Dated: 26.10.2018 vs The Commissioner Of Commercial ... on 26 October, 2018
Madras High Court
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
1
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 26.10.2018
Reserved on : 12.10.2018
Delivered on : 26.10.2018
CORAM
THE HON’BLE Mr.JUSTICE K.RAVICHANDRABAABU
W.P.Nos.19458 to 19460, 19584, 20845, 22034, 23491, 23497, 23830, 23944, 24024, 24051, 24554, 24707, 24708, 24996, 24997, 25184, 25290, 25291, 25316, 25317, 25618, 25622, 25627, 25634, 25695, 25698, 25700, 25709, 25724, 25859, 25867, 26131, 26135, 26219, 26220, 26226, 26232, 26241, 26242, 26245, 26251, 26253, 26254, 26262, 26270, 26287, 26420, 26476, 26481, 26489, 26727, 26752, 26738, 26764, 26805, 26879, 27048, 27037, 27054, 27061, 27616, 27625, 27708, 27568, 28002, 28015, 28024, 28030 and 28033 of 2018. (71 Cases)
AND
all Connected W.M.Ps.
W.P.Nos.19458 to 19460:
M/s.The Ramco Cements Ltd.,
Rep. by its General Manager-Legal T.Mathivanan
Auras Corporate Centre, V Floor,
98-A, Dr.Radhakrishnan Salai,
Mylapore, Chennai-600 004. …Petitione
(in W.P.Nos.19458 to 19460
2
vs
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 1
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
- The Commissioner of Commercial Taxes Chepauk, Chennai-600 005.
- The Additional Commissioner (CT) Large Taxpayers Unit
5th Floor, Dugar Towers
No.34, Marshalls Road, Egmore,
Chennai-600 008. …Respondent
(in W.P.Nos.19458 to 19
Prayer:
Writ petition No.19458 of 2018 filed under Article 226 of t
Constitution of India for issuance of a Writ of Certiorari to call
records of the 1st respondent in Letter No.CC4/678/2012 and quash the Circular dated 31.05.2018 issued therein.
Writ petition No.19459 of 2018 filed under Article 226 of t
Constitution of India for issuance of a Writ of Certiorari to call
records of the 2nd respondent in CST.497541/2018-2019 and quash the notice dated 17.07.2018 issued therein.
Writ petition No.19460 of 2018 filed under Article 226 of t
Constitution of India for issuance of a Writ of Certiorari to call
records of the 2nd respondent in CST.497541/2018-2019 and quash
the proceedings dated 17.07.2018 issued therein.
3
For petitioners : Mr.R.L.Ramani, Senior Counsel
(in WP Nos.19458, 19459 & 19460 of 2018) Mr.P.Rajkumar
(in WP Nos.19584, 22034, 23491,
23497, 23830, 23944, 24024, 24707,
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 2
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
24708, 25184, 25316, 25317, 25859, 25867, 26131, 26135 & 26805 of 2018)
Mr.R.Kumar
(in WP.No.20845 of 2018)
Mr.J.R.Prabhakaran
(in WP No.24051, 27568 of 2018) Mr.S.P.Parthasarathy
for Mr.R.S.Pandiyaraj
(in WP Nos.24554, 24996, 24997, 25290, 25291, 25618, 25622, 25627, 25634, 25695, 25698, 25700, 25709, 25724, 26219, 26220, 26226, 26232, 26241, 26242, 26245, 26251, 26253, 26254, 26262, 26270, 26287, 26420, 26476, 26481, 26489, 26727, 26752, 26738, 26764, 27048, 26879, 27037, 27054, & 27061 of 2018)
Mr.R.S.Pandiyaraj
(in W.P.Nos.27616, 27625 and
27708, 28002, 28015, 28024, 28030 and 28033 of 2018)
For Respondents : Mrs.Narmadha Sampath
in all W.Ps. Additional Advocate General-VIII
Assisted by
Mr.M.Hariharan
Additional Government Pleader
Mrs.G.Dhana Madhri
Government Advocate
Mr.V.Haribabu
Additional Government Pleader
4
COMMON ORDER
In all these writ petitions, filed by individual petition
common grievance expressed before this Court is against the letter
dated 31st May 2018 issued by the Commissioner of Commercial
Taxes, Chepauk, Chennai-5 to all Joint Commissioners of his territ
jurisdiction, individual communication dated 17.07.2018 and a noti
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 3
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
dated 17.07.2018.
