Bombay High Court
M/S. Brijda Roadlines Pvt. Ltd. And Anr vs The Union Territory Of Daman And Diu Thru ... on 25 February, 2020
Equivalent citations: AIRONLINE 2020 BOM 982
Author: Nitin Jamdar
Bench: Nitin Jamdar, M.S. Karnik
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 3310 OF 2019
1. M/s.Brijda Roadlines Pvt.Ltd.,
having its registered administrative
office at Shop No 4, BMC Case No.2,
Sewree Cross Road, Mumbai- 400 015.
2. Mr.Brijesh Singh,
Managing Director having address at,
Shop No 4, BMC Case No.2,
Sewree Cross Road, Mumbai- 400 015. ... Petitioners.
V/s.
1. The Union Territory of Daman and Diu
through the Government Pleader,
High Court, Mumbai.
2. The Commissioner of VAT, Daman
having his office at Udyog Bhavan,
3rd Floor, Bhenslore, Nani Daman-396 201.
3. Assistant Vat Officer (AVO),
VAT Department, Daman having his
office at Udyog Bhavan, 3rd Floor,
Bhenslore, Nani Daman- 396 201.
4. Bharat Petroleum Corporation Ltd.
Having its office at Bharat Bhavan,
3 & 4, Currimbhoy Road, Ballard
Estate, Mumbai- 400 001. ... Respondents.
Digitally
signed by
Sanjay K.
Sanjay K. Nanoskar
Nanoskar Date:
2020.03.03
19:26:15
+0530
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Mr.V.Sridharan, Senior Advocate with Mr.Rahul Thakkar and
Mr.Sriram Sridharan for the Petitioners.
Mr.S.S.Deshmukh for Respondent Nos.1 to 3.
CORAM : NITIN JAMDAR AND
M.S. KARNIK, JJ.
DATE : 25 February 2020.
ORAL JUDGMENT : (Per Nitin Jamdar, J.)
The Respondent Nos.1 to 3 have refused to issue Form-C to the Petitioners. Form C is to be obtained by the registered dealer under section 8 of the Central Sales Tax Act, 1956 to be given to the registered seller at the time of interstate purchase. Upon production of Form C, central sales tax at a concessional rate is leviable.
2. Petitioners were granted a petrol Pump dealership by Respondent No.4- Bharat Petroleum Corporation Ltd to purchase and sell petroleum products in the Union Territory of Daman and Diu. The Petitioners purchase petroleum products from Respondent No.4- BPCL at a concessional rate as per the scheme of section 8 of the Act. The Petitioners also has a business of transportation. The Petitioners lease trucks, trailers and tankers for transportation activities.
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3. For the period between the year 2012-13 to 2015-16, the Petitioners had purchased goods by submitting Form-C. The Respondent No.3- Assistant VAT Officer, Daman noticed that the Petitioners had purchased petrol, diesel from BPCL for resale in Daman; however, the Petitioners used the same in their transportation business and contravened and misused Form-C issued to the Petitioners. The Respondent No.3 concluded that the Petitioners were liable for penalty under the Act and, the penalty was imposed under section 10(d) of the Act. The Respondent No.3 passed an assessment order on 13 September 2017.
4. The Petitioners' appeal before the Deputy Commissioner, was dismissed on 26 March 2018. After that, the Petitioners filed second appeal before the Appellate Tribunal. The Petitioners applied on 3 April 2018 requesting the Respondent No.2 to permit the Petitioners to pay the disputed dues by way of installments. A revised proposal was submitted on 18 April 2018. On 8 May 2018, the Respondent No.3 passed an order allowing the Petitioners to pay the dues in installments. The Petitioners were directed to pay the total amount of Rs.9,43,55,838/- with installments of Rs.50 lakh each per quarter. The Petitioners paid the first installment of Rs.50 lakh on 19 May 2018 and thereafter stopped paying the installments. The appeal is pending.
5. As regards the issuance of Form-C regarding petroleum products purchased from Respondent No.4- BPCL the Petitioners skn 4 3310.19.doc had applied for the same in August 2018. According to the Petitioners, initially, the purpose of the purchase was shown as 'use in the manufacture'. After Forms-C were issued to the Petitioners on 13 August 2018, the Petitioners applied for rectification of Form-C stating that it was inadvertently sought on the ground of manufacture when it should have been for 'resale'. By the impugned communication dated 16 August 2018 notified on the official gazette, the Petitioner's request for issuance/rectification of Form-C was rejected on the ground of non-payment of the second installment.
