WP(C)/6113/2022 on 6 June, 2025

June 11, 2025

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Gauhati High Court

WP(C)/6113/2022 on 6 June, 2025

M/S Bharat Trading Corporation,
A partnership firm registered under the Partnership Act,
1932 having its office at 76 MS Road, Athgaon,
Guwahati-781001, Assam and in the present
proceedings, represented by one of its partner, Shri
Tarun Jain.

……..Petitioner

-Versus-

1. State of Assam
Represented by the Commissioner & Secretary to
the Government of Assam, Department of Finance
& Taxation, Dispur, Guwahati-781006

2. Commissioner of State Taxes (Earlier Known
as Commissioner of Taxes) Kar Bhawan, Dispur,
Guwahati-781006

3. Superintendent of Taxes, Unit-C, Guwahati,
Kar Bhawan, Dispur, Guwahati-781006

4. Hindustan Paper Corporation Ltd., Having its
registered office in Scope Miner Comples, Laxmi
Nagar, District Centre, New Delhi-110092 and in the
present proceedings represented by its liquidator
Mr. Kuldeep Verma who is a Registered Insolvency
Professional with Insolvency and Bankruptcy Board
of India having registration No. IBBI/IPA-001-IP-
P00014/2016-17/10038 and having its office at 46
BB Ganguly Street, 5th Floor, Unit No. 501, Kolkata

……..Respondents
W.P(C) NO. 6112/2022
M/S Bharat Trading Corporation,
A partnership firm registered under the Partnership Act,
1932 having its office at 76 MS Road, Athgaon,
Guwahati-781001, Assam and in the present

Page 2 of 66
proceedings, represented by one of its partner, Shri
Tarun Jain.

……..Petitioner

-Versus-

1. State of Assam
Represented by the Commissioner & Secretary to
the Government of Assam, Department of Finance
& Taxation, Dispur, Guwahati-781006

2. Commissioner of State Taxes (Earlier Known
as Commissioner of Taxes) Kar Bhawan, Dispur,
Guwahati-781006

3. Superintendent of Taxes, Unit-C, Guwahati,
Kar Bhawan, Dispur, Guwahati-781006

……..Respondents
W.P(C) NO. 6113/2022
M/S Bharat Trading Corporation,
A partnership firm registered under the Partnership Act,
1932 having its office at 76 MS Road, Athgaon,
Guwahati-781001, Assam and in the present
proceedings, represented by one of its partner, Shri
Tarun Jain.

……..Petitioner

-Versus-

1. State of Assam
Represented by the Commissioner & Secretary to
the Government of Assam, Department of Finance
& Taxation, Dispur, Guwahati-781006

2. Commissioner of State Taxes (Earlier Known
as Commissioner of Taxes) Kar Bhawan, Dispur,
Guwahati-781006

Page 3 of 66

3. Superintendent of Taxes, Unit-C, Guwahati,
Kar Bhawan, Dispur, Guwahati-781006

……..Respondents

-BEFORE-

HON’BLE MR. JUSTICE SOUMITRA SAIKIA

Advocate for the petitioner(s) :Dr. A. Saraf, Sr. Advocate
Mr. P.K. Bora, Advocate

Advocate for the respondents :Mr. B. Choudhury, Standing Counsel,
Finance & Taxation Department
Dates of Hearing : 27.01.2025, 27.02.2025 & 04.03.2025

Date of Judgment & Order : 06.06.2025

JUDGMENT AND ORDER (CAV)

The writ petitioner before this Court is a partnership firm

registered under the Partnership Act, 1932 and having its Office at

76 MS Road, Athgaon, Guwahati-781001, Assam. The petitioner is a

dealer engaged in sale and supply of acids and chemicals. All the

partners of the petitioner firm are citizens of India and as such they

are entitled to all the rights and privileges guaranteed under the

Constitution of India and the laws framed thereunder from time to

time. The petitioner firm at the relevant year was duly registered

under the Central Sales Tax Act, 1956 (hereinafter referred to as ” the

Page 4 of 66
Act of 1956″) and is represented before this Court by one the

partners.

2. For the period 2013-14, the petitioner firm made supplies of

caustic soda to Hindustan Paper Corporation Ltd. namely the

respondent No. 4 by way of e-way transactions and raised bills on

the respondent No.4/ Company in respect of which the said company

was required to issue declaration Forms “C” under the provisions of

the Act of 1956.

3. It is submitted that the petitioner received an order from the

Hindustan Paper Corporation Limited for supply of caustic soda. The

Petitioner purchased the said item from a registered dealer outside

the State of Assam and when the goods were in course of movement

in inter-state trade and commerce by transfer of documents of title

to the goods, supplied the same to the Hindustan Paper Corporation

Limited. Such supply is a subsequent sale in course of inter-state

trade and commerce. As per Section 16(2) of the Central Sales Tax

Act, 1956, subsequent sale made in course of interstate trade and

commerce is exempted from the payment of Central Sales Tax on the

dealer furnishing a declaration Form – ‘E-1’ from the dealer making

the first sale and a declaration in Form — ‘C’ from the recipient of the

goods i.e. ultimate purchaser. Thereby the Petitioner was required to

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produce Form — ‘E-1’ from dealer outside the State of Assam from

whom the Petitioner purchased the caustic soda in course of

interstate trade and commerce and a declaration Form –‘C’ from the

Hindustan Paper Corporation Limited and on production of the ‘E-1’

Form and ‘C’ Form, the Petitioner was not liable to make payment of

the Central Sales Tax in respect of the supply of caustic soda to the

Hindustan Paper Corporation of India.

4. It is submitted that the Petitioner raised the bills on account of

supply of caustic soda by making a subsequent sale for transfer of

document title of goods during the movement of the said goods

during inter-state trade and commerce and procured Form — ‘E-1’

from the first selling dealer and clearly mentioned in the invoices

issued to the Hindustan Paper Corporation Limited that the sale

remain even sales transactions and the name of the first supplier of

the goods was also mentioned. In the said invoices it was also clearly

mentioned that the Form ‘C’ was to be received from the Hindustan

Paper Corporation Limited.

5. It is submitted that during the year 2013-14, the Petitioner

made E-1 purchases to the tune of Rs. 5,85,96,987/- (including tax)

and made E-1 sales to the tune of Rs. 7,53,13,785/- to the Hindustan

Paper Corporation Limited. The Hindustan Paper Corporation

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submitted its ‘C’ Forms covering an amount of Rs. 7,42,48,275/- to

the Petitioner and the balance ‘C’ Forms amounting to Rs.

10,65,510/- were not issued by the Hindustan Paper Corporation

namely respondent No. 4.

6. It is submitted that the Petitioner was continuously following and

taking up the matter with the Hindustan Paper Corporation Limited

for issuance of the balance ‘C’ Forms through various letters and e-

mails but the said ‘C’ Forms were not issued to the Petitioner.

7. It is submitted that the Hindustan Paper Corporation Limited

vide letter dated 14.06.2017 addressed to the Petitioner in response

to the e-mail dated 05.06.2017 informed that the Cachar Paper Mill,

an unit of the Hindustan Paper Corporation Limited was in extreme

financial crisis for the last past few years. It was stated that the Mill

production had been suspended since October, 2015 due to fund

crisis and scarcity of Fuel/Coal which has arisen due to ban imposed

by National Green Tribunal in extraction and transportation of Coal in

and from Meghalaya, which is the main fuel source to Cachar Paper

Mill. It was further stated that due to sub-optimal production and

prolonged suspension of production, fund crisis has deepened and

the Hindustan Paper Corporation Limited could not clear the

statutory dues to the State Sales Tax Authority. Consequently the

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Sales Tax Department was not issuing C-Forms to the Cachar Paper

Mill since November, 2015. It was further stated in the said letter

that the Hindustan Paper Corporation Limited has taken up the

matter to the appropriate authority for providing fund and once fund

is received, the Corporation shall clear the Government dues and ‘C’

Form will be collected will thereafter be issued to the Petitioner.

8. It is submitted that since the Hindustan Paper Corporation

Limited did not issue the ‘C’ Form and the assessment proceedings

were taken up by the Assessing Authority, the Petitioner vide letter

dated 05.08.2017 informed the Superintendent of Taxes that the

Hindustan Paper Corporation was yet to issue the ‘C’ Forms against

the sales made to the Hindustan Paper Corporation Limited for the

various assessment years. The Superintendent of Taxes accordingly

on receipt of the said letter, vide letter dated 22.09.2017, addressed

to the Manager Finance, Hindustan Paper Corporation Limited,

Nagaon Paper Mill and enquired about the Petitioner’s claim of non-

issuance of ‘C’ Forms by the Hindustan Paper Corporation Limited. In

the said letter, it was stated that every registered dealer is required

to submit statutory Form ‘C’ for inter-state sales of taxable goods and

it is to be submitted for every quarter ending for which they can

claim exemption under sub-section (2) of Section 6, read with Rule

12(4)/concessional rate of tax under sub-Section (4) of Section 8 of

Page 8 of 66
Central Sales Tax Act, 1956 read with Rule 12(1) of the Central Sales

Tax (Registration and Turnover) Rules, 1957. It was further stated in

the said letter that If the dealer fails to submit such statutory forms

before the Assessing Officer within the stipulated time, his claims will

not be entertained and such sales will be treated to be sale to

unregistered dealer and levy-able of existing rate of VAT as per law.

The Superintendent of Taxes was requested to confirm the matter

whether the dealer’s claims of such huge pending amounts of ‘C’

Form with Hindustan Paper Corporation Limited, Jagiroad against ‘E-

1’ sales is genuine and further that if the same is correct, inform the

reason of non-issuance of statutory forms so that the assessing

authority can be proceed with the higher authority and if claim of the

Petitioner is not genuine, then assessment will be completed as per

the provision of Central Sales Tax, Act, 1956.

9. It is submitted that the Superintendent of Taxes, Guwahati,

Unit C without awaiting for the reply from respondent No. 4

thereafter completed the assessment of the petitioner company for

the period 2013-14 and vide order of assessment dated 05.05.2019

imposed an amount of Rs. 7, 58, 759/- on account of tax, interest

and penalty.