2. Through the said letter dated 31.05.2018, the Commissi
of Commercial Taxes informed all Joint Commissioners that any deal
who deals in petroleum crude, high speed diesel, motor spirit (pet
Aviation Turbine Fuel, Natural gas and Liquor, are alone entitled
effect purchases from other State by availing the concessional rat
tax. In other words, according to the Commissioner of Commercia
Taxes, those dealers, who are not dealing in those goods are not
eligible to purchase those six goods at the concessional rate of t
2% by issue of ‘C’ Form declaration, as they are trading or
manufacturing those goods that are administered under GST Act,
2017. Thus, the Commissioner of Commercial Taxes directed all t
Joint Commissioners to issue necessary instructions to the Assessi
Officers concerned that wherever approval is required for generati
‘C’ Forms, they should approve after verifying the eligibility for
5
those declarations. In the very same letter, the Commissioner
Commercial Taxes informed that dealers, coming under the following
categories, are entitled to purchase petroleum products and alcoho
liquors as they are dealers in those six commodities.
1. Major Oil Companies that included IOC,
BPCL, HPCL, Shell Reliance Industries, ONGC.
2. Major Distilleries that included Golden Vats,
SNJ Distilleries and TASMAC.
3. Major Hotels that included ITC, Oriental
Hotels, Crown Plaza, GRT Hotels, SAS Hotels Enterprises. TAJ GVK Hotels, Hablis Hotels etc.
4. Major Clubs, Resorts, Cultural Associations
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 4
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
that included Presidency Club, Madras boat Club,
Madras Gymkhana Club, Ootacamund Club, Andhra
Social Cultural Association, Ideal Beach Resorts, etc.
3. Thus, the Commissioner of Commercial Taxes excluded the
following category, as not entitled to purchase petroleum products
the goods manufactured by persons falling under the following category are being taxed under GST.
Other Dealers not related to the above category being Spinning Mills, Blue Metal crusher Unit, ILFS Tamil Nadu Power Company, Housing Promoters, Cement Companies (Ramco Cement), Mines, Nuclear Power Corporation etc.
6
4. In the impugned communication dated 17.07.2018 issued t
the individual writ petitioners, the Revenue informed the respecti
writ petitioners that they cannot generate online ‘C’ Forms from
01.07.2017 for those six commodities, which are not under the GST
Act, 2017 and that the Government did not amend Section 8(3)(b) of
the CST Act, 1956 for the reason that once Section 2(d) of the Sec
CST Act declares which are the commodities comes under the
definition of the goods then, automatically, only those goods can purchased using ‘C’ Forms.
5. The impugned notice dated 17.07.2018 called upon the
respective petitioner to file their objections as to why penalty s
not be levied as they have generated ‘C’ Forms for purchasing HSD,
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 5
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
which is ineligible.
6. As all these writ petitions project a common cause aggr
against the above proceedings of the Revenue, I take the leading c
in W.P.Nos.19458 of 2018 to 19460 of 2018 for discussing the facts
and circumstances, which warranted filing of these writ petitions.
7. The case of the petitioners is as follows:
7
(a) The petitioner is engaged in mining of lime stone and
manufacture of cement in the State of Tamil Nadu. The petitioner w
registered under the Tamil Nadu Value Added Tax Act, 2006 and
Central Sales Tax Act, 1956. The petitioner is also registered
the Tamil Nadu Goods and Services Tax Act, 2017 and Central Goods
and Service Tax Act, 2017 and Integrated Goods and Services Tax Ac
2017 on the file of the second respondent herein. As
Registration Certificate of the petitioner issued under the CST Ac
effect from on 01.10.2015, they are entitled to purchase high spee
diesel oil, light diesel oil at concessional rate of tax against i
declaration forms for use of the same in mining process or extract
The said Registration Certificate is still in force. From 01.07
Central Excise Act and Service Tax Act were repealed and the State
Value Added Tax Acts were partially repealed. The system of Indire
Taxation was replaced by the Goods and Services Tax Acts.
