Supreme Court of India· 16 April 2025

Under the Central Sales Tax Act, 1956, may a State Government frame a rule empowering its authorities to cancel a declaration in Form C?

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

No. None of the clauses of Section 13(4) empowers the State Government to frame rules providing for cancellation of declarations or forms furnished under the rules framed by the Central Government, and a rule made under the general power in Section 13(3) providing for such cancellation would be inconsistent with the Central Registration Rules framed under Section 13(1)(d).

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 13Now, we come to sub-sections (3) and (4) of Section 13 of the CST Act, which read thus:

Paragraph 15Now, coming back to sub-sections (3) and (4) of Section 13, the rule-making power conferred on the State Government under sub-section (4) is for any or all of the specific purposes laid down in clauses (a) to (j). As stated earlier, none of these clauses provide for making a rule to enable the authorities to cancel a declaration in Form C. It is true that under sub-section (3) of Section 13, the State Government has power to frame rules to carry out purposes of the CST Act. However, power of sub-section (3) is circumscribed by its first part which provides that the rules made to carry out the purposes of the CST Act should not be inconsistent with the provisions of the CST Act and the rules made by the Central Government in exercise of powers under Section 13(1) of the CST Act.

Paragraph 16A specific rule-making power under clause (d) of sub-section (1) of Section 13 has been exercised by the Central Government by framing the Central Registration Rules laying down the form of declaration (Form C) required to be furnished in terms of sub-section (4) of Section 8. As stated earlier, the Central Registration Rules do not vest power in any authority to cancel the declaration in Form C. Therefore, 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.

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

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?If a purchasing dealer's registration is found to be bogus, what statutory route remains open under 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