Page 9 of 66

10. It is submitted by the learned Senior counsel for the petitioner

that in the meantime the National Company Law Tribunal in

Company Appeal (AT) Insolvency No. 585/2019 dated 02.05.2019

passed an order of liquidation in respect of the Respondent

Corporation and liquidator was appointed. The Tribunal vide order

dated 26.08.2020 in I.A. No. 3150/2020 directed the liquidator to

convene a meeting of committee of stakeholders and place the

scheme for its consideration and also directed the liquidator to file

the status report \containing the outcome of the meeting. The

meeting of the Stakeholder Consultation Committee was held on

02.09.2020 in which meeting the proposal/scheme submitted by MCL

was not found to be feasible by the financial creditors,

employees/workmen and the operational creditors. The Government

of Assam also submitted two letters seeking one month time as the

State Government was making efforts with the Central Government

for revival of closed mills and another letter dated 29.01.2020

seeking additional time to work out details of its proposal.

11. It is submitted that the National Company Law Tribunal vide

order dated 26.04.2021 directed the liquidator to follow the decision

of the NCLAT in Company Appeal (AT) Insolvency No. 585/2019 to

sell the corporate debtor as going concern. The two units of the

Respondent Corporation, namely, Nagaon Paper Mill and Cachar

Page 10 of 66
Paper Mill were non-operational since March 2017 and October, 2015

respectively. Accordingly the liquidator took steps to sell the

Respondent Corporation as a going concern as per Regulation 32E of

the Insolvency and Bankruptcy Board of India (Liquidation Process),

Regulation, 2016. Ultimately the State of Assam took over the assets

of both the paper mills of the Respondent Corporation by paying a

sum of Rs. 375 crores through a transparent bidding process and

thereby the State of Assam became the owner of the two paper mills

of the Respondent Corporation.

12. It is submitted that the impugned demand raised on the

Petitioner by the order of assessment 05.05.2019 is for non-

submission of the ‘C’ Forms by the petitioner which were to be

furnished by the Hindustan Paper Corporation Limited.

13. It is submitted that the ‘C’ Forms were to be procured by the

Hindustan Paper Corporation Limited from the Taxation Department

of the State of Assam and the Taxation Department of the State of

Assam was not issuing the said ‘C’ Forms to the Hindustan Paper

Corporation Limited because of the pending tax demand against the

said Corporation. In so far as the Petitioner is concerned, the

Petitioner having made the supply to Hindustan Paper Corporation

Limited on the condition that ‘C’ Forms be supplied by the

Page 11 of 66
Respondent Corporation and the impugned demand raised on the

Petitioner being for failure to submit the ‘C’ Forms which were not

supplied by the Hindustan Paper Corporation Limited and the said

Corporation having been taken over by the State of Assam, the

Taxation Department of the State of Assam were liable to supply the

said ‘C’ Forms to the Hindustan Paper Corporation Limited so the said

‘C’ Forms may be supplied to the Petitioner for onwards submission

of the same before the assessing authority or the State of Assam is

liable to be directed to exempt the Petitioner, by issuing an

appropriate Notification under Section 8(5) of the Central Sales Tax

Act, 1956, from the liability of submission of the ‘C’ Forms in respect

of the transaction of sales made to the Hindustan Paper Corporation

Limited in respect of which the Hindustan Paper Corporation Limited

could not supply the ‘C’ Forms.

14. As the C-Forms were not received and the Orders of

Assessment were getting barred by limitation, the Superintendent of

Taxes, Guwahati, Unit-C completed the assessment of the petitioner

Company for the period 2014-15 and vide order of assessment dated

05.05.2019 imposed an amount of Rs. 2,73,120/- on account of tax,

interest and penalty. The said Order of Assessment is subject-matter

of challenge in W.P(C) No. 6111/2022.

Page 12 of 66

The C-Forms were also not received for the assessment year

2015-16 and as the Orders of Assessment were getting barred by

limitation, the Superintendent of Taxes, Guwahati, Unit-C completed

the assessment of the petitioner company for the period 2015-16

and vide order of assessment dated 08.05.2019 imposed an amount

of Rs. 36,58,393/- on account of tax, interest and penalty. The said

Order of Assessment is subject-matter of challenge in W.P(C) No.

6112/2022.

The C-Forms were also not received for the assessment year

2016-17 and as the Order of Assessment were getting barred by

limitation, the Superintendent of Taxes, Guwahati, Unit-C completed

the assessment of the petitioner company for the period 2016-17

and vide order of assessment dated 08.05.2019 imposed an amount

of Rs. 1,10,94,281/- on account of tax, interest and penalty. The said

Order of Assessment is subject matter of challenge in W.P.(C) No.

6113/2022.

15. All these writ petitions having been filed by the same petitioner

but in respect of the transactions covered by different periods raises

the similar questions of law as such these writ petitions are taken up

together for hearing and disposal.

Page 13 of 66

16. The learned Senior counsel for the petitioner submits that the

petitioner purchased the item namely caustic soda from a registered

dealer outside the State of Assam in course of inter-State trade and

commerce and when the goods were in course of movement in the

course of inter-State trade and commerce, supplied the same to the

Hindustan Paper Corporation Limited by transfer of document title of

the goods as a subsequent sale in course of inter-State trade and

commerce.

17. It is submitted that as per Section 6(2) of the Central Sales Tax

Act, 1956 the subsequent sale made in course of inter-State trade

and commerce is exempted from the payment of Central Sales Tax

on the dealer furnishing a declaration Form- ‘E-1’ from the dealer

making the first sale of inter-State trade and commerce and

declaration in Form- ‘C’ from the recipient of the goods i.e. ultimate

purchaser. The petitioner was required to produce Form- ‘E-1’ from

dealer outside the State of Assam from whom the petitioner

purchased the caustic soda in course of inter-state trade and

commerce and a declaration Form- ‘C’ from the Hindustan Paper

Corporation Limited. On production of the ‘E-1’ Form and ‘C’ Form,

the petitioner was not liable to make payment of the Central Sales

Tax in respect of the supply of caustic soda to the Hindustan paper

Corporation of India.

Page 14 of 66

18. It is submitted that the impugned demand raised on the

Petitioner by the order of assessment 05.05.2019 is for non-

submission of the ‘C’ Forms by the Petitioner which were to be

furnished by the Hindustan Paper Corporation Limited. It is submitted

that the ‘C’ Forms were to be procured by the Hindustan Paper

Corporation Limited from the Taxation Department of the State of

Assam and the Taxation Department of the State of Assam had

declined to issue the said ‘C’ Forms to the Hindustan Paper

Corporation Limited because of the pending tax demand against the

said Corporation. In so far as the Petitioner is concerned, the

Petitioner having made the supply of goods to Hindustan Paper

Corporation Limited on the condition that ‘C’ Forms be supplied by

the Respondent Corporation and the impugned demand raised on the

Petitioner being for failure of the petitioner to submit the ‘C’ Forms

which were not supplied by the Hindustan Paper Corporation Limited

and that the said Corporation having been taken over by the State of

Assam pursuant to orders passed by the NCLT/NCLAT during the

insolvency proceedings, the Taxation Department of the State of

Assam is liable to be directed to exempt the Petitioner, by issuing an

appropriate Notification under Section 8(5) of the Central Sales Tax

Act, 1956, from the liability of submission of the ‘C’ Forms in respect

of the transaction of sales made to the Hindustan Paper Corporation

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Limited in respect of which the Hindustan Paper Corporation Limited

could not supply the ‘C’ Forms.

19. It is further submitted that on the one hand the Petitioner had

not received the sales consideration in respect of the supply of goods

made to the Hindustan Paper Corporation Limited and on the other

hand, the sales made to the Hindustan Paper Corporation Limited

has been treated to be sales made to unregistered dealers and tax

have been imposed at the rate as applicable to the unregistered

dealers and interest also levied on the same. It is submitted that as

per the provisions of the Central Sales Tax Act, 1956, a dealer can

avail the concessional rate of tax for supply of goods during the

inter-state trade or commerce to a registered dealer only on

furnishing of declaration Form ‘C’ and the Petitioner having supplied

the goods to the Respondent Corporation who was a registered

dealer under the Central Sales Tax Act, 1956 at the relevant point of

time with a clear understanding that ‘C’ Forms would be supplied to

the Petitioner, it was obligatory on the part of the Hindustan Paper

Corporation Limited to have supplied the ‘C’ Forms to the Petitioner

for onward submission to the State Tax Department for availing the

benefit of exemption under Section 6(2) of the Act of 1956. It is

pertinent to mention herein that the Petitioner in the bills raised had

only charged the taxes at a concessional rate on a clear

Page 16 of 66
understanding that the Hindustan Paper Corporation Limited can

supply requisite ‘C’ Forms in support of the said sales made to the

Respondent Corporation. The Respondent Corporation expressed its

difficulties in issuing the ‘C’ Forms on the ground that the Taxation

Department had not issued the ‘C’ Forms to the Corporation for its

failure to clear it’s outstanding tax demand. It is the case of the

Petitioner that cannot be made liable to pay tax as applicable to the

unregistered dealer when the Petitioner made the supply to the

Respondent Corporation on a clear understanding that the ‘C’ Forms

shall be supplied to the Petitioner. The said Corporation now having

been taken over by the Government of Assam and the tax demand

raised on the Petitioner being on account of failure to submit the ‘C’

Forms which were to be furnished by the Respondent Corporation, it

is the duty of the State of Assam to supply the ‘C’ Forms to the

Petitioner so that the Petitioner may submit the same before the

assessing authority in order that the demand raised on the Petitioner

in the order of assessment for non-furnishing of the ‘C’ Forms may

be wiped off.

20. It is submitted that in the peculiar facts and circumstances of

the case as the tax demand by the taxing authorities is on account of

non-furnishing of the ‘C’ Forms which is now owned by the State of

Page 17 of 66
Assam and under such circumstances, the State of Assam may by

invoking the power under Section 8(5) of the Central Sales Tax Act,

1956 may issue an proper notification granting relief to the Petitioner

for furnishing of the ‘C’ Forms in respect of the sales made to the

Respondent Corporation.