6. Since the Petitioners did not produce Form-C, BPCL took coercive action against the Petitioners. The Respondents also filed a criminal complaint against the Petitioners for misuse of Form-C and the criminal case is pending. A search of the petrol pump was also taken, and the pump was seized. Aggrieved by the action of the Respondents in not issuing Form-C to the Petitioners, the present writ petition is filed.
7. We have heard Mr. V. Sridharan, learned Senior Advocate for the Petitioners and Mr. S.S. Deshmukh, learned Advocate for the Respondents.
8. Though the Petitioners have sought various reliefs regarding issuance of Form-C, attachment of petrol pump, these reliefs are separate and distinct. Mr.Deshmukh, learned Advocate for the skn 5 3310.19.doc Respondents no 1 to 3 has rightly taken an objection to such multifarious prayers. Mr. V.Sridharan, the learned Senior Advocate for the Petitioners, has advanced contentions only regarding non- issuance of Form-C. Since we are not dealing with the prayer of the Petitioners regarding the seizure of the petrol pump, we leave that issue open to be considered in a separate substantive proceeding, if the Petitioners choose to agitate the same.
9. Thus the principal relief sought for by the Petitioners is a direction to the Respondents to issue Form-C. Mr. V.Sridharan contended that under the scheme of the Central Sales Tax Act more particularly section 8 read with Rules, if stipulations are satisfied, rights accrue to a dealer for issuance of Form-C, and unless a specific ground is stipulated in the Rules or the Act for denial of issuance of Form-C, it cannot be so withheld. It is contended that the scheme for issuance of Form-C is a self-contained code. It is contended that the Central Sales Tax (Goa, Daman and Diu) Rules, 1973 contain no stipulation in respect of withholding of Form-C on the ground of arrears unlike the Central Sales Tax (Bombay) Rules, 1957 wherein it is so specifically provided. Mr. Sridharan submitted that since the ground of arrears is omitted explicitly from the Daman Rules, 1973, the action of the Respondents in withholding Form-C on this ground is illegal. Reliance is placed on the decision of the Gujarat High Court in the case of Dhru Automobiles v. State of Gujarat 1; the decision of the Division Bench of Madhya Pradesh High Court in 1 Spl. Civil Application No.17919/2018 decided on 7 February 2019 skn 6 3310.19.doc Dawar Brothers v. State of Madhya Pradesh 2; judgment of the Kerala High Court in Colourgraphs v. Sales Tax Officer, Ernakulam 3; and judgment of the Madras High Court in Chanda Paints (Madras) Ltd. v. Commercial Tax Officer4. Mr. Sridharan submitted that further, the ground of non-payment of arrears is nothing to do with issuing Form-C for the subsequent period. As regards the invocation of equity jurisdiction of this Court under Article 226, it is contended that non-payment of arrears by the Petitioners because of financial hardship cannot be termed as Petitioners approaching the Court with unclean hands to deny the relief on this ground. It is submitted that for denial of relief on the ground of conduct, the general conduct of the litigant should not be considered and only if the conduct has a direct nexus to the relief sought that the Court can consider such conduct. It is contended that there is no direct nexus present in the case. In support of this proposition, reliance is placed on the decision of the Apex Court in Arunima Baruah v. Union of India 5 and Public Passenger Service Ltd. v. M.A.Khadar 6. Reliance is also placed on the extract of Halsbury's Law of England, 4th Edn, Vol.16, pp 874-76 and the extract from Snell's Equity, 25 Edn, pp 30-31.
