention under Article 226 of the Constitution of India? 2. Whether the petitioners have an alternative and efficacious remedy under Section 9(2) of the Central Sales Tax Act, 1956, read with Section 31 of the VAT Act, to challenge the assessment orders, making a writ petition inappropriate? Petitioner's Arguments: The petitioners contended that the respondents' action was illegal, arbitrary, and unconstitutional. They argued that the insistence on 'C' Forms was unreasonable, especially when they had provided other documentary evidence to substantiate their inter-state sales. They invoked the principle of legitimate expectation. They also sought directions to consider their representations and grant concessions without the mandatory 'C' Forms. Revenue's Arguments: The revenue argued that for the period after March 31, 2015, until the GST regime, 'C' Forms were mandatory to avail concessional tax rates under Section 8(1) of the CST Act. Failure to furnish them meant the rigour of Section 8(2) would apply. They also pointed out the availability of an alternative appellate remedy under the CST and VAT Acts, suggesting that writ jurisdiction should not be invoked.