21. Referring to the Central Sales Tax Act, 1956, the learned Senior

counsel submits that the Notification under Section 8(5) of the

Central Sales Tax Act, 1956 is to be issued in public interest and in

the present case, public interest will be better served if the said

Notification is issued inasmuch as on the one hand the Petitioner had

not received the sale consideration for the sale of the products to the

Respondent Corporation including the concessional rate of tax

charged by it and on the other hand the Petitioner has been made

liable to pay huge amount of tax calculated to the rate applicable to

the un-registered dealers for no fault of the Petitioner inasmuch as

the Respondent Corporation expressed not to supply the ‘C’ Forms

and sought for some time as the said ‘C’ Forms were not supplied to

the Respondent Corporation by the Taxation Department for the non-

payment of dues by the Respondent Corporation. Under such

circumstances, the State of Assam, who is the owner of the

Respondent Corporation now is liable to be directed by the Court to

take necessary steps for granting exemption to the petitioner from

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furnishing of the ‘C’ Forms in respect of the sales made by the

Petitioner to the Respondent Corporation.

22. It is submitted that the petitioner cannot be made liable to pay

the demand raised vide assessment orders dated 05.05.2019 and

08.05.2019 for failure on part of the respondent No. 4 to furnish the

pending C Forms to the petitioner. The said pending ‘C’ Forms were

to be procured by the respondent No. 4- Hindustan Paper

Corporation Limited from the Taxation Department of the State of

Assam and which Form-‘C’ were not issued by the Taxation

Department of the State of Assam to the Hindustan Paper

Corporation Limited because of the pending tax demand against the

said Corporation. Since there was no fault or negligence on part of

the petitioner the impugned order of assessment dated 05.05.2019 is

illegal, arbitrary and the same is liable to be set aside and or

quashed.

23. In support of his contentions, he has referred to an order

passed by the Assam Board of Revenue in M/S Radiant

Manufacturers Private Limited Vs. The Deputy Commissioner of

Taxes (Appeals) Guwahati in Case No. 40 STA/2013 & 41 STA/2013.

Referring to the said order, Dr. Saraf submits that where the facts

reveal that it was indeed an inter-State sale under the provisions of

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the Act of 1956 and the benefit accrued to the petitioner has been

denied merely because the ‘C’ Form required to have been supplied

by the respondent No. 4 were not furnished because the same were

not issued by the Department because of certain tax issues relating

to the said company, that should not debar the authorities from

granting the benefit to the petitioner as available under the

provisions of the Act of 1956.

24. It is submitted that the nature of the inter-State sales has not

been denied by the authorities and therefore the denial of the

benefits accrued to the petitioner under the provisions of Section 8 of

the Act of 1956 cannot be curtailed as there is no fault of the

petitioner which had led to the non-issuance of the ‘C’ forms to the

respondent No. 4. In view of the arguments made, it is submitted

that the impugned order is illegal, arbitrary and the same is liable to

be set aside and quashed and the State Government be also directed

to take necessary steps for granting exemption to the petitioner from

furnishing ‘C’ Forms in respect of the sales made by the petitioner to

the respondent corporation.

25. The respondents have contested the case by filing affidavit in

opposition disputing the claims made by the petitioner.

Page 20 of 66

26. It is submitted by the respondents that the reference to Section

8(2)(A) and Section 8(2)(B) in the writ petitions are misplaced as

the same has already been omitted from the statute and has no

relevance in respect of the facts of this case. It is submitted that

reference to Sections omitted from the statute are nothing but an

attempt to mislead the Court. The respondents dispute the case

projected by the petitioner and further dispute the contention of the

petitioner that the transaction of sale was covered under the

provisions of Section 6(2). It is stated that the petitioner had

admitted that it had received order for supply of caustic soda from

the Hindustan Paper Corporation and thereafter it had purchased the

said item from the registered dealer outside the State and when the

goods were in the course of movement in the inter-State Trade and

Commerce, by transfer of document title to the goods, the same

were supplied to Hindustan Paper Corporation and therefore this

transaction cannot be said to be covered under Section 6(2).

Referring to Section 6(2), it is submitted by the respondents that the

facts narrated in the present case make it amply clear that the

instant transaction cannot be said to be a transaction covered under

Section 6(2) of the Act of 1956. It is further submitted that the

petitioner is aware regarding the declaration in Form-C which is

mandatory under the provisions of the Act to avail the benefits

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prescribed. It was incumbent on the petitioner to obtain the duly

signed C forms from the purchaser and the same was required to be

furnished by the seller namely the petitioner to the prescribed

authority within a period of three months from the end of the period

to which the form relates as per Rule 12(7) of the CST (Registration

and Turnover) Rules, 1957 (hereinafter referred to as ” the Rule of

1957″). The respondents therefore submit that the mandatory

provisions prescribed under the Act of 1956 and the Rules of 1957 as

required have not been complied with by the petitioner and

consequently the impugned demands came to be issued and

therefore in view of the submissions made does not call for any

interference by the Court.

27. It is submitted that the concession under Section 8(5) of the

Act of 1956 can be granted by the State Government if it is

necessary to do so in public interest, however, in the facts of the

present case such an exercise is not called for as there is no public

interest involved. The benefit is to be conferred by the State under

provisions of Section 8(5) is not to confer benefit only to a private

individual. Although in terms of the Judgment of the Apex Court

rendered in Shree Digvijay Cement Company Limited Vs. State of

Rajasthan and ors, reported in (2000) 117 STC 395 (SC) wherein the

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power of the State Government to waive the condition of submission

of ‘C’ form or ‘D’ Form was held to be available, but in view of the

amendment by Section 152 of the Finance Act of 2002, the State

Government now cannot waive the requirement. Therefore the

prayer for issuance of notification under Section 8(5) of CST Act

cannot be permitted as it is not in accordance in law. It is submitted

that if the petitioner wishes to avail the benefit prescribed under the

statute, then the procedure prescribed must also be fulfilled.

28. In rejoinder, the learned Sr. counsel reiterates his submissions

made earlier. It is further submitted that the petitioner was regularly

following up the matter with the Hindustan Paper Corporation for

collection of the pending ‘C’ forms. He has referred to the enclosures

in the writ petition in support of his contentions that the letter and E-

mails have already been issued to the corporation and the

Corporation in turn had assured for furnishing the ‘C’ Forms as early

as possible. It is submitted that only through the communication

dated 14.06.2017 issued by the Hindustan Paper Corporation that

the petitioner came to be aware about the non-payment of taxes by

the Corporation resulting in non-issuance of ‘C’ forms by the

Department to the Corporation and in turn the same could not be

supplied to the petitioner. This information was not known to the

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petitioner prior to the communication dated 14.06.2017. It is further

submitted that the assessments for the Financial Year 2013-14,

2014-15, 2015-16 and 2016-17 were completed almost after five

years. There was no pre-assessment communication or reminder

issued by the Tax Department for submission of pending ‘C’ forms.

As such, the department also appeared to have been sitting over the

matter. It is further submitted that as on date the assets and

liabilities of the respondent No. 4 Corporation have already been

taken over by the State and therefore they are required to exempt

furnishing of the ‘C’ forms by the petitioner under the provisions of

law.

29. In so far as the submissions of the respondents regarding the

amendment of Section 8(5) of the CST Act with effect from

11.05.2022 and that the power to grant exemption under Section

8(5) is subject to fulfillment of the requirement under 8(4), the

learned senior counsel for the petitioner submits that the power to

grant exemption by the State Government is not affected even after

the amendment. It is submitted that even after the amendment of

Section 8(5) of the Act of 1956, the power of the State Government

to grant total or partial exemption in respect of the inter-State sales

covered by Section 8(2) of the Act is not affected. In this regard the

Page 24 of 66
petitioner presses into service a Judgment of Bombay High Court

rendered in M/S. Prism Cement Limited and Another vs. State of

Maharashtra and Others, Writ Petition No. 6475 of 2009.

30. The learned counsel for the parties have been heard. Pleadings

have perused. The Judgments pressed into the bar has also been

carefully perused.

31. The facts in this matter are not disputed. For convenience a

brief reference to the facts is also required. The petitioner is a dealer

engaged in the sale and supply of acid and chemicals. In response to

an order received from Hindustan Paper Corporation namely

respondent No. 4 for supply of caustic soda, the petitioner purchased

the said item from the registered dealer outside the state of Assam

and when the goods were in the course of movement in the course

of inter-State trade and Commerce by transfer of document titled to

the goods, the sale was completed to the Hindustan Paper

Corporation. Pursuant to the sale made by the petitioner, bills on

account of the sale and supply of the goods were raised. In the

invoices where were raised, there was a mention that the sale was E-

1 sales transactions and the name of the first supplier of the goods

were also mentioned and it was also mentioned that the ‘C’ Forms

were to be received from respondent No. 4- Hindustan Paper

Page 25 of 66
Corporation. According to the petitioner inspite of regular follow-ups

with the respondent No. 4 regarding the supply of ‘C’ Forms, the

same were not released. Subsequently by communication dated

14.06.2017 issued by the respondent No.4- Hindustan Paper

Corporation in response to an E-mail dated 05.06.2017 issued by the

writ petitioner, it was informed that the Corporation was in extreme

financial crisis for the last few years and that the mill production has

been suspended since October, 2015 due to fund crisis and scarcity

of fuel/coal which had arisen due to ban imposed by the National

Green Tribunal in extraction and transportation of coal in and from

Meghalaya, which was the main source of fuel to the paper mill.

Since Form ‘C’ could not be submitted by the petitioner in support of

the sales stated to have been made, the assessment proceedings

were initiated by the authorities concerned and the benefit claimed

by the petitioner stood rejected by the impugned order passed for

the respective assessment years.

32. In order to appreciate the submisssions made before this

Court, it will be necessary to refer to the provisions of the Act.

33. Section 3 of the Central Sales Tax Act, 1956 provides for levy

of taxes when sale and purchase takes place in the course of inter-

state trade and commerce. Section 3 of the CST Act, 1956 formulates

Page 26 of 66
the principles for determining when sale and purchase of goods is

said to take place in course of interstate trade and commerce.

Section 3 is reproduced below for the sake of convenience:

“Section 3. When is a sale or purchase of goods said to take
place in the course of inter-State trade or commerce.
A sale or purchase of goods shall be deemed to take place in the
course of inter-State trade or commerce if the sale or purchase– (a)
occasions the movement of goods from one State to another; or

(b) is effected by a transfer of documents of title to the goods during
their movement from one State to another.

