C forms cannot be declared invalid if the purchaser ceased to exist while issuing and seller is unaware of it- Karnataka HC

Karnataka High Court has held in an important case namely Bell Ceramics Ltd. Vs DCCT that if the purchaser of goods issuing C forms has ceased to exist at the time of issuing C forms and such fact is not known to the seller of such goods claiming concessional rate of CST on the basis of such C forms then no disallowance of such concessional rate can be made to the seller on this ground.

 "The petitioner had sold goods to the registered dealer at Tirupati for the period prior to July 1, 2002 as well as subsequent to the said period coming within assessment year 2002-03 and that in respect of the said sales made, if the dealer at Tirupati has issued C forms and based on that concessional rate of tax was claimed by the petitioner without knowing as to whether the dealer at Tirupati has ceased to exist from July 1, 2002, then it cannot be held that the C forms issued by the dealer at Tirupati were invalid. It is not for the assessee to actually find out as to whether the registered dealer was in existance as on the date when the sales were effected when in fact, the registered dealer who is the purchaser has issued C forms to the assessee. If really the registered dealer to whom the sale has been made had ceased to exist from July 1, 2002, then in accordance with the provisions of law, the said forms could not have been made use by the purchaser and handed over to the petitioner assessee. If at all there has been any violation committed by the purchaser in the instant case, the petitioner assessee cannot be found fault with since it was the duty of the purchaser to have informed the petitioner about its ceasing to be in existance and thereby not issuing C forms. The petitioner has utilized the C forms issued by the registered dealer who is a purchaser based on the fact that the said purchaser has been in existance and has validly issued the said forms. Therefore the authorities could not have been held that the petitioner had utilized the invalid C forms in order to claim concessional rate of tax".

Full Judgement can be downloaded herebelow:

Bell Ceramics Ltd. Vs. DCCT


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