Section 2(d) of the Central Sales Tax Act, 1956, prior to 01.07.201
goods includes all materials, articles, commodities and all other
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 6
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
of movable property but does not include Newspapers, Actionable
claims, Stocks, Shares and Securities. After 01.07.2017, Section 2
of the CST Act, 1956, means goods as follows: (i) Petroleum crude;
(ii)High speed diesel;
8
(iii)Motor spirit (commonly known as petrol) (iv)Natural gas
- Aviation turbine fuel and
- Alcoholic liquor for human consumption
(b) Section 8 of the CST Act, 1956 deals with rates of tax
sales in the course of the interstate trade or commerce. As per Ru
12(1) of the CST (Registration and turnover) Rules, 1957, the
declaration referred in Section 8(4) shall be in Form C. When good
the description prescribed in Section 8(3) of the CST Act 1956 are
purchased from other States on interstate sale basis, the same can
purchased at the rate of 2% against issue of ‘C’ declaration forms
the seller. Central Sales Tax Act, 1956, has not been repealed by
CGST Act, 2017. Thus, even after 01.07.2017, the levy of tax on th
sale of petroleum, high speed diesel, motor spirit (Petrol), Nat
Gas, Aviation Turbine Fuel and Alcoholic Liquor for human consumpt
is governed by the provisions of the CST Act 1956 and the State Va
Added Tax Acts. The provisions of TNGST Act, 2017, CGST Act, 2017
and IGST Act,2017 are not applicable in respect of the above said those six items. Hence, even after 01.07.2017, the petitioner
continued to purchase high speed diesel oil and low speed diesel o
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 7
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
interstate basis against the issue of ‘C’ declaration forms inasmu
the petitioner was using those goods in mining and certificate of
9
registration granted to the petitioner permitted the same. The ‘C’
declaration forms are being generated by the petitioner online. Ti
March 2018, the petitioner has generated ‘C’ declaration forms.
Thereafter, the system is not permitting the petitioner to generat
declaration forms online.
c) While so, the first respondent issued the impugned circu
dated 31.05.2018 and further impugned communications. The above
instruction of the first respondent is erroneous, without jurisdic
contrary to the provisions of CST Act,1956. In respect of another
similarly placed dealer, who was also engaged in the busin
limestone and manufacture of cement, the Chhatisgarh High Court in
Writ Petition (TP) No.83 of 2018 dated 18.05.2018 in the case of Shree Raipur Cement Plant (A unit of Shree Cement Limited)
Vs. State of Chhattisgarh, Finance Department (Tax Division)
held that the petitioner’s registration certificate under the CST
still valid and the goods defined under section 2(d) of the CST Ac
1956 including high speed diesel and thus, the petitioner therein
entitled for issuance of ‘C’ form for interstate purchase/ sale of
speed diesel against the said ‘C’ form. Similar orders were passed
the Punjab and Haryana High Court in the case of Caparo Power
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 8
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
10
Limited vs. State of Haryana in CWP.No.29437 of 2017 dated
28.03.2018 and the Rajasthan High Court in the case of Hindustan
Zinc Limited & several others vs. The State of Rajasthan & Ors
dated 18.05.2018. The Revenue went on appeal as against the order
of Punjab and Haryana High Court in the Caparo Power Limited case
and the Apex Court, by order dated 13.08.2018 dismissed the SLP fi
by the State and confirmed the order of the Punjab and Haryana Hig
Court. Hence, the writ petitions are filed challenging the impugne
communications.
8. The other writ petitioners are engaged in mining of lime
stone and manufacture of cement, blue metal, yarn products, textil
fertilizers, pesticides, steel valve casting products, cotton yarn
yarn and gada cloth, white cement, their substitutes and concrete
mixture, ready mix concrete, purchase and sale of sand and jelly a
also engaged in production of broiler chicks, poultry feed and bro
chicken. These petitioners are purchasing the petroleum product/HS
for captive power generation of electricity and use the same in th
manufacturing activities.
9. A common counter affidavit is filed by the respondents.
11
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 9
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
crux of the objections raised by the respondents is as follows:
a) The writ petition is not maintainable for the reason th
impugned letter is nothing but an internal communication to cause
certain verification of the eligibility in issue of declaration fo
an intention to safeguard the State exchequer. It is a g
administrative communication not intended to any asse
particular. It is not a circular.
b) As per the amended definition of goods in Section 2(d)
the CST Act, 2017 from 01.07.2017, the goods that can be dealt by
any dealer administered under CST Act, 1956, are petroleum crude,
HSD, Motor Spirit, Natural Gas, Aviation Turbine Fuel and alcoholi
liquor for human consumption and therefore, those goods alone can
be purchased at a concessional rate against issue of ‘C’ declarati
form and either disposed or sold or exported outside the country.
Though the dealers are permitted to effect sale or purchase of goo
under CST Act, 1956, condition prescribed under Section 8(3) of CS
Act, 1956 is that the goods emanating out of the process of mining
generation or distribution of electricity or telecommunication sho
of those six goods and cannot be extended to other goods.