Explanation 1 — Where goods are delivered to a carrier or other
bailee for transmission, the movement of the goods shall, for the
purposes of clause (b), be deemed to commence at the time of
such delivery and terminate at the time when delivery is taken
from such carrier or bailee.

Explanation 2 — Where the movement of goods commences and
terminates in the same State it shall not be deemed to be a
movement of goods from one State to another by reason merely
of the fact that in the course of such movement the goods pass
through the territory of any other State.”

34. Section 6 of the CST Act is the main charging provision under

the Act. Section 6 provides for the liability to pay tax on interstate

sales. Section 6 of the CST Act is reproduced herein below:

“6. Liability to tax on inter-State sales.– [(1)] Subject to the
other provisions contained in this Act, every dealer shall, with
effect from such date4 as the Central Government may, by
notification in the Official Gazette, appoint, not being earlier than
thirty days from the date of such notification, be liable to pay tax
under this Act on all sales [of goods other than electrical energy]
effected by him in the course of inter-State trade or commerce
during any year on and from the date so notified:

[Provided that a dealer shall not be liable to pay tax under this Act
on any sale of goods which, in accordance with the provisions of
sub-section (3) of section 5 is a sale in the course of export of
those goods out of the territory of India.]

Page 27 of 66
[(1A) A dealer shall be liable to pay tax under this Act on a sale of
any goods effected by him in the course of inter-State trade or
commerce notwithstanding that no tax would have been leviable
(whether on the seller or the purchaser) under the sales tax law of
the appropriate State if that sale had taken place inside that State.]

[(2) Notwithstanding anything contained in sub-section (1) or sub-
section (1A), where a sale of any goods in the course of inter-State
trade or commerce has either occasioned the movement of such
goods from one State to another or has been effected by a transfer
of documents of title to such goods during their movement from
one State to another, any subsequent sale during such movement
effected by a transfer of documents of title to such goods to a
registered dealer, if the goods are of the description referred to in
sub-section (3) of section 8, shall be exempt from tax under this
Act:

Provided that no such subsequent sale shall be exempt from tax
under this subsection unless the dealer effecting the sale furnishes
to the prescribed authority in the prescribed manner and within the
prescribed time or within such further time as that authority may,
for sufficient cause, permit,–

(a) a certificate duly filled and signed by the registered dealer from
whom the goods were purchased containing the prescribed
particulars in a prescribed form obtained from the prescribed
authority; and

(b) if the subsequent sale is made to a registered dealer, a
declaration referred to in subsection (4) of section 8:

Provided further that it shall not be necessary to furnish the
declaration referred to in clause (b) of the preceding proviso in
respect of a subsequent sale of goods if,–

(a) the sale or purchase of such goods is, under the sales tax law of
the appropriate State exempt from tax generally or is subject to tax
generally at a rate which is lower than three percent, or such
reduced rate as may be notified by the Central Government, by
notification in the Official Gazette, under sub-section (1) of section
8 (whether called a tax or fee or by any ether name); and

(b) the dealer effecting such subsequent sale proves to the
satisfaction of the authority referred to in the preceding proviso that
such sale is of the nature referred to in this subsection.]

Page 28 of 66
[(3) Notwithstanding anything contained in this Act, no tax under
this Act shall be payable by any dealer in respect of sale of any
goods made by such dealer, in the course of inter-State trade or
commerce, to any official, personnel, consular or diplomatic agent
of–

(i) any foreign diplomatic mission or consulate in India; or

(ii) the United Nations or any other similar international body,

entitled to privileges under any convention or agreement to which
India is a party or under any law for the time being in force, if such
official, personnel, consular or diplomatic agent, as the case may
be, has purchased such goods for himself or for the purposes of
such mission, consulate, United Nations or other body.

(4) The provisions of sub-section (3) shall not apply to the sale of
goods made in the course of interState trade or commerce unless
the dealer selling such goods furnishes to the prescribed authority a
certificate in the prescribed manner on the prescribed form duly
filled and signed by the official, personnel, consular or diplomatic
agent, as the case may be.]

[(6A) Burden of proof, etc., in case of transfer of goods claimed
otherwise than by way of sale.–

(1) Where any dealer claims that he is not liable to pay tax under
this Act, in respect of any goods, on the ground that the movement
of such goods from one State to another was occasioned by reason
of transfer of such goods by him to any other place of his business
or to his agent or principal, as the case may be, and not by reason
of sale, the burden of proving that the movement of those goods
was so occasioned shall be on that dealer and for this purpose he
may furnish to the assessing authority, within the prescribed time or
within such further time as that authority may, for sufficient cause,
permit, a declaration, duly filled and signed by the principal officer of
the other place of business, or his agent or principal, as the case
may be, containing the prescribed particulars in the prescribed form
obtained from the prescribed authority, along with the evidence of
despatch of such goods 1 [and if the dealer fails to furnish such
declaration, then, the movement of such goods shall be deemed for
all purposes of this Act to have been occasioned as a result of sale].

(2) If the assessing authority is satisfied after making such inquiry as
he may deem necessary that the particulars contained in the
declaration furnished by a dealer under sub-section (1) are true he
may, at the time of, or at any time before. the assessment of the tax

Page 29 of 66
payable by the dealer under this Act, make an order to that effect
and thereupon the movement of goods to which the declaration
related shall be deemed for the purpose of this Act to have been
occasioned otherwise than as a result of sale.”

35. Section 8 of the CST Act, 1956 deals with rates of tax on sales

in the course of inter state trade and commerce. Relevant part of

section 8 is reproduced below:

8. Rates of tax on sales in the course of inter-State trade or
commerce:–

(1) Every dealer, who in the course of inter-State trade or commerce,
sells to a registered dealer goods of the description referred to in sub-

section(3); shall be liable to pay tax under this Act, which shall be
three per cent, of his turnover or at the rate applicable to the sale or
purchase of such goods inside the appropriate State under the Sales
Tax Law of that State, whichever is lower; Provided that the Central
Government may, by notification in the Official Gazette, reduce* the
rate of tax under this sub-section.

(2) The tax payable by any dealer on his turnover in so far as the
turnover or any part thereof relates to the sale of goods in the course
of inter-State trade or commerce not falling within sub-section (1),
shall be at the rate applicable to the sale or purchase of such goods
inside the appropriate State under the sales tax law of that State.
Explanation:- For the purposes of this sub-section, a dealer shall be
deemed to be a dealer liable to pay tax under the sales tax law of the
appropriate State, not withstanding that he, in fact, may not be so
liable under that law:

(3) The goods referred to in sub-section (1):—

(a) (Deleted from 1st April 1963);

(b) are goods of the class or classes specified in the Certificate of
Registration of the registered dealer purchasing the goods as being
intended for re-sale by him or subject to any Rules made by the
Central Government in this behalf, for use by him in the manufacture
of processing of goods for sale or in the telecommunications network
or] in mining or in the generation or distribution of electricity or any
other form of power;

(c) are containers or other materials specified in the Certificate of
Registration of the registered dealer purchasing the goods, being
containers or materials intended for being used for the packing of
goods for sale;

Page 30 of 66

(d) are containers or other materials used for the packing of any
goods or classes of goods specified in the certificate of registration
referred to in clause (b) or for the packing of any containers or other
materials specified in the Certificate of Registration referred to in
clause (c).

(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.

5) Notwithstanding anything contained in this section, the State
Government may [on the fulfillment of the requirements laid down
in sub- section (4) by the dealer] if it is satisfied that it is necessary
so to do in the public interest, by notification in the Official Gazette
and subject to such conditions as may be specified therein direct,–

(a) that no tax under this Act shall be payable by any dealer having
his place of business in the State in respect of the sales by him, in
the course of inter-State trade or commerce, [to a registered
dealer from any such place of business of any such goods or
classes of goods as may be specified in the notification, or that the
tax on such sales shall be calculated at such lower rates than those
specified in sub-section (1) as may be mentioned in the
notification;

(b) that in respect of all sales of goods or sales of such classes of
goods as may be specified in the notification, which are made, in
the course of inter-State trade or commerce [to a registered dealer
] by any dealer having his place of business in the State or by any
class of such dealers as may be specified in the notification to any
person or to such class of persons as may be specified in the
notification, no tax under this Act shall be payable or the tax on
such sales shall be calculated at such lower rates than those
specified in subsection (1) as may be mentioned in the
notification.]
(6) *** *** ***
(7) *** *** ***
(8) *** *** ***

36. A perusal of the above provisions reveal that Section 3 of the

CST Act makes it clear that the conditions and circumstances laid

Page 31 of 66
down as necessary and essential for a sale to be in the course of

inter-State trade or commerce under section 3(a) are:

(i) firstly, there must be a completed sale of goods, i.e., any

transfer of property in goods by one person to another

for cash or for deferred payment or for any other

valuable consideration; and

(ii) secondly, such sale should occasion the movement of

goods from one State to another State, meaning that the

relevant contract of sale provides that goods will be so

moved from one State to another and that by reason of

the sale.

With regard to Section 3(b) of the Act, an inter-State sale is one

which is effected by transfer of documents of title to the goods in the

course of it’s movement from one State to another. Where the

property in the goods has passed before the movement has

commenced, the sale will evidently not fall within clause (b).

Accordingly, a sale effected by transfer of documents of title after the

commencement of movement and before its conclusion as defined by

the two termini set out in Explanation 1 and no other sale will be

regarded as inter-State sale under this clause. Explanation 2 makes it

clear that where the movement of goods, occasioned as a result of a

Page 32 of 66
sale from one place to another within one and the same State but

nevertheless, for actual transport, the goods have necessarily to pass

through another State, it cannot result in a sale in the course of

inter-State trade or commerce. This remains an out and out intra-

State sale governed by the local sales tax law of the State concerned.

But where movement of the goods, occasioned as a result of the

sale, takes place from one State to another, not only has the original

sale taken place in the course of inter- State trade or commerce but

also every connected transaction shall be deemed to be in the course

of inter-State trade or commerce if it is effected by transfer of the

railway receipt or other document of title to the goods at a time after

the goods have been delivered to the common carrier or other bailee

for transmission and before the same are taken delivery of, from

such common carrier or other bailee. It may be noted that while

section 3(a) concerns a sale effected before actual despatch of the

goods, section 3(b) applies to a sale effected after such despatch but

before actual delivery of the goods.