10. Mr. Deshmukh, the learned counsel for Respondent Nos.1 to 3 contended that the Petitioners are not entitled to invoke the equity jurisdiction of this court and the contention that the conduct 2 1979 44 STC 286 MP 3 (1993) 88 STC 347 4 (1986) 61 STC 335 5 (2007) 6 SCC 120 6 AIR 1966 SC 489 skn 7 3310.19.doc of the petitioner is not material for grant of relief cannot be accepted as it has a direct bearing on the relief. It is contended that the proceedings have been initiated against the Petitioners for misuse of Form-C as the Petitioners, instead of reselling the petrol/diesel, used the same in their transport business and a substantial advantage was taken in terms of the tax evaded, and the penalty is nothing but a consolidation of the evaded tax. It is contended that the Petitioners on their own accord offered payment on installments accepting the order by giving undertaking and, therefore, cannot now contend that their future Forms-C should be released without reference to the earlier conduct. It is submitted that when abuse of provision is noticed, then there exists an ample power to prevent further abuse and merely because expressly this provision is not contained in the Daman Rules, 1973 it does not mean that the Officers are rendered powerless to withhold issuance of Form-C. Mr.Deshmukh relied upon the decision of the Apex Court in the case of Rajasthan State Industrial Development and Investment Corpn. v. Diamond & Gem Development Corpn.Ltd.7 to stress upon the maxim that a person cannot be permitted to approbate and reprobate. Mr.Deshmukh also relied upon the decisions of this Court in the case of Mclloyd & Co. v. State of Maharashtra 8 and in the case of Rajiv Yashwant Bhale v. The Principal Commissioner of Income Tax 9, where in identical circumstances, the Court has declined to exercise its equity jurisdiction.
7 (2013) 5 SCC 470 8 2018 SCC OnLine Bom 16587 9 (2018) 401 ITR 408 : (2017) 299 CTR 225 skn 8 3310.19.doc
11. The concept of Form-C as a declaration is envisaged in section 8 of the Central Sales Tax Act, 1956, more particularly sub- section (4) thereof. Section 8(4) reads thus:
"8. Rates of tax on sales in the course of inter-State trade or commerce. --
..... ..... ..... ..... ..... ..... ..... ..... (4) The provisions of sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce, unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority:
Provided that the declaration is furnished within the prescribed time or within such further time as that authority may, for sufficient cause, permit."
The declaration to be furnished as per section 8(4) has been prescribed in the Central Sales Tax (Registration and Turnover) Rules, 1957 in Form-C pursuant to Rule 12 thereof. This form gives particulars of the purchasing dealer, its transportation, the use for which the goods are to be purchased and the undertaking that what is stated in the form is true to the knowledge and belief of the person signing the same. As per the scheme of section 8 and the Rules, upon furnishing Form-C, the seller gets an advantage of a concessional rate of tax as stipulated, failing which the Act provides skn 9 3310.19.doc for a higher rate of tax. A distinct advantage thus is gained by furnishing Form-C. As stipulated, the concessional rate would be attracted in case of resale but not in the case of self-consumption.
12. The Petitioners are before us in writ jurisdiction. The Petitioners' appeal against the earlier order is pending; however, the Petitioners have sought to invoke the equity jurisdiction of this Court. The law governing the exercise of equity jurisdiction is now settled. Conduct of the party invoking the jurisdiction is a material factor to be considered while deciding whether the relief should be granted. The conduct of the party may dis-entitle it from invoking equity jurisdiction but, at the same time, it should not be remote from the relief sought. Thus the question is whether the conduct of the Petitioners herein can be considered as entirely irrelevant to the relief sought.
13. The Petitioners admittedly had two businesses: a petrol pump and transport business. It is alleged that the Petitioners purchased petrol and diesel from BPCl for resale in the petrol pump, but used it in the transport business and evaded tax. Authorities have found this evasion as established. A penalty was imposed on the Petitioners by the Respondents and the appeal is pending. When the penalty was imposed, and the appeal was sought to be preferred, the Petitioners, on 3 April 2018, represented to the Respondent- Authorities submitting a proposal. The proposal reads thus:
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" ..... ..... ..... ..... ..... ..... ......
Proposal
However, considering its responsibility to honour the tax liability, we intend to make the payment of the tax arrears in installments proposed as under:-
i) Rs.10,00,000/- payable immediately on receipt of an approval from your office;
ii) Rs.30,00,000/- per quarter till the disposal of the order by 2nd appellant authority.
iii) Excess amount if any, paid till the disposal of the order should be credited to our account."
The Petitioners stated that they would pay the installment of Rs.10 lakh first and thereafter installments of Rs.30 lakh per quarter till the disposal of the order. On 8 May 2018, by the order passed by Respondent No.3, the request of the Petitioners for installments was accepted. However, the Petitioners were directed to pay the dues in installments of Rs.50 lakh each per quarter. Petitioners accepted this order. The Petitioners paid one installment of Rs.50 lakh and stopped making further payments. The Petitioners now contend that non-deposit of this amount would not dis-entitle the Petitioners from invoking equity jurisdiction of this Court. The Respondent- Authorities have not issued From-C to the Petitioners on this ground. From this two facets arise (i) whether any provision empowers the Respondents to withhold Form-C on the ground of non-payment of arrears and (ii) whether any indulgence can be given to the Petitioners in writ jurisdiction of this Court.