12
c) While purchasing one of the above 6 goods from other Sta
at a concessional rate of tax at 2% against issue of ‘C’ declarati
Form, the said 2% goes to the selling State only. After purchasing
goods from other States, only if the purchaser in Tamil Nadu again
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 10
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
manufactures any one of the 6 goods out of it and sells either loc
or interstate, the State of Tamil Nadu would get tax revenue eithe
the form of Local VAT or 2% CST. On the other hand, if t
purchasing dealer uses the above purchased goods f
manufacture of GST goods and sells it again to another state only
accrues to the destination state and in such scenario the state of
Nadu stands devoid of any tax revenue out of the above transaction
Hence, the restriction of concessional levy on purchase of those s
goods for the dealers dealing in GST goods is valid in all aspects
d) The definition of Dealer provided under CST Act, 1956 is
applicable only for those who are registered under CST Act 1956 an
in the event of smooth transition from erstwhile Act to GST Act 20
the registration under CST Act automatically vanished and does not
exist independently without the support base of local VAT Act.
e) As per the communication in the Gazette of India, New
13
Delhi, dated 5th May 2017, whereby the Ministry of Law and Justice
published the Taxation Laws (Amendment) Act 2017 No.18/2017
under Chapter IV, 13(b), the definition of goods under the CST Act
was amended. Subsequently, the Department of Revenue, Ministry of
Finance, New Delhi had in November 2017, interpreted what the term
Goods, as per the above Notification, is to be construed. Though t
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 11
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
Department of Revenue further clarified that the word goods
occurring in the amended Section 2(d) and the word goods occurring
in Section 8(3)(b) of the same Act is restricted to only the said
and nothing else, still it has extended the benefit for use in the
communications network or in mining or in the generation or
distribution of electricity or any other form of power. The a
interpretation is against the very concept of the present VAT Act
the CST Act. That means it is stated that a dealer in generation a
supply of electricity or mining of lime stone for manufacture of c
can also purchase any one of the 6 goods which are used for
manufacture of other than VAT/CST goods i.e. GST goods.
interpretation was found by State of Tamil Nadu to be inconsistent
the provisions of the CST Act, 1956 and hence a clarification was
sought from the Joint Secretary (Revenue) by the then Additional C
Secretary to Government (FAC) CT&R Department, Chennai-9 in
14
December 2017. The clear intention of the internal communication h
been well laid out from the said letter dated 31.05.2018. The said
communication issued was aimed at and restricted only towards
dealers involved in various business activities and may indulge in
misuse of ‘C’ Form declarations which could be evidently found,
keeping in mind the loss of revenue that should accrue and is due
the State, assured as per Section 9(2) of CST Act, 1956, in relati
goods kept out of the purview of CST Act, 1956.
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 12
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
f) The Hon’ble Punjab-Haryana High Court in the case of
Tvl.Caparo Power Ltd vs State of Haryana and Others in CWP
No.29437 of 2017 dated 28.03.2018, has not considered the vital
aspect that the dealer is not at all eligible for Registration und
CST Act, 1956, when they are not dealing in one of the six goods as
per the amended provision of Section 2(d) of the CST Act read with
Section 7 of the CST Act. When they are not registered under the CS
Act, 1956, they cannot issue ‘C’ declaration forms to avail the
concessional rate of tax. Further, in the above said judgment,
High Court has interpreted the word, the sales tax law of the
appropriate State found in Section 8(1) of the CST Act 1956 as
inclusive of SGST Act also. But the sales tax law of the approp
15
state mentioned in the above section refers only Value Added Tax t
existed prior to introduction of GST. Thus, even though there
discrepancies in the above said judgment of the Hon’ble High Court
when the judgment was taken up by the Haryana Government before
the Hon’ble Supreme Court of India by way of SLP, the same was
dismissed by the Supreme Court, which does not mean that State of
Tamil Nadu should also continue to admit that dealers such as the
petitioner are bestowed with such incorrect apprehe
interpretations and rights to purchase at lower rate a commodity n
under GST and utilize it to produce an end product in the ambit of
and enjoy the same.