37. Therefore as discussed above, there are two types of inter-

State sales which are charged to tax under the Central Sales Tax Act,

one, coming under section 3(a) thereof, that is, sale occasioning

movement of goods from one State to another, and the other,

Page 33 of 66
coming under section 3(b) of the Central Act, being sales effected by

transfer of documents of title to the goods during their movement

from one State to another. The first category enjoys exemption

under Section 6(1) and the second under section 6(2).

Section 6(2) was introduced in section 6 in order to avoid the

cascading effect of multiple taxation. A subsequent sale falling under

section 6(2), which satisfies the conditions mentioned in the proviso

thereto, is exempt from tax as the first sale has been subjected to

tax under section 6(1). Hence, in order to attract section 6(2), it is

essential that the concerned sale must be a subsequent inter-State

sale effected by the transfer of documents of title to the goods

during the movement of the goods from one State to another and it

must be preceded by a prior inter-State sale. It is only then that

section 6(2) may be attracted in order to make the subsequent sale

exempt from levy of central sales tax. However, the proviso to

section 6(2) prescribes further conditions and it is only on fulfillment

of those conditions that the subsequent sale stands exempted. If

those conditions are not satisfied then, notwithstanding the fact that

the sale is a subsequent sale, the exemption would not be admissible

to such subsequent sales.

Page 34 of 66

38. Similarly Section 8 deals with rates of tax on sales in the course

of inter-state trade or commerce. For the purpose of rates, the

section makes a classification between (i) inter-State sales to

Government on prescribed forms, (ii) inter-State sales made by a

dealer to a registered dealer of goods specified in his certificate of

registration or of packing materials, etc., and (iii) inter-State sales

other than (i) and (ii) aforesaid.

The transactions of sales in the course of inter-State trade or

commerce have been sub-divided in the following categories for the

purpose of levy of tax under this section:-

(a) sales of goods, which under the relevant State law are

generally exempt from tax, are to be exempted from tax;

[Sec. 8(2A)]

(b) sales of goods, which are under the relevant State-law

taxable at a rate lower than 4 per cent are to be taxed at

the State-rate; (Sec. 8(2A)].

section 8(1) [i.e. which are not made to Government or are

made to registered dealer in whose certificate of

registration they have not been specified] are to be taxed at

Page 35 of 66
twice the rate applicable to such goods in the relevant

State; [Sec. 8(2) (a)]

(d) sales to (i) Government when supported by “D” Form

certificates or (ii) to registered dealer other than

Government, in whose certificate of registration the same

have been specified and who furnish the prescribed Form C’

Declarations are to be taxed at four per cent; [Sec. 8(1)]

(e) sales, other than the above, when the State rate is

equal to or less than 10 percent are to be taxed at 10 per

cent; [Sec. 8(2)(b)] and

(f) sales, other than the above, when the State-rate is

higher than 10 per cent are to be taxed at the higher State-

tax rate; [Sec. 8(2)(b)]

The concessional rate of 4% is provided for (when the goods

sold are taxable under the State sales tax law at a rate of 4% or

more than 4 %) on inter-state sales made to

(i) the Government; or

(ii) a registered dealer other than the Government-

(a) if the class or classes of goods purchased are

specified in the purchasing dealer’s certificate of

registration and the goods under such purchase are

Page 36 of 66
intended for resale by him; or, subject to any rules made

by the Central Government in this behalf, for use by him

in the manufacture or processing of goods for sale; or,

subject to any such rules, for use by him in mining or in

the generation or distribution of electricity or any other

form of power;

(b) in the case of containers or other packing materials

specified in the registration certificate of the purchasing

dealer, if the goods purchased are intended for being

used for the packing of goods for sale;

not specified in the registration certificate of the

purchasing dealer, if the goods purchased are intended

for being used as containers or packing materials for the

packing of any goods specified in the purchasing dealer’s

certificate of registration or for the packing of any

containers or other materials specified in the certificate of

registration.

39. The general rate of tax is prescribed under section 8(2). But a

dealer selling goods to a registered dealer in the course of inter-Stale

trade or commerce of the description referred to in section 8(3) is

Page 37 of 66
liable, under section 8(1) (b), to pay a tax at a concessional rate,

four percent, on that part of his turnover. In order to qualify for that

rate of tax, dealer has to furnish to the prescribed authority within

the prescribed time, etc., a declaration duly filled and signed by the

registered dealer to whom the goods are sold. Such a declaration

must contain the prescribed particulars in the prescribed form

obtained from the prescribed authority. If the selling dealer fails to

furnish the declaration in the prescribed form (C-Form) he is liable to

pay tax at the general rate provided for in section 8(2).

40. Section 8(4) controls the applicability of section 8(1). The

benefit of a concessional rate under section 8(1) is conditional upon

the assessee producing and furnishing a prescribed declaration in C

Form in the prescribed manner and within the prescribed time, etc.

Non-compliance with the provision of furnishing the C Form

declaration will inevitably deprive the assessee of the benefit of

taxation at the concessional rate.

41. Under section 8(4) of the Central Sales Tax Act, 1956, a dealer

would be entitled to pay tax at the rate fixed under the Central Act in

respect of an inter-state sale, only upon furnishing to the prescribed

authority in the prescribed manner a declaration duly filed and

signed by the dealer to whom the goods are sold after obtaining the

Page 38 of 66
prescribed form from the prescribed authority. Rule 12(1) of the

Central Sales Tax (Registration and Turnover) Rules, 1957, lays down

that the declaration and certificate referred to in section 8(4) shall be

in Forms C and D. Therefore, to get the benefit of reduced rate of

tax under the Central Act, a dealer has, to furnish a C Form duly

filled and signed by the dealer to whom the goods are sold.

42. Upon due examination of the provisions as extracted above

what is seen is that there is a power on the State Government to

issue a Notification exempting the ‘C’ Forms or ‘D’ Forms as the case

may be in public interest where the State Government feels that such

a notification is required. The writ petitioner claims that such

exemption is called for in the facts of the present case as there is no

dispute that the sale has been effected to the respondent No. 4 and

the respondent No. 4 inspite of assurances given, failed to furnish

the ‘C’ Forms as the same were not issued by the Department for the

failure of the respondent No. 4 to meet its outstanding tax liabilities

towards State Government. A plain reading of the provisions of

exemption as prescribed under Section 8 makes it clear that such

exemption is to be issued by the State Government in public interest.

In so far as the writ petitioner is concerned, the denial of the benefit

of reduced rate of taxation for the failure to furnish the ‘C’ Forms

Page 39 of 66
cannot be construed to be of public interest in order for the State to

invoke its powers under Section 8 of the CST Act 1956. Public

interest will require any event which will confer any benefit to the

people at large or atleast a particular community. Under this

provisions of the statute, the hardship suffered by the petitioner for

non-supply of ‘C’ Forms and thereby payment of taxes at higher rates

cannot be termed to be a matter of public interest. Such submissions

of the petitioner therefore cannot be accepted and the same are

therefore rejected.

43. For the purpose of the present proceedings, the impugned

order dated 05.05.2019 passed by the respondent authorities in

respect of the petitioner for the period 2013-14 is taken up as a

reference as similar orders were passed in respect of the other

assessment years and which are also assailed in the other writ

petitions. The text of the order is relevant and is therefore extracted

below:

“Date 05/05/2019 Assessment Order

The case of M/S Bharat Trading Corporation Guwahati taken for scrutiny assessment
for P.E. 2013-14 as per CT’s Circular 5/15. Issued notices for productions of required
books of accounts along with all statutory forms in support of sales. Sri Tarun Kumar
Jain A/R of the firm appeared before me and produced some sales documents including
statutory forms of verifications. On verification it appears that, the dealer deals Ferric
Alum, Custic Soda, Bleaching Powder, Ammonium Bi-carbonate Sodium By-carbonate
etc and sold the same to registered dealer against form “C” amounting Rs. 7560363.00.
He submitted 40 Nos offline Form “C” for Rs. 6523336.00 and 06 Nos. On line “C” for
Rs. 1037027.00 out of 40 offline “C” Form 05 is found obsolete as per Notification
issued by Commissioner of taxes, Manipur by vide No. Tax/4(31)/CST/2012/113 dated

Page 40 of 66
25.07.2012 value amounting Rs. 3467294.00. And hence the said sales taken as sales
to unregistered dealer with 14.5% tax elements. The other manual “C” forms could not
be verified in system and hence the process of cross verification is taken with Ex-State
through Apex office. The TIN & CST No. of the said dealer verified in TINSXYS and
found in active. The e-declaration is found in order. On scrutiny of monthly returns, it
appears that the dealer made inter-state sales during this period as per returns
amounting Rs. 12140393.00 and out of its only Rs. 4093069.00 covers by required
valid Form “C”. Hence balance amounts Rs. 8047324.00 taken as sales to Lin-registered
dealer. The sales figure in the monthly returns tally with books of accounts. The dealer
made E-1 transactions purchase amounting Rs. 58596987.00 against 11 Nos. E-1 form
and sold to HPC, Nagaon, submitted 08 Nos. Form “C” amounting Rs. 74248275.00.
The balance amounts Rs. 1065510.00 count as sales to others.

The dealer sold goods to registered dealer inclusive of 2%, 5%, 13.5% & 14.5% tax
elements and hence per centum is allowed US 8A(1)(a) of CST Act’56.