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14. The Petitioners have relied upon various decisions. The first decision is of the Division Bench of the Gujarat High Court in the case of Dhru Automobiles. Here, the authorities had conveyed to the petitioner that Form-C cannot be issued because of the outstanding dues of the petitioner therein under the Value Added Tax Act/Entry Tax Act. It was argued that non-issuance of Form-C under the Central Sales Tax Act for the outstanding dues under the Value Added Tax Act/Entry Tax Act was without jurisdiction and illegal. The Gujarat High Court held that in the absence of dues under the Central Sales Tax Act, it is not permissible for the respondents to refuse Form-C because tax under other enactments is outstanding. Mr. Sridharan placed reliance on the observation that even if there are outstanding dues under the Central Sales Tax Act, it would not be permissible to refuse issuance of Form-C if the requirements of section 8 are satisfied. This, in our respectful opinion, is an obiter and not the ratio. The court was considering a fact situation where the dues were not under the Central Sales Tax Act. Further, there was no such undertaking was given to clear the dues as in the case at hand. Before the Division Bench of the Madhya Pradesh High Court in the case of Dawar Brothers, the question arose for consideration was regarding rule-making power of the State Government. In this context, the Division Bench held that the State Government could not use the rule-making power of the State Government under section 13(3) and (4) of the Central Sales Tax Act for the realization of its dues. This was also a case where dues of skn 12 3310.19.doc a different enactment were made ground to deny Form- C. In the case of Colourgraphs, the single learned Judge of the Kerala High Court considered the question whether Form-C could be denied. The facts in this decision are different. The respondent-authorities had denied Form-C because the conditions prescribed in section 8(4) of the Central Sales Tax Act and Rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957 were not fulfilled. The learned Single Judge, after analyzing the provisions of the Act and Rules found that once the registered dealer obtains certificate authorizing him to purchase the goods, then he is entitled to get Form-C. The fact that Form-C will be misused in future cannot be a ground for non-issuance of Form-C. The learned single Judge also gave an example that if a licence is given to any person to obtain any medicine, the fact that the medicine will be misused will not be a ground for denying the medicine. Therefore, the learned single Judge found that on facts, the petitioner therein had satisfied the provision of section 8(4) of the Act. The question regarding equity jurisdiction and arrears in respect of Form-C did not arise for consideration of the learned single Judge. In the case of Chanda Paints (Madras) Ltd., the Madras High Court was considering the question whether the authorities could refuse to supply Form-C on the apprehension that the material brought by the petitioner would be mis-utilized and not for the purpose stated. The learned single Judge opined that if the assessee misuses Form-C, that will be punishable under section 10 of the Central Act and therefore issued skn 13 3310.19.doc the direction. None of the decisions apply to the facts of the present case.
15. On the aspect of invocation of equity jurisdiction, the Mr.Sridharan placed reliance on the observations of the Apex Court in the case of Arunima Baruah to contend that if relief is to be denied in equity on the ground of suppression of facts or conduct, it must have direct nexus to the relief sought. In the case before the Apex Court, the appellant had first filed a civil suit before the District Court and then filed a writ petition. The learned single Judge of the Delhi High Court dismissed writ petition on the ground of suppression of fact that the suit was filed. The Division Bench confirmed this order. Thereafter the matter was considered by the Apex Court. The application for withdrawal of the suit was filed before the writ petition came up for consideration. After taking a review of various decisions, the Apex Court did not interfere with the order except the mandate faced by the learned single Judge and the learned Division Bench in not able to file another petition. The extract from the commentaries also lay down the same basic proposition that the conduct, if it is relatable to the relief sought, is material.