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 13
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
10. A rejoinder has been filed by the petitioner, wherein i
stated as follows:
a) When the Legislature thought it fit to amend various sec
of the CST Act, 1956 and also introduce the CGST Act, 2017, and IG
Act, 2017, it has thought it fit not to amend Sec.8(3) of the CST
1956 and permit the purchase of the 6 goods mentioned in Section
2(d) of the CST Act, 1956 for use in mining, generation/distributi
electricity or in telecommunication network against the issue of C
declaration, it is not for the respondent now to contend that thes
16
processes should also ultimately end up in the emanation of the 6 goods mentioned under Section 2(d) of the CST Act, 1956.
b) As per Article 269 of the Constitution of India, taxes
sales or purchase of goods where such sale or purchase takes place
the course of inter-state trade or commerce shall be levied and
collected by the Government of India but shall be assigned and sha
be deemed to have been assigned to the States. Hence, it is only t
Central Government which has the sole power to levy tax on the sal
or purchase of goods that takes place in the course of inter-state
or commerce. In such circumstances, when the Central Government
has clarified that the amended definition of goods under Section 2
of the CST Act, 1956 does not affect the provisions of Section 8(3
of the CST Act, 1956 relating to telecommunication network or mini
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 14
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
generation or distribution of electricity or any other form of pow
respondent herein/State Government has not power whatsoever to
comment/conclude that such an interpretation is inconsistent with
provisions of the CST Act, 1956 and therefore they have decided to
issue instructions contrary to the clarification of Government.
17
c) When the Central Government has clarified that it is ope
the dealers to purchase the 6 goods mentioned in Section 2(d) of t
CST Act, 1956 for use in telecommunication network, mining,
generation/distribution of electricity/any other form of power, th
State Government cannot deny the same and direct its officers not
permit dealers who want to use the 6 goods in these activities to
generate C declaration forms. It is wrong to state that as per Sec
of the CST Act, 1956 only the following two categories of dealers
for registration: (i) dealers liable to pay tax under the CST Act,
(ii) dealers liable to pay tax under the sales tax law of the appr
State i.e., Tamil Nadu Value Added Tax Act, 2006. The respondent i
reading words into the Statute. Section 7(2) of the CST Act, 1956
states Sales Tax law of the appropriate State. It does not say TNV
Act, 2006.
d) From the above, it is clear that Value Added Tax Law has
included in the definition of sales tax law and the above definiti
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 15
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
not restrict the sales tax law to mean Value Added Tax Law alone.
From 01.07.2017, the sales tax law providing for levy of taxes on
or purchase of goods generally is TNGST Act, 2017, CGST Act, 2017
18
on specified goods is TNVAT Act, 2016. The petitioner being a regi
under the TNCST Act, 2017 and the CGST Act, 2017 is entitled to co
to be registered under the CST Act, 1956. All the contentions now
by the respondent herein have already been raised by the respectiv
Governments in the said judgements and duly considered by the said
Courts and the judgment of the Punjab & Haryana High Court has als
been affirmed by the Supreme Court by dismissing the SLP vide orde
dated 13.08.2018 in SLP(C)No.20572/2018.
11. Mr.R.L.Ramani, learned Senior Counsel, Mr.P.Rajkumar,
Mr.S.P.Parthasarathy and Mr.R.Kumar, learned counsels appeared and
argued for the petitioners. A written submission is also filed
W.P.Nos.19458 to 19460 of 2018. The sum and substance of t
submissions made on behalf of the petitioners are as follows:
a) The petitioners are engaged in manufacture of various
products in the State of Tamil Nadu. Certificate of Registrati
been granted to the petitioners under the CST Act, 1956 and the
petitioners are entitled to purchase high speed oil, light diesel
concessional rate of tax against ‘C’ declaration forms for use of same in mining process.
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 16
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
19
b) With effect from 01.07.2017, Goods and Services Tax Act
was introduced in the country. At that time, the Central Sales Tax
was amended drastically.
c) Section 8 of the CST Act, 1956 remains unamended even after 01.07.2017 and the said Section is retained as such.
Section 8(3)(b) of the CST Act, the petitioners are entitled to iss
declaration forms and purchase petroleum products at concessional rate of 2%.
d) On 31.05.2018, the Principal Commissioner has issued the
impugned Circular. In the said Circular, the Commissioner has take
the stand that after the introduction of G.S.T., any dealer, who d
the six goods mentioned under the definition of goods under the CS
Act, who effect purchase and sales and those, who effect purchase
those goods and manufacture those goods, are alone eligible to be
assessed under the CST Act. In other words, any dealer, who deals
those six goods alone, are entitled to effect purchase from other
by availing concessional rate of tax. However, the Commissioner ha
lost sight of the other part of Sec.8(3)(b) of the CST Act, 1956,
permits purchase of goods of the class or classes specified in the
20
Certificate of Registration for use in mining. The
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 17
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
13.07.2018, a letter was filed by one of the petitioners before th
second respondent to the effect that they are eligible to issue ‘C
declaration forms in respect of the six commodities in the light o
provisions of Section 8(3)(b) of the CST Act, by enclosing the ord
passed by the High Court of Chattisgarh and Rajasthan, allowing th
eligibility of issuing ‘C’ Forms.
