State of Rajasthan & Ors. vs Combined Traders

Court

Supreme Court of India

Date

16 April 2025

Case No.

Civil Appeal No. 1208 of 2025

Result

Dismissed

Bench

Abhay S. Oka, Ujjal Bhuyan

Citation

[2025] 4 S.C.R. 816 : 2025 INSC 496

Acts & Sections

Central Sales Tax (Rajasthan) Rules, 1957 Central Sales Tax Act, 1956

Issue for consideration

Sub-rule (20) of Rule 17 of the Central Sales Tax (Rajasthan) Rules, 1957 provided that where any dealer had generated declaration forms or certificates by misrepresentation of fact or by fraud or in contravention of the provisions of the Central Sales Tax Act, 1956 [CST Act] and rules made thereunder, the assessing authority or any other authority authorised by the Commissioner after affording such dealer an opportunity of being heard, is empowered to cancel such declaration forms or certificates. By the impugned judgment, the High Court held that the first appellant-State had no rule-making power to frame a rule providing for the cancellation of validly issued declarations/forms. The High Court held that sub-rule (20) of Rule

17 of the Rajasthan Rules was ultra vires Sections 8(4), 13(1) (d), 13(3) and 13(4)(e) of the CST Act. The validity of sub-rule 20 of rule 17 of the Central Sales Tax (Rajasthan) Rules, 1957 was therefore in issue before this Court.

Headnote

Central Sales Tax (Rajasthan) Rules, 1957 – Sub-rule (20) of Rule 17 – Central Sales Tax Act, 1956 – ss.8(4), 13(1)(d), 13(3) and 13(4)(e) – High Court held that sub-rule (20) of Rule 17 of the Rajasthan Rules was ultra vires ss.8(4), 13(1)(d), 13(3) and 13(4)(e) of the CST Act – Correctness of:

Held: The Central Government has the rule-making power to prescribe the form of declaration and lay down particulars to be contained in any declaration – Therefore, the form of declaration under Section 8(4) of the Central Sales Tax Act, 1956 and the contents thereof are to be provided by the rules framed by the Central Government in accordance with Section 13(1)(d) of the CST Act – If the State Government exercises the rule-making power under sub-section (3) of Section 13 by making rules providing for cancellation of a declaration in Form C as provided in Central Registration Rules, the State Rules will be inconsistent with the Central Registration Rules framed by the Central Government in exercise of power under Section 13(1)(d) of the CST Act – The State Government cannot frame rules in exercise of power under Section 13(3) which will be inconsistent with the rules framed by the Central Government in exercise of powers under Section 13(1) of the CST Act. No fault with the view taken by the High Court that sub-rule (20) of Rule 17 of the Rajasthan Rules is inconsistent with the Central Registration Rules framed in exercise of power under clause (d) of sub-section (1) of Section 13 of the CST Act. [Paras 12.1, 16, 18]

Judgment Abhay S. Oka, J. 1. The first appellant is the State of Rajasthan. A writ petition was filed before the High Court of Judicature for Rajasthan by the respondent-Combined Traders invoking jurisdiction of the High Court under Article 226 of the Constitution of India for challenging the validity of sub-rule (20) of rule 17 of the Central Sales Tax (Rajasthan) Rules, 1957 (for short, ‘the Rajasthan Rules’). Sub-rule (20) of Rule 17 was incorporated by way of an amendment with effect from 14th July 2014. Sub-rule (20) of Rule 17 provided that where any dealer had generated declaration fo

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