Supreme Court of India· 16 April 2025

If a purchasing dealer's registration is found to be bogus, what statutory route remains open under the Central Sales Tax Act, 1956?

STATE OF RAJASTHAN & ORS. v. COMBINED TRADERS

2025 INSC 496 · CIVIL APPEAL NO. 1208 OF 2025
Coram: Abhay S. Oka; Ujjal Bhuyan

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Answer

Section 7(5) of the Act expressly confers power on the authority to cancel a certificate of registration, and the Central Registration Rules provide for that cancellation. There is no corresponding power in Section 8 or in those rules to cancel the declaration in Form C itself.

Headnote

Central Sales Tax Act, 1956 — s.8(1) — s.8(4) — s.13(1)(d) — s.13(3) — s.13(4) — Central Sales Tax (Registration and Turnover) Rules, 1957 — r.12 — Central Sales Tax (Rajasthan) Rules, 1957 — r.17(20) — Declaration in Form C — Cancellation — Rule-making power — Ultra vires — Central Sales Tax Act, 1956 — s.8(4) — s.13(1)(d) — Form and particulars of the declaration — Held: The form of a declaration under Section 8(4) and the particulars it must contain are to be provided by rules framed by the Central Government under Section 13(1)(d). Furnishing that declaration is the condition precedent for the rate under Section 8(1). (¶11, 12) Central Sales Tax (Registration and Turnover) Rules, 1957 — r.12 — No power to cancel Form C — Held further: The Central Registration Rules prescribe the form of declaration but confer no power on any authority to cancel a declaration in Form C, in contrast to the express provision they make for cancelling a certificate of registration. (¶14) Central Sales Tax Act, 1956 — s.13(3), (4) — Limits of the State's rule-making power — Held further: None of the clauses of Section 13(4) empowers a State Government to provide for cancellation of a declaration. Its general power under Section 13(3) is circumscribed by the requirement that State rules not be inconsistent with the Central rules. (¶13, 15) Central Sales Tax (Rajasthan) Rules, 1957 — r.17(20) — Inconsistency with the Central rules — Held further: A State rule permitting cancellation of a declaration in Form C is inconsistent with the Central Registration Rules framed under Section 13(1)(d) and cannot be sustained. Appeal dismissed. (¶16, 18)

In the Court's own words

Paragraph 14In exercise of the rule-making power under clause (d) of sub-section (1) of Section 13, the Central Registration Rules have been framed. Rule 12(1) provides that the declaration referred to in sub-section (4) of Section 8 of the CST Act shall be in Form C prescribed thereunder. Therefore, the Central Registration Rules have laid down the form of declaration referred to in Section 8(4). A perusal of the Central Registration Rules shows that no power is conferred on any authority to cancel the declaration in Form C. Thus, the rules which prescribe the form of declaration in terms of Section 8(4), do not provide for cancellation of the declaration on the ground that commercial activities were not found at the address mentioned in the declaration. There is no provision in the Central Registration Rules to cancel the declaration in Form C. In contrast, the Central Registration Rules provide for cancellation of the certificate of registration for giving effect to sub-section (5) of Section 7 of the CST Act.

Acts & Sections

s.13(1)(d) Central Sales Tax Act, 1956s.13(3) Central Sales Tax Act, 1956s.13(4) Central Sales Tax Act, 1956s.8(4) Central Sales Tax Act, 1956s.8(1) Central Sales Tax Act, 1956s.7(5) Central Sales Tax Act, 1956r.17(20) Central Sales Tax (Rajasthan) Rules, 1957r.12 Central Sales Tax (Registration and Turnover) Rules, 1957Art.226 Constitution of India

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Also decided in this judgment

Under the Central Sales Tax Act, 1956, may a State Government frame a rule empowering its authorities to cancel a declaration in Form C?Which government has the rule-making power to prescribe the form of, and particulars to be contained in, a declaration under Section 8(4) of the Central Sales Tax Act, 1956?What is the condition precedent for a dealer to claim the concessional rate under Section 8(1) of the Central Sales Tax Act, 1956?Do the Central Sales Tax (Registration and Turnover) Rules, 1957 provide for cancellation of a declaration in Form C?How is a State Government's general rule-making power under Section 13(3) of the Central Sales Tax Act, 1956 circumscribed?What did State of Madras v. R. Nand Lal & Co. lay down about the scheme of Section 13 of the Central Sales Tax Act, 1956?

Plain-language answer prepared by the LexStreak Editorial Desk — verify against the judgment. Source: Supreme Court of India. Corrections