e) On 17.07.2018, two notices were issued. The first notice
the effect that the petitioners cannot generate on line ‘C’ declar
forms with effect from 01.07.2017 for purchase of the 6 commoditie
mentioned in Sec.2(d) of the CST Act, 1956, as the petitioners’ manufactured product comes within the purview of GST Act.
second Notice is for the purpose of imposing penalty under Section
A of the CST Act for alleged mis-use of declarations.
circumstances, the petitioners were constrained to file these writ
petitions.
f) The very same legal issue whether a dealer is entitled to
‘C’ declaration forms and purchase petroleum products from outside
the State and use the same in the generation of electricity, after
21
introduction of G.S.T. with effect from 01.07.2017, was considered
the Division Bench of the High Court of Punjab & Haryana in the ca
of Caparo Power Ltd in CWP No.29437 of 2017 dated 28.03.2017
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 18
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
dated 28.03.2018. The petitioner in the said case is engaged
generation of electricity through its power plant. In the said jud
the legal issue was considered in detail and it was decided in fav
the assessee. The writ petition was allowed by the Punjab & Haryan
High Court and the respondents were directed to issue ‘C’ declarat
forms for the purchase made by the petitioner from the oil compani
in Gujarat and used in the generation or distribution of electrici
power plants in Haryana.
g) The Rajasthan High Court in the case of Hindustan Zinc Lt
considered the very same issue in a batch of writ petitions.
cement companies are parties to the said judgment. The High Court
considered the issue in detail and was pleased to follow the law l
down by the Punjab & Haryana High Court in the case of Caparo Powe
Limited.
h) On 18.05.2018, Chattisgarh High Court had occasion to
consider this issue with reference to a cement company viz. Shree
22
Rajpur Cement Plant and followed the judgment in the case of Punja
and Haryanan High Court in the case of Caparo Power Ltd.
again, the Rajasthan High Court in the case of Udaipur Cement Work
Ltd. considered the very same issue and followed the judgment in t
case of Hindustan Zinc Ltd., which is already referred to.
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 19
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
i) It is submitted that as against the judgment of the Divis
Bench in the case of Caparo Power Limited, the State of Punjab &
Haryana filed Special Leave Petition No.20572/2018 and the same wa
dismissed on 13.08.2018, after hearing both sides.
j) From the above, it is very clear that the question of law
was decided by the Division Bench of the Punjab & Haryana
Government is affirmed by the Supreme Court on 13.08.2018. It has
a binding effect on all the respondents, especially when the same
issue is considered and answered in favour of the assessee and als
having regard to the fact that Central Sales Tax Act, 1956 is a Ce
Enactment applicable in all States. Therefore, when the provisions
the Act are considered by one High Court, the same has a binding
effect on the officers in other States.
23
k) It is further submitted that the C.S.T. Act is enacted by
Parliament. Ministry of Finance, Department of Revenue issue
clarification in F.No.28011/03/2014-ST-II dated 07.11.2017.
clarification issued by the Ministry of Finance is directly in fav
petitioners. In such circumstances, the State of Tamil Nadu has
power or jurisdiction to take a view contrary to the stand already
by Ministry of Finance in their Office Memorandum dated 07.11.2017
l) In view of the above, the impugned Circular issued by the
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 20
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
Principal Commissioner dated 31.05.2018 and the two notices dated
17.07.2018 issued by the second respondent viz. The assessing
authority are not in conformity with the judgments referred to abo
and also the Office Memorandum dated 07.11.2017 issued by the Ministry of Finance and therefore liable to be quashed.
12. Mrs.Narmadha Sampath, learned Additional Advocate
General appeared for the respondents and argued the matter.