In absence of any other information assessment is completed US 9(2) of CST Act’56 as
follows-

1. Gross Turnover Rs.92554189.00

2. Less Us 6-A 1 i.e Stock transfer Rs. 0

3. Balance sales Rs. 92554189.00

4. Less U/s 6(2) (E-1 sales) [75313785- Rs. 74248275.00
1065510]=

5. Balance sales Rs. 0

6.Less U/s 5 4 i.e. Export Rs. 0

7.Net Inter State turn over Rs. 17240404.00
7 A 2% sales to registered dealer Rs. 4093069.00
Less U/s 8A 1 a Rs. 80256.00
B. Sales to Others Rs. 13147355.00
i. 5% tax with 2% tax elements. Rs. 3467294.00
Less U/s 8A (1) (a) Rs. 67986.00
ii. 5% tax with 5% ax elements. Rs. 1267623.00
Less Us 8A (1)(a) Rs. 60363.00
iii. 13.5% tax with 13.5% tax elements. Rs. 1011974.00
Less Us 8A(1)(a) Rs. 120367.00
iv. 14.5%, tax with 14.5% tax elements Rs. 6301160.00
v. Less Us 8A(1)(a) Rs. 152143.00
vi 14.5%, tax without tax elements. Rs. 1099284.00
vii. 14% tax without tax elements (E-1) Rs. 1065510.00

8. Net taxable Turn over on Rs. 17824799.00 TAX

Page 41 of 66

7. A Rs. 4012813.00 80256.00

7.B (i) Rs. 3399308.00 169965.00

(ii) Rs. 1207260.00 60363.00

(iii) Rs. 891607.00 120367.00

(iv) Rs. 6149017.00 152143.00

(v) Rs. 1099284.00 159396.00

(vi) Rs. 1065510.00 154499.00

Total Tax assessed Rs. 896989.00
Adjustment with VAT if an Rs. 0
Tax Payable Rs. 896989.00
Tax Paid Rs. 502662.00
Balance Payable Rs. 394327.00
Interest levied [1580+357852] 60.5m Rs. 359432.00
Penal imposed Rs. 5000.00
Total payable Rs. 758759.00
Draw assessment order and issued demand notice

Note:- Tax Paid Challans, C forms, E-1 Forms verified as per Statement

Superintendent of Tax
Guwahati Unit-C”

44. A plain reading of the order reflects that out of 40 offline ‘C’

Forms submitted, 5 are found to be obsolete in respect of a value

amounting to Rs. 34,67,294/- and therefore the sales were treated

to be sales to unregistered dealer at the rate applicable. The other

manual ‘C’ Forms could not be verified in the system and hence the

process of cross-verification is taken with Ex-State through Apex

Office. The TIN & CST No. of the dealer was duly verified and found

to be active. The E-declaration was found to be in order. In so far as

the sales made to the respondent No. 4 is concerned, purchases

made under E-1 were found to be amounting to Rs. 5,85,96,987/-

against 11 Nos E-1 form and sold to HPC, Nagaon and for which 08

Page 42 of 66
Nos of ‘C’ Forms amounting to Rs. 74248275/- were submitted. As

the balance amounts were not found to be covered by the ‘C’ Forms

although the reduced rate of taxation was claimed by the petitioner,

these claims were rejected and by the assessment order, a demand

including penalty and interest was imposed on the petitioner.

45. The benefit under Section 6(2) of the Act as sought to be

claimed by the petitioner will accrue to a seller only when the dealer

selling the goods furnishes to the prescribed authority in the

prescribed manner, declaration duly filled and signed by the

registered dealer to whom the goods are sold. This form is described

under Rule 12 of the CST Rules of 1957 to be Form ‘C’. The format in

which the ‘C’ Forms are to be issued by the purchaser and submitted

to the prescribed authority are also appended to the Rules of 1957.

The Form ‘C’ is to be submitted in triplicate. These ‘C’ Forms are to

be procured from the prescribed authority by the dealer who

purchases the goods in the course of inter-State Trade and

Commerce and counter sign the same and thereafter furnish it to the

seller who supplied the goods in the course of inter-State sale. The

State authorities however are empowered not to grant the ‘C’ Forms

to the purchasing dealer, if the State authorities are of the view that

tax as assessed if found to be payable and outstanding from such a

Page 43 of 66
dealer. This is precisely the situation which has arisen in the facts of

the present case. The respondent No. 4 had substantial outstanding

taxes liable to be paid to the State of Assam, Finance Department.

This fact is admitted by the respondent No. 4 in the communication

addressed to the petitioner which is enclosed to the writ petition. As

a consequence thereof, the ‘C’ Forms were refused to be issued by

the department till such payments are cleared by the respondent No.

4. The supply of caustic soda by the petitioner in the meanwhile was

effected on the requisition made by the respondent No. 4. This sale

is stated to be conducted by the transfer of title deeds while the

goods were in transit. It is also stated that the petitioner at the time

of effecting the sale to the respondent No. 4 was not aware of the

pending tax liabilities of the respondent No. 4 and because of which

the state authorities had refused to issued the ‘C’ Forms to

Respondent No. 4 and consequently the same were not furnished to

thee petitioner by the respondent No. 4. In so far as the petitioner is

concerned in the bills which were submitted, it was shown to be a

sale duly covered by ‘C’ forms which however, although mentioned

therein were not submitted before the Department as the relevant ‘C’

Forms were yet to be issued by respondent No. 4 and consequently

received by the petitioner for onward submission to the prescribed

authority.

Page 44 of 66

46. It is therefore seen that there is no dispute raised by the

respondent State authorities that the sales were effected to the

respondent No. 4 by the petitioner. The respondent No. 4 inspite of

notice being issued is not before the Court and meanwhile it is

informed that the respondent No. 4 has been wound up in liquidation

and the assets and liabilities have also been taken over by the State

through its appropriate department. As such as on date there is no

question of the respondent No. 4 issuing these ‘C’ Forms in respect

of the supplies and sales made by the petitioner. The petitioner has

also claimed that the financial status of the respondent No. 4 was not

known to the petitioner at the time of the supply of the caustic soda

as requisitioned by the respondent No. 4 or that the corporation has

gone into liquidation. Under such circumstances, the question now

that is before the Court is whether the failure on the part of the

purchaser/dealer to furnish adequate ‘C’ Forms will deprive the seller,

the benefits available under the statue. As have been discussed

above, it is seen that the failure to furnish ‘C’ Forms by the petitioner

in support of the sales claimed to have been made by the petitioner

cannot be attributed to the petitioner. The communication of the

respondent No. 4 enclosed to the writ petition as well as the

contention of the petitioner reveals that the ‘C’ Forms were not duly

supplied by the respondent No. 4 to cover the sales made by the writ

Page 45 of 66
petitioner to the respondent No. 4. This position is also not disputed

by the respondents. This leads to a very peculiar situation whereby

the petitioner is being deprived of the benefits prescribed under the

provisions of the Act of 1956 without any fault that can be attributed

to it. The ‘C’ Forms are mandatorily are required to be issued by the

prescribed authority namely the State respondents and which can

also be refused to be issued by the State authorities if there are

pending dues found to be outstanding towards payment of tax. This

fact is equally admitted by the respondent No. 4 in their

communications. The State respondents had also made an enquiry

with the respondent No. 4 in respect of the claims made by the

petitioner but which remained unresolved because of non-furnishing

of any reply by the respondent No. 4. Under such circumstances

whether the benefits due to the petitioner under Section 6(2) of the

Act of 1956 in respect of sales which are otherwise not disputed can

be curtailed for non-furnishing of ‘C’ Forms by the purchaser dealer

where the sales effected by the petitioner are not disputed or denied

by the purchasing dealer or by the assessing officer.

47. A perusal of the provisions of the Act reveals that under

Section 7, the dealer has to take necessary steps for getting itself

registered. This duty to get itself registered begins with the liability

Page 46 of 66
of the dealer to pay tax under the Act. The application for

registration is to be made in the prescribed form and once the same

is accepted by the authorities and found to be in confirmation with

the prescribed format and the necessary fees are deposited the

registration is issued to the dealer. In terms of the definition

prescribed under Section 2(B), a dealer is defined as a person who

carries on whether regularly or otherwise the business of buying,

selling, supplying or distributing goods, directly, indirectly for cash or

for valued payment or for commission, remuneration or other

valuable consideration and also includes the local authority, a factor,

broker, commission agents etc, an auctioneer.

48. As discussed above, the sales made by the petitioner to the

respondent No. 4 has not been disputed either by the respondent

authorities or by the respondent No. 4. Although the respondent No.

4 is not represented in the present proceedings, the communication

issued by the respondent No. 4 clearly reveals it’s admission that the

sales were indeed effected by the petitioner and which sales were in

the course of inter-State Trade and Commerce. The stand of

respondent No. 4 reflected in the said communication is also not

questioned by the respondent authorities. Although the respondent

authorities dispute that the sale was not effected by the petitioner as

Page 47 of 66
claimed under Section 6(2) of the Act of 1956. The fact remains that

there is no dispute that the sales were made pursuant to the goods

being procured from a dealer outside the State of Assam and for

which the prescribed Forms namely Form E-1 was duly furnished.

What steps were taken by the respondent authorities to verify the

claims of the petitioner that the goods were procured during the

course of inter-State Trade and Commerce is not seen from the

pleadings available before the Court. Consequently it has to be

accepted that the claim of the petitioner that the goods were

procured in the course of inter-State Trade and Commerce from a

dealer outside the State of Assam is accepted by the respondents.

Therefore, the objections raised by the respondents that it is not a

sale under Section 6(2) cannot be accepted.

49. Under the provisions of the CST Act, 1956, it is seen that

although the purposive intent of the Statute is to impose Sales Tax

on the transactions prescribed on such rates as applicable, yet at the

same time there is a clear legislative intent discernable that where

benefits accrue to a dealer, the same shall be available subject to

fulfillment of the norms prescribed. Under such circumstances, where

the sales stated to have been made by the selling dealer to the

respondent No. 4-Corporation are not disputed and also where these

Page 48 of 66
items claimed to be purchased by the petitioner from outside the

State and for which the supporting E-1 Form declarations are also

furnished are not questioned by the department, the only conclusion

that can be arrived at is that the goods were indeed purchased in the

course of inter-State Trade and Commerce by the petitioner from

outside the State of Assam and which purchased was duly supported

by the E-1 Form declaration. The goods have been claimed to be

sold to the respondent No. 4 by transfer of title deeds before the

goods were received by the dealer. Under such circumstances, non-

furnishing of the declaration Form-‘C’ by respondent No. 4 in respect

of purchases made from the petitioner and which are not denied

cannot preclude the petitioner from being granted the benefit of

exemption from payment of tax under Section 6(2). It is also to be

noted that in the impugned order, the assessing authority has also

not disputed or doubted the purchase made through E-1 transaction

or that these purchases which were made under E-1 transaction

were not sold by effecting transfer of the title goods as claimed by

the petitioner. Such findings are not seen in the impugned order.