16. The fact situation of dishonouring undertaking to pay and seeking equitable relief is squarely dealt with by the Division Bench of this Court in two cases. In the case of Mclloyd & Co., a petition under Article 226 of the Constitution of India was filed by the skn 14 3310.19.doc petitioner therein challenging the order passed by the Maharashtra Sales Tax Tribunal under the Maharashtra Value Added Tax Act. The Tribunal had recorded the fact that the petitioner was directed to deposit a certain amount for a stay of the assessment order. This order of deposit was not challenged and not complied with. In this context, the Division Bench observed thus:
"9. It is a settled position that while exercising our extraordinary writ jurisdiction, the conduct of the petitioner is an important factor to decide whether the Court should exercise it in favour of the petitioner. We find that the petitioner had approached the Tribunal in earlier round of proceedings and he was directed to deposit an amount of Rs. 33.64 Lakh on or before 31st July, 2017 for stay of the assessment order. The petitioner did not comply with the directions of the Tribunal nor did the petitioner challenge it. Thereafter on 15th March, 2017 an order was passed by the First Appellate Authority confirming the assessment order dated 30th March, 2013. The same has now been challenged before the Tribunal and the stay of the First Appellate order (which upheld the order in original) is sought by the petitioner. This without any explanation, as to why the petitioner did not comply with the earlier orders of the Tribunal in respect of stay of the assessment order passed by the Tribunal. It must be appreciated that the order of the Tribunal passed under the Act, has sanctity attached to it. It must be followed unless stayed by a higher forum. The proceedings before the Tribunal are not to be initiated for time pass and with no intent to comply with the same, if not convenient. In these circumstances the view taken by the Tribunal does not warrant any interference in exercise of our jurisdiction under Article 226 of the Constitution of India.
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10. In these facts, the conduct of the petitioner dis- entitles it to any relief under Article 226 of the Constitution of India."
In the case of Rajiv Yashwant Bhale, the Division Bench of this Court was considering writ petition under Article 226 of the Constitution wherein the petitioner had sought to quash and set aside the sale of bungalow attached. After an elaborate discussion, the Division Bench noted that the petitioner was continuing in default till the date and no installments had been paid. The Division Bench observed that the Court's jurisdiction under Article 226 is equitable, extraordinary and discretionary and no defaulter should be allowed to take benefit thereof and observed that on that ground alone the writ petition deserves to be dismissed.
17. The Petitioners requested the Respondents to permit the Petitioners to pay the disputed dues by way of installments. When the Respondent No.3 passed an order allowing the Petitioners to pay the dues in installments, the Petitioners paid the first installment and thereafter stopped paying the installments. The appeal proceeding is pending. The installment is of the amount of penalty for misuse of Form C. The Petitioner is seeking a direction to issue Form C. Therefore, the contention of the Petitioner that this conduct is not relevant for the direction sought, is entirely incorrect. The conduct has direct bearing and nexus to the relief sought. In the circumstances, we are not inclined to exercise our writ jurisdiction.
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18. Rule 5 of the Daman Rules, 1973 specifies the authority from whom declaration Form-C may be obtained. Rule 5(1) provides that the dealer shall obtain a declaration Form-C in a manner prescribed subject to the conditions specified in the notification. The Taxation Officer can grant a such number of blank forms as may be reasonable. Rule 4 of the Bombay Rules, 1957 specifies the Authority from which and conditions subject to which Declaration Forms may be obtained. Rule 4(1A)(b) states that if any applicant has at the time of making the application, or during the time his application is pending, defaulted in furnishing any return or returns or in payment of any tax (including any penalty) due from him under any provisions of the Act, the Sales Tax Officer may withhold the issue of such forms to him, until such time as he furnishes. Absent this condition in the Daman Rules, 1973; the Petitioners contend that Form-C cannot be withheld. In the present case, the proceedings have been initiated against the Petitioners for misuse of Form-C. In these proceedings, the Petitioners had sought to pay the penalty by way installments and accepted the order and have not paid the amount. According to the Respondents, the Petitioners have already misused Form-C and penalty is levied thereon. In this context, the Respondents have sought to withhold furnishing of Form-C till the Petitioners resumes payment of installments as undertaken. Prima facie, we find merit in the contention of the Respondents that in such circumstances inherent powers exist in the authority upon noticing an abuse to prevent skn 17 3310.19.doc further abuse. It is, however, not necessary for us to conclude this issue finally for two reasons. Firstly, that we are not inclined to exercise our equity jurisdiction and, secondly, in a pending appeal the Petitioners can take up the contentions as may be available in law. The appeal of the Petitioners in respect of penalty is pending before the Tribunal. If the Petitioner requests the Tribunal to pass an order regarding issuance of Form-C, the Tribunal shall consider the said request on its own merits as per law.
19. As a result, the Writ Petition is dismissed. Rule is discharged. No costs.
(M.S. KARNIK, J.) (NITIN JAMDAR, J.)