written submission is also filed on behalf of the respondents. The
and substance of the submissions made on behalf of the respondents
are as follows:
a) The writ petitions are not maintainable and pre-mature a
24
are liable to be dismissed. The petitioner’s registration under th
Act is capable of being assessed by the respondents in terms of
Section 7(4)(b) of the CST Act, 1956 read with Rule 9 of the CST
Rules, 1957. Hence, the respondents can alter, amend or cancel the
registration of the petitioners after following the due process of
described under Section 7(4)(b) of the CST Act read with Rule 9 of
Rules, 1957. The petitioners have filed more than 50 writ petiti
before this Court. However, only in respect of three writ petit
(W.P.No.19459/2018, W.P.No.25316/2018 & W.P.No.26131/2018),
notices issued imposing penalty under Section 10A of the CST Act h
been challenged. All the other writ petitioners have challenge
internal communication dated 31.05.2018. The clear intention of th
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 21
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
internal communication has been well laid. The said communica
issued was restricted only towards dealers involved in various bus
activities and may indulge in misuse of ‘C’ Form declarations, whi
could be evidently found, keeping in mind the loss of revenue that
should accrue and is due to the State, assured as per Section 9(2)
CST Act, 1956, in relation to goods kept out of the purview of CST
1956. The impugned letter is nothing but an internal communication
to the Joint Commissioners (ST) to cause certain verification of
eligibility in issue of declaration forms with an intention to saf
25
the State Exchequer. It was a general administrative communication
which was not intended or addressed to any assessee in particular
thus cannot be challenged before this Court b
extraordinary jurisdiction of this Court under Article 226 of the
Constitution of India. Reliance is placed on the decision of the H
Supreme Court in the case of State of Orissa and Others vs Mesco Steels Ltd & anr. (2013) 4 SCC 340.
b) After the amendment, the CST Act is made applicable
for 6 goods as mentioned above and therefore to that extent of 6
goods alone, the benefits enjoyed out of the original Act has to b
restricted. It is pertinent to note that if the dealers had p
those 6 goods locally (within the State), they have to pay tax at
rate of 28%. However, since it is inter-state Sale and if the deal
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 22
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
able to produce C-Form, they would be liable to pay only 2%. Hence
there is a huge leakage of revenue for the States.
c) As per Section 8(3) of CST Act, in order to avail c
levy on the purchase of the 6 goods from other States, a dealer mu
either re-sell, or use in manufacture and subsequent sale of the g
or in mining, or in generation/distribution of
26
Telecommunication. In other words, in order to issue C-Form, a dea
should be dealing in the 6 goods only and cannot be extended to ot
goods. In respect of any finished goods on which GST is paid, th
petitioners cannot be allowed to download C-Forms. That me
while purchasing one of the above 6 goods from other State at a
concessional rate of tax at 2% against issuance of ‘C’ declaration
Form, the said 2% goes to the selling State only. After purchasing
goods from other States, only if the purchaser in Tamil Nadu again
manufactures any one of the 6 goods out of it and sells either loc
or interstate, the State of Tamil Nadu would get tax revenue eithe
the form of Local VAT or 2% CST. On the other hand, if t
purchasing dealer use the above purchased goods for the manufactur
of GST goods and sells it again to another State, only IGST accrue
the destination State and in such scenario, the State of Tamil Nad
deprived of any tax revenue out of the above transaction. Even if
manufactured GST goods are sold locally but subsequently moves to
other States again the tax accrued to the State is Nil. The defini
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 23
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
Dealer provided under CST Act, 1956 is applicable only for those, are registered under CST Act, 1956 and in the event of smooth
transition from erstwhile Act to GST Act 2017, the registration un
CST Act automatically vanished and does not exist independently
27
without the support of local VAT Act. Therefore, once the applicab
of definition of dealer under CST Act is not available for a parti
dealer, then the benefits provided under the said Act definitely c
continue to exist and therefore, they become ineligible.
13. Heard both sides and perused the materials placed befor
this Court.
14. These writ petitions are filed by individual writ petit
who are engaged in any one of the following activities, viz., 1. Mining of limestone and manufacturing of cement.
- Mining and manufacture of blue metal.
- Manufacture of steel structural such as heavy beams and channels.
- Manufacture of cotton yarn and textiles.
- Manufacture of fertilizers and pesticides
6. Buying and selling of lubricants, sulphur furnace and hig
speed diesel oil and petrol.
7. Production of broiler chicks, poultry feed and broiler ch
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 24
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
- Manufacture of steel valve casting products.
- Manufacture of ready mixed concrete products and sale of
28
sand and jalli.
10. Manufacture of cement including white cement and their substitutes and concrete mixture.
15. While such of those petitioners, who are engaged in mini
activities by purchasing petroleum product like HSD for the use of
mining activity, the other petitioners, who are engaged in the oth
activities, as stated supra, are purchasing petroleum product like
for captive power generation of electricity for
activity/manufacturing process.
