Summary
Sub-rule (20) of Rule 17 of the Central Sales Tax (Rajasthan) Rules, 1957, which empowered the assessing authority to cancel declaration forms (Form C) obtained by misrepresentation or fraud, is ultra vires the Central Sales Tax Act, 1956. The form of declaration under Section 8(4) is prescribed by the Central Government under Section 13(1)(d); the Central Registration and Turnover Rules contain no power to cancel Form C; and a State rule under Section 13(3) providing for such cancellation is inconsistent with them.
Issues
- Whether the State Government has rule-making power under Section 13(3) or 13(4) of the Central Sales Tax Act, 1956 to frame a rule providing for cancellation of declaration forms (Form C) furnished under Section 8(4).
- Whether sub-rule (20) of Rule 17 of the Central Sales Tax (Rajasthan) Rules, 1957 is inconsistent with the Central Sales Tax (Registration and Turnover) Rules, 1957 framed by the Central Government under Section 13(1)(d).
Provisions considered
- Section 8(1) and 8(4), Central Sales Tax Act, 1956Section 8(1) gives a concessional rate of tax on inter-State sales to registered dealers; under Section 8(4) the concession applies only if the selling dealer furnishes to the prescribed authority, in the prescribed manner, a declaration in the prescribed form obtained from the prescribed authority and signed by the purchasing registered dealer. 'Prescribed' means prescribed by the rules. Section 8 contains no provision for cancellation of such a declaration. (¶¶ 11, 11.1, 12)
- Section 13(1)(d), Central Sales Tax Act, 1956Confers on the Central Government the power to make rules for the form of, and particulars to be contained in, any declaration or certificate under the Act. The form of the Section 8(4) declaration (Form C) is therefore a matter for Central rules. The Central Registration Rules framed under this power contain no power to cancel a Form C declaration, although they do provide for cancellation of registration certificates to give effect to Section 7(5). (¶¶ 12, 12.1, 14, 16)
- Section 13(3) and 13(4), Central Sales Tax Act, 1956Section 13(4) lists specific purposes for which the State Government may make rules, none of which covers cancellation of declarations or forms. The general power under Section 13(3) to make rules to carry out the purposes of the Act is circumscribed by the requirement that such rules be not inconsistent with the Act and with the Central Government's rules under Section 13(1). A State rule providing for cancellation of Form C is inconsistent with the Central Registration Rules and beyond Section 13(3). (¶¶ 13, 13.1, 15, 16, 18)
- Rule 17(20), Central Sales Tax (Rajasthan) Rules, 1957Inserted with effect from 14.07.2014, it empowered the assessing authority or an authorised officer, after hearing the dealer, to cancel declaration forms or certificates generated by misrepresentation, fraud or contravention of the Act or rules. Held ultra vires Sections 8(4), 13(1)(d), 13(3) and 13(4)(e) of the CST Act as inconsistent with the Central Registration Rules. (¶¶ 1, 18)
- Rule 12(1), Central Sales Tax (Registration and Turnover) Rules, 1957Prescribes Form C as the declaration referred to in Section 8(4), a single form covering a quarter under the second proviso. These rules confer no power on any authority to cancel a Form C declaration on the ground that no business activity was found at the address stated in it. (¶¶ 3, 14, 16)
Held
- The form and particulars of the declaration required by Section 8(4) of the CST Act are to be prescribed by the Central Government under Section 13(1)(d); the Central Registration Rules, which prescribe Form C, contain no power to cancel such a declaration. (¶¶ 12.1, 14)
- None of the specific purposes enumerated in Section 13(4) of the CST Act authorises the State Government to frame a rule for cancellation of declarations or forms furnished under the Central rules. (¶¶ 13.1, 15)
- The State Government's general rule-making power under Section 13(3) is subject to the condition that State rules must not be inconsistent with the Act or with the rules made by the Central Government under Section 13(1); a State rule providing for cancellation of a Form C declaration is inconsistent with the Central Registration Rules and cannot be sustained under Section 13(3). (¶¶ 15, 16)
- Following State of Madras v. R. Nand Lal & Co., a matter that can be prescribed only under Section 13(1)(d) by the Central Government cannot be regulated by the State under Section 13(3) or 13(4). Sub-rule (20) of Rule 17 of the Rajasthan Rules is therefore ultra vires, as the High Court held. (¶¶ 17, 18)
Result
Appeal dismissed; High Court's declaration that sub-rule (20) of Rule 17 of the Central Sales Tax (Rajasthan) Rules, 1957 is ultra vires the Central Sales Tax Act, 1956 upheld; no order as to costs.