No C Form, No CST Exemption: Gauhati High Court Upholds Strict Compliance Mandate in Industrial Tax Rebate Claims

“Section 8(5) is conditional upon compliance with Section 8(4); eligibility certificates alone do not create an absolute right to exemption” — In a decisive ruling Gauhati High Court dismissed Writ Petition challenging the denial of Central Sales Tax (CST) exemption under the Assam Industrial Policy on the ground of non-submission of "C Forms." The Court held that tax exemption under Section 8(5) of the Central Sales Tax Act, 1956 is not a standalone right and is inextricably linked to strict compliance with Section 8(4), which mandates furnishing of C Forms.

Justice Sanjay Kumar Medhi, in his judgment, categorically ruled:

“A bare reading of Section 8(5) would show that the same is dependent on Section 8(4). In other words, unless the conditions mentioned in Section 8(4) are fulfilled, there would be no application of the provisions of Section 8(5).”

The judgment cements the position that industrial exemption policies and eligibility certificates, however liberal their language, cannot override the mandatory compliance framework established under a fiscal statute.

“Tax Statutes Must Be Interpreted Strictly in Favour of Revenue” — Court Reaffirms Constitutional Limits on Industrial Incentives

“Eligibility Certificate does not translate to automatic rebate without fulfilling statutory conditions; procedural safeguards cannot be bypassed under the guise of economic incentives”

Referring to binding Supreme Court precedent in Commissioner of Customs v. Dilip Kumar & Co. [(2018) 9 SCC 1], the Court held that all components of tax statutes, including exemption clauses, must be construed strictly. In fiscal matters, no ambiguity can be resolved in favour of the assessee when it comes to exemption clauses.

Justice Medhi observed:

“It is a settled position of law that a tax statute has to be given strict interpretation as the interest of the State is involved… for an exemption clause, the benefit of ambiguity must be interpreted in favour of the Revenue.”

The Court further cited Union of India v. VVF Ltd. [(2020) 20 SCC 57] to reinforce that industrial policies and exemptions must yield to statutory compliance.

In M/s Aglo Packaging Pvt. Ltd. v. State of Assam & Others, the petitioner, a manufacturing unit claiming industrial tax incentives under the Industrial and Investment Policy of Assam, 2008, approached the Gauhati High Court challenging the assessment order dated 21.08.2013 and the rejection of its revision petition in December 2014. The core grievance was that exemption from CST was denied solely due to the non-submission of "C Forms" for inter-State sales conducted during the financial year 2010–2011.

The petitioner argued that once an eligibility certificate was granted under the Assam Industrial Policy, failure to file C Forms should not defeat the right to exemption. However, the High Court refused to accept this claim, holding that statutory conditions under the CST Act cannot be diluted by administrative policies or departmental recommendations.

M/s Aglo Packaging Pvt. Ltd. was granted an eligibility certificate under the Assam Industries (Tax Exemption) Scheme, 2009, based on the Industrial and Investment Policy of Assam, 2008. The certificate provided for a 7-year tax holiday from 26.06.2009 to 25.06.2016 for an amount of ₹687.54 lakhs. A corresponding certificate of entitlement was also issued.

For the assessment year 2010–11, the petitioner claimed CST exemption under Section 8(5) of the CST Act. However, the Superintendent of Taxes rejected the claim through assessment order dated 21.08.2013, citing failure to file mandatory "C Forms" under Section 8(4) of the CST Act. The petitioner’s revision petition was also dismissed by the Additional Commissioner of Taxes in December 2014, prompting the present writ petition under Article 226 of the Constitution.

The key question was whether a dealer can claim CST exemption under Section 8(5) without fulfilling the requirement of furnishing declarations in C Form under Section 8(4).

The petitioner argued that:

• Industrial policy benefits cannot be defeated by procedural lapses;

• Section 8(5) allows independent State discretion;

• Recommendations of the assessing officer favored rebate;

• Citing judgments in Prism Cement Ltd., Techer Power Solutions, and Shree Digvijay Cement Co., it was urged that public interest and State discretion were the guiding principles under Section 8(5).

The Court, however, found no merit in these arguments. It held that:

“The submission that even if the petitioner does not furnish such declaration, they cannot be deprived of the rebate, is not acceptable in view of the clear requirement of the statute.”

The Court examined Section 8 of the CST Act in detail and concluded that Section 8(5) is merely an enabling provision that operates subject to compliance with Section 8(4).

Referring to Rule 12(7) of the CST (Registration and Turnover) Rules, 1957, the Court noted that declarations must be submitted within three months. In this case, the time expired on 30.06.2011 with no C Form or extension application submitted, thereby violating the statutory framework.

Court’s View on Precedents Relied by Petitioner:

The High Court specifically addressed and distinguished each case cited by the petitioner:

• Prism Cement Ltd. v. State of Maharashtra – Actually supported the respondent’s position that compliance with Section 8(4) is mandatory even under Section 8(5).

• Techer Power Solutions Pvt. Ltd. – Concerned refund claims based on proof of tax not being passed to consumers. Held inapplicable as present case involved exemption not refund.

• Shree Digvijay Cement Co. Ltd. v. State of Rajasthan – The Court noted that in that case, the notification itself provided an alternative to submission of C Forms, which was not present in the Assam notification.

“None of the case laws relied upon by the petitioner would come to the aid of the petitioner.”

No Vested Right Without Procedural Compliance:

A particularly crucial part of the ruling was the Court’s observation that eligibility certificates and industrial policies do not grant an automatic, vested right to exemption unless statutory procedures are followed.

Justice Medhi remarked:

“The Eligibility Certificate… is only with regard to the production, date, etc., and it is the fulfillment of the conditions which are necessary and mandatory to claim the rebate.”

Even the revisional authority noted that the rebate granted in the best-case scenario exceeded the legally permissible quantum, but chose not to interfere adversely under Section 82(2) of the Assam VAT Act, 2003 due to the limitations of revisional jurisdiction.

Dismissing the writ petition, the Gauhati High Court has reaffirmed the supremacy of statutory compliance over policy declarations in matters involving tax exemptions and industrial incentives. The judgment sends a clear message that industrial units cannot bypass declaration mandates under the Central Sales Tax Act by merely relying on state-level eligibility certificates or policy recommendations.

The Court ruled: “No case for interference is able to be made out by the petitioner and accordingly the writ petition is dismissed.”

This decision not only fortifies the principle of strict construction of fiscal statutes, but also serves as a guiding precedent for industrial units seeking exemptions under Section 8(5) of the CST Act. Failure to submit C Forms within the prescribed timeline extinguishes the claim to exemption — regardless of economic or policy considerations.

Date of Decision: 24 October 2025