Therefore, the contention raised by the respondents disputing the

claim of the petitioner that the sales were not made under Section

6(2) and thereby disputing the claims of the petitioner that he is

entitled to benefit under Section 6(2) cannot be accepted.

Page 49 of 66

50. The object of the Act of 56 is to levy and collect sales tax by

the Union on a class of sales made. These are interstate sales.

Interstate sales are of two types as defined under Sec 3 namely –

Sec 3(a) and Sec 3(b). Whether a particular sale is an inter sale is to

be determined by Section 3 only and no other provision. Section 3 of

the Act of 1956 defines the class of sales which shall be deemed to

be sales in the course of inter-State trade or commerce. Under the

CST Act, 1956, tax is leviable on the sale of goods and not because

of the movement of the goods. The movement of the goods is only

material for the purpose of deciding whether the sale took place in

the course of inter-State trade or commerce or whether such sale

was purely an intra-State transaction. The name given to a

transaction by the parties concerned does not decide the nature of

the transaction. In order to make a transaction taxable under the

CST Act, 1956, the transaction must be a “sale” as defined in Section

2(g) taking place in the course of inter-State trade or commerce in

any of the manner provided for in clause (a) or clause (b) of Section

3. Where a sale is covered under Section 3. Under Section 6(3) any

subsequent sales made in the state can also be considered to be a

continuation of the sale under Section 3 and in which event there will

be no tax on this subsequent sale under the CST so as to avoid

cascading effect. This therefore means that the subsequent sale

Page 50 of 66
(within the state) is to be considered to be a continuation of the first

sale (purchased by the dealer making the subsequent sales) which

was in the course of interstate trade & commerce. The subsequent

sale is therefore also out of the purview of State Sales Tax. Once it is

established that the subsequent sale is also a sale under section 3

the benefit under section 6(2) will be available to the dealer subject

to furnishing of the prescribed C-forms. However, whether this

benefit under section 6(2) will be denied to the dealer for its failure

to submit C-forms even when there is no dispute that the subsequent

sales is in continuation of a sale under Section 3 of the Act of 1956 is

not specifically provided for under the Act of 1956. But what is clear

from the provisions is that whether a sale is in the course of

interstate trade has to be determined by section 3 only. Sections 6, 8

or 9 or any other provision does not define or determine interstate

sales. As such in the facts of the present case where it is not

disputed by the assessing officer that the first sale is an interstate

sales or that the subsequent sale is not in continuation of the first

sale or that it is a completely different transaction which occurred

within the state and is not connected to the First sale, the benefits

under section 6(2) cannot be curtailed for non furnishing of the C-

forms which default again cannot be saddled upon the petitioner

alone as respondent No. 4 failed to furnish the said C-forms. The E-

Page 51 of 66
1-forms submitted by the dealer containing all particulars is also not

in question. In the scheme of the Act Returns in respect of sales

made by a dealer for a particular period are to be submitted by the

dealer. In order to support claims of sales under section 3 necessary

particulars including Form-E-1, corresponding Form- C are also to be

furnished by the dealer. The CST Act does not provide for a situation

as to what will be consequences when the purchasing dealer fails to

provide for any C-forms in case of any interstate sales.

51. These averments made by the writ petitioner are disputed by

the respondents in their affidavit. According to the State

respondents, the sale claimed to have been made by the petitioner

to respondent No. 4 is not covered under Section 6(2) of the CST Act

as the sale order was received and the buyer of the product was

identified before the purchase order was placed by the petitioner and

in order to escape payment of appropriate tax, the petitioner has

tried to project that the sale made to the respondent No. 4 is

covered under Section 6(2) of the CST Act. As such, there is no

infirmity in the assessment made by the assessing officer. It is

disputed by the respondents that the same is an inter-State Sale

covered under Section 6(2) of the Act of 1956. Therefore, the

question which is required to be answered by the Court is whether in

order for a sale to be covered under Section 6(2) of the Act what are

Page 52 of 66
the parameters required to be fulfilled. A careful perusal of Section

6(2) reveals that it begins with a non-obstantive clause that

notwithstanding the provisions of Sub-Section 1 or Sub-Section 1(A)

of Section 6 where a sale of any goods in the course of inter-State

Trade or Commerce has either occasioned the movement of goods

from one State to another or has been effected by transfer of the

documents of title to such goods during the movement from one

State to another, any subsequent sale during such movement

effected by transfer of documents of title to such goods to a

registered dealer, if the goods are of the description referred to in

Sub-section 3 of Section 8, shall be exempt from tax under the said

Act. Sub-section 3 of Section 8 specifies the classification of goods or

classes of goods which are to be considered for liable for payment of

tax under Section 8(1) of the said Act. In other words, in order for

any transaction to be covered under Section 6(2) it must satisfy the

following:-

(a) It must be a sale of goods in the course of inter-State Trade

or Commerce;

(b) and it has occasioned movement of goods from one State to

another or it has been effected by transfer of documents of

title to such goods;

Page 53 of 66

(c) and that these goods fit the description as prescribed under

Sub-Section 3 of Section 8.

52. In order to examine the contention of the respondent State

that the sale effected is not covered under Section 6(2), it will

require reference to the impugned assessment order. A perusal of

the impugned assessment order reflects that the assessing officer did

not question the claims of the petitioner that the goods supplied to

respondent No. 4 were procured from outside the State. The claim of

the petitioner that the returns reflected inter-State sale made by the

petitioner during the concerned period was also never questioned by

the assessing officer. This is clearly evident from a perusal of the

impugned assessment order. However, since a part of the sales

claimed to have been made in the course of inter-State sale were not

supported by the corresponding Form ‘C’, the assessing officer

considered these sales as sales made to non-registered dealers or

sale which are not covered by Form-‘C’. The assessment order does

not reflect that at any point in time there was any issue raised by the

assessing officer questioning the very claim of the petitioner that the

sales made to respondent No. 4 did not originate from purchases

made in the course of inter-State Trade and commerce.

Page 54 of 66

53. As discussed above, a perusal of the provisions of CST Act

1956 clearly reflects that all sales in the course of inter-State Trade

or Commerce are either affected under Section 3(a) or under Section

3(b). Section 8 prescribes the rates on sales in the course of inter-

State Trade or Commerce. Section 8(1) of the Act provides for

reduced rate of tax in respect of sales made in the course of inter-

State Trade or Commerce subject to satisfaction of the conditions

prescribed in Section 8(3). Section 8(4) provides that in order to avail

the benefit of Section 8(1), the conditions prescribed in Section 8(4)

of furnishing a declaration is to be satisfied by the dealer.

54. Section 6 on the other hand affixes the liability to pay tax in

the manner provided. Section 6(2) however curves out an exception

in respect of subsequent sales made within the State where the

goods which were sold within the State were procured from outside

the State and are supported by the prescribed forms namely Form E-

1. Ordinarily, the tax to be imposed under the Act of 1956 are only in

respect of those sales which are made in the course of inter-State

Trade or Commerce whereas the sales made within the State are

covered by the respective State legislation namely Assam General

Sales Tax Act as it then was prior to the same being repealed under

the Assam VAT Act and now the Goods and Service Tax Act, 2017.

Therefore, the contention raised by the respondents that the claim of

Page 55 of 66
the petitioner to be covered under the benefit of Section 6(2) is not

available as the petitioner had already accepted the contract to

deliver goods to respondent No. 4 and therefore it was not the case

of sales which was made by affecting transfer of documents of title

of the concerned goods during their movement from outside the

State and into the State of Assam cannot be accepted. This

argument is fallacious as Section 6(2) covers sales made in the

course of inter-State Trade and Commerce which are occasioned by

movement of goods from outside the State into the State of Assam

as well as sales by effecting transfer of the documents of title of the

goods during their course of movement from outside the State into

the State of Assam. There is no dispute as have been discussed

above, as can be seen in the impugned assessment order that the

movement of goods from outside the State into the State of Assam

was accepted to be occasioned in the course of inter-State Trade or

commerce and which sales are therefore covered under Section 3 of

the Act. No such dispute has been raised by the assessing officer as

can be seen in the impugned assessment order that such sale did not

occasion movement of goods from outside the State and into the

State of Assam. The form E-1 submitted by the petitioner was also

accepted by the assessing officer and there was no dispute raised.

Page 56 of 66

55. As such where it is not disputed by the assessing officer that

there was movement of goods from outside the State into the State

of Assam, it has to be accepted that such sales were sales in the

course of inter-State Trade and Commerce. There is also no finding

in the impugned assessment order that the subsequent sales made

by the petitioner to the respondent No. 4 are not covered under

Section 6(2) of the Act of 1956. The only ground for denying the

benefit that would accrue to a dealer under the provisions of Act of

1956 for payment of CST was the non-furnishing of the Form ‘C’ in

respect of the portion of the sales made to the respondent No. 4.

56. As such where the movement of goods from outside the State

of Assam and into the State was not questioned by the assessing

officer as also the subsequent sales made to respondent No. 4, it has

to be held that the subsequent sales made to respondent No. 4 is

covered under Section 6(2) and would be exempt from payment of

Central Sales Tax. The only shortfall in the entire transaction is the

absence of valid ‘C’ Forms which were required to be furnished by

the respondent No. 4 in respect of these sales made by the

petitioner. This fact is also explained by the communications

executed between the petitioner as well as the respondent State

Department. The respondent No. 4 in the meantime went into

liquidation and its assets and liabilities were also taken over by the

Page 57 of 66
State. The question whether the sales made to respondent No. 4 is a

subsequent sales under Section 6(2) having not been disputed by the

assessing officer, the benefit available to the petitioner under Section

6(2) cannot be curtailed in the peculiar facts and circumstances of

the case, merely because the ‘C’ Forms were not furnished by the

petitioner and which was a result of non-issuance of valid ‘C’ Forms

by the respondent department to the respondent No. 4 because of

outstanding tax liabilities on the part of respondent No. 4. This fact is

also not clearly disputed by the assessing officer or by the

respondents. Under such circumstances, it has to be held that where

a benefit is found to accrue to a petitioner under the provisions of

the statute, the same cannot be curtailed when the basis of making

the claim is not called into in question or is in dispute.

57. As have been discussed above, there is no dispute raised by

the respondent authorities that the goods which were ultimately

supplied to the respondent No. 4 did not occasion movement from

outside the State. Neither the assessing officer nor the respondents

in their affidavits filed raised any dispute that the goods supplied by

the petitioner to the respondent No. 4 were never procured from

outside the State. Although the assessing officer did not raise any

such dispute but the respondents in their affidavit filed before this

Court had disputed the claim of the petitioner that it is not a sale

Page 58 of 66
covered under Section 3(b) as the petitioner was aware that goods

were required to be supplied to respondent No. 4 and were therefore

procured by the petitioner.

58. Purpose of Section 6 is to ensure that sales under Section 3 are

inter-state sales even in cases where there is subsequent sale within

the state. This subsequent sales within the state cannot be taxed by

the state. In order to avail benefits under section 6(2) it must be

shown that the goods were procured from outside the state and it

had occasioned movement in the course of interstate trade. To

support such claim, transfer of documents of title to the goods must

be shown. There is no finding by Assessing Officer that the goods

were already procured by the petitioner and that the subsequent

sales made to respondent No. 4 was a separate transaction. This is

sought to be projected by the respondents by their affidavit in

opposition for the first time. Therefore when the subsequent sales

have been made the transfer of title to the goods has to be deemed

to have been made.

59. However, where the respondents dispute that this is not a sale

effected under Section 3(b) then the burden would lie on the

respondents to show that the claim made by the petitioner is an

incorrect claim and would therefore not be available to the petitioner.

Page 59 of 66
This view of this Court to that extent is fortified by Judgment of the

Apex Court rendered in Commissioner of Sales Tax, UP, Lucknow and

ors. Vs. Suresh Chand Jain, Tendu Leaves Dealer, Lalitpur and ors ,

reported in 1988 (Supp) SCC 421 wherein it was held that where the

assessee asserts to have made a sale either as a local sale or as a

inter-State sale then the onus to disprove the assessee would lie on

the revenue. There is one more aspect that needs to be referred in

this matter which is that the power of the State to impose tax has to

be within the parameters prescribed Article 286 of the Constitution of

India. Any tax which may be imposed has to be strictly in terms of

Article 286 of the Constitution of India. Under the powers which can

be traced back to Article 286 of the Constitution of India, the

legislature has enacted the Central Sales Tax Act, 1956. Under the

provisions of this Act read with the Rules any tax on sales relating to

inter-State Trade and Commerce will be in the domain of the Union

of India but it is to be collected by the Department of sales tax or

finance as the case may be of that State within whose territorial

jurisdiction, such inter-State Trade and Commerce in respect of those

particular goods are effected. The power of the State to impose its

State taxes is only restricted to those sales which are strictly within

the territory of that State and which are excluded from the purview

of Section 3 of the CST Act, 1956. In the facts of the present

Page 60 of 66
proceedings, there is no finding by the assessing officer that the

subsequent sales made to the respondent No. 4 were intra State

Sales effected within the State of Assam and were therefore outside

the purview of the Act of 1956. However, the only ground for denial

of the benefit of the exemption available under Section 6(2) of the

Act of 1956 is that in the absence of valid ‘C’ Forms required to be

furnished by the petitioner. Therefore, what is clear is that the State

respondents are not considering the subsequent sales made to

respondent No. 4 to be a sale under the State Sales Tax laws. It is

also not disputing the claim of the petitioner that the goods which

were sold or supplied to respondent No. 4 were not procured from

outside the State and are supported by the relevant Form E-1. Under

such circumstances, it is clear that the goods which were supplied to

respondent No. 4 by the petitioner were goods which had occasioned

movement from outside the State and into the State of Assam and

are therefore covered under Section 3 of the CST Act of 1956. From

a bare reading of the provisions of Section 6(2), it is seen that the

benefit under 6(2) is not restricted to those sales which were made

by transfer of the documents of title to the goods during the transit

of such goods, but it will cover all such goods which occasion

movement of goods from outside the State in the course of the inter-

State Trade and Commerce which are covered under Section 3 of the

Page 61 of 66
Act of 1956. Where the procurement of goods in the course of inter-

State Trade and Commerce by the petitioner is not disputed, the

benefit conferred under Section 6(2) on subsequent sales cannot be

denied to an assessee merely because the ‘C’ forms were not

furnished that to for the inability of such Forms to be supplied by the

respondent No. 4 because of their tax liabilities towards the State

Department. The ‘C’ Forms are essentially documents to support the

claim of an assessee that the sale had occasioned under Section 3 of

the CST Act of 1956 and thereby movement of goods occasioned

during the course of inter-State Trade and Commerce. Where this

fact is established beyond doubt the consequential benefits available

to an assessee under the provisions of the Act cannot be curtailed or

denied. As such, the claim of the petitioner of the benefit under

Section 6(2) cannot be curtailed for non-furnishing of declaration ‘C’

Forms where the assessing officer does not dispute the assertion of

the petitioner that the goods which were supplied or sold to the

respondent No. 4 had occasioned movement from outside the State

of Assam appears to the Court to have sufficient merit. The

impugned assessment order also does not reflect that the benefit

available to the petitioner was denied because the assessing officer

declined to accept the claim of the petitioner that the subsequent

sales of goods did not originate by movement of goods from outside

Page 62 of 66
the State of Assam and are therefore not covered under Section 3 of

the CST Act of 1956. This objection has been sought to be raised by

the respondents in their affidavit. Needless to say that an

assessment order passed by competent Officer of the Department

cannot be improved by subsequent affidavits filed by the State. The

findings of the assessing officer has to be accepted and understood

from a mere reading of the assessment order which is under

challenge in the present proceedings. A reference in this case may be

made to the celebrated Judgment of the Apex Court rendered in

Mohinder Singh Gill & Anr. Vs. The Chief Election Commissioner, New

Delhi reported in (1978) 1 SCC 405 that where it was held that

“Orders are not like old wine becoming better as they grow older”.

60. Coming to the Judgments pressed into service on behalf of the

petitioner, in M/S Radiant Manufacturers Pvt Ltd. Vs. The Deputy

Commissioner of Taxes (Appeals) Guwahati in case No. 40STA/2013

& 41STA/2013 in a appeal preferred by the assessee against the

assessment order where assessing officer declined to grant the

benefit or inter-State sales made which were not supported by ‘C’

Forms. The Board of Revenue disagreeing with the findings of the

assessing officer declining to accept such portion of sales to be inter-

Page 63 of 66
State sales and accordingly the Revenue Board disagreed with such

findings and deleted the such imposition of taxes. It is not disputed

in the bar that no further appeal has been preferred by the

Department against this order. This position is accepted by the

respondents.

61. Again in M/S Prism Cement Ltd (Supra), while considering the

powers of the State Government to grant exemption to tax under

Section 8(5) pursuant to the amendments carried out in the Finance

Act 2002, the Bombay High Court rejected the arguments of the

Revenue that the amendments carried out by the Finance Act 2002

restricts the power of the State Government to grant total/partial

exemption under Section 8(5) of the Act of 1956 in respect of inter-

State sales covered under Section 8(1). The Bombay High Court held

that even after the amendment of Section 8(5) by the Finance Act,

2002 the State Government in public interest may subject to

fulfillment of the requirements of Section 8(4), applicable to the

transactions covered under Section 8(1), grant total/partial

Page 64 of 66
exemption from tax payable on inter-State sales covered under

Section 8(1) as also under Section 8(2) of the CST Act.

62. In view of all the above discussions, it has to be held that the

claim of the writ petitioner must be allowed. The benefits claimed

under Section 6(2) must be given its full effect in respect of the

transactions undertaken by the petitioner. The findings of the

assessing officer in W.P(C) No. 6108/2022 treating Rs. 1065510.00

to be sales to others in the absence of valid ‘C’ Forms are interfered

with and set aside. Similarly the findings of the assessing officer in

W.P.(C) No. 6111/2022; W.P(C) No. 6112/2022 and W.P(C) No.

6113/2022 treating Rs. 1090929.00; Rs. 15952027.00 and Rs.

51027523.00 respectively to be sales to others in the absence of

Valid ‘C’ Form are also interfered with and set aside. The sales made

by the petitioner to that extent shall be treated to be subsequent

sales in the course of inter-State trade and commerce and full benefit

thereon shall be granted to the petitioner as is available to the

petitioner under Section 6(2) of the Act of 1956. The impugned

Page 65 of 66
orders therefore are interfered with and set aside to the extent the

benefit in respect of sales made to respondent No. 4 as subsequent

sales under Section 6(2) was denied. The impugned demands are also

therefore set aside and quashed. The petitioners are entitled to be

granted the full benefit available under Section 6(2) of the Act of 1956

for the sales made to respondent No. 4.

63. The writ petitions are therefore allowed and disposed of.

Interim orders, if any, stand merged. Pending I.As are also disposed

of.

JUDGE

Comparing Assistant

Page 66 of 66

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Shiv Narain Pd. Mishra vs The State Of Bihar And Ors on 30 August, 2025

Bharatvarshiya Digamber Jain Tirth … vs Jain Shwetamber Society on 18 August, 2025

Tulsi Devi vs The State Of Madhya Pradesh on 14 August, 2025

30.08.2025 vs Khasi Hills Autonomous District … on 30 August, 2025

Nishi Singla vs State Of Punjab And Others on 28 August, 2025

Shiv Narain Pd. Mishra vs The State Of Bihar And Ors on 30 August, 2025

Bharatvarshiya Digamber Jain Tirth … vs Jain Shwetamber Society on 18 August, 2025

Tulsi Devi vs The State Of Madhya Pradesh on 14 August, 2025

30.08.2025 vs Khasi Hills Autonomous District … on 30 August, 2025

Nishi Singla vs State Of Punjab And Others on 28 August, 2025

WP(C)/6113/2022 on 6 June, 2025

Gauhati High Court

WP(C)/6113/2022 on 6 June, 2025

Author: Soumitra Saikia

Bench: Soumitra Saikia

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