16. All these writ petitioners are commonly aggrieved agai
the action of the respondents in denying permission to download an
issue ‘C’ declaration forms for purchase of petroleum products at
concessional rate of 2%, as has been permitted in the past and til
issuance of the impugned circular. These writ petitioners, by issu
such ‘C’ declaration forms, purchased petroleum products by inters
trade as contemplated and permitted under Section
CST Act, 1956. All these writ petitioners are registered dealer
the respective office of the respondents and there is no dispute t
fact that they are holding a valid Certificate of Registration iss
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 25
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
29
the respondents under the CST Act, 1956. It is also not in dispute
the said Certificate of Registration entitles the petitioners to p
petroleum products at concessional rate of tax against ‘C’ declara
forms for use of the said petroleum product in their manufacturing
activities. It is also not the case of the respondents that the Ce
of Registration issued to the petitioners has either been cancelle
any proceedings are initiated to do so.
17. Section 8(3)(b) of the CST Act, 1956, which entitles t
petitioners to issue ‘C’ declaration form and purchase petroleum products at concessional rate of tax, reads as follows:
8. Rates of tax on sales in the course of inter-State trade or commerce.
1. Every dealer, who in the course of inter-State
trade or commerce, sells to a registered dealer goods of
the description referred to in sub-section (3) shall be liab
to pay tax under this Act, which shall be two percent, of hi
turnover or at the rate applicable to the sale or purchase o
such goods inside the appropriate State under the sales tax law of that State, whichever is lower;
…..
…..
http://www.judis.nic.in (3). The goods referred to in sub-section (1) – …(b) Are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for re-sale by him or subject to any rules made by the Central Government in this b ehalf , for u s e b y h im i n t he m anufa c t u r e o r p r o c e s s i n g o f g o o d s f o r s a l e o r i n t h e tele-communications network or in mining or in the generation or distribution of electricity or any other form of power;
18. Perusal of the above said provision of law would show that every dealer in the course of interstate trade or commerce, sells to a registered dealer goods of the description referred to in sub
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 26
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
section (3), shall be liable to pay tax under the said Act, which shall be 2% of his turnover or at the rate applicable to sale or purchase of such goods inside the appropriate State under the sales tax of law of that State, whichever is lower. Sub Section (3)(b) further contemplates as to what are the “goods” referred to in sub section (1). It is specifically stated that the “goods” referred to in sub section (1) of Section 8 are goods of the class or classes specified in the Certificate of Registration of the registered dealer. It is further clarified therein that such purchase of goods by the registered dealer is for use by him in the manufacture or processing of goods for sale or in the telecommunication network or in mining or in the generation or distribution of electricity or any other http://www.judis.nic.in form of power.
- Thus, it is evident that a registered dealer, who is holding a valid Certificate of Registration, which is in force, if satisfies the requirement contemplated under sub clause (3)(b) of Section 8, is entitled to pay the concessional tax, as provided under sub clause (1) of Section 8.
- There is no dispute to the fact that even after the introduction of GST, though several drastic amendments were made to CST Act, 1956, this particular provision of law viz., Section 8(3)(b) has not undergone any change. On the other hand, it is admitted by both sides that the said provision still holds the field.
- It is seen that these petitioners were purchasing the petroleum products, all along, at concessional rate of tax by issuing ‘C’ declaration forms in view of such entitlement conferred to them under Section 8(3)(b), as stated supra. The trouble started only when the Commissioner of Commercial Taxes of the State of Tamilnadu issued a communication dated 31.05.2018 to all the Joint Commissioners of the State, wherein it was informed that for the purpose of getting the http://www.judis.nic.in benefit of concessional rate of paying the tax, while purchasing petroleum products by way of interstate trade, the dealer must be a person, who should be dealing in those six goods defined under Section 2(d) of the CST Act, 1956, after the amendment came into force on 01.07.2017.
- In other words, the crux of the contention of the respondents is that if a dealer having valid Certificate of Registration under the CST Act, 1956, seeks to purchase petroleum products from other State by availing concessional rate of tax against ‘C’ declaration forms, must be a dealer in dealing with only those six goods defined under Section 2(d) and not a dealer, just to utilise such petroleum products for the purpose of manufacturing or processing of goods for sale or telecommunication network or in mining or in the generation or distribution of electricity or any other form of power, as permitted under Section 8(3)(b) of the said Act. Thus, it is the clear case of the respondents that after the amendment, the CST is made applicable only for those six goods, as mentioned above and therefore, the benefits enjoyed out of the said provision has to be restricted only to the extent of those six goods. It is the further contention of the respondents that if the dealers purchase those six goods locally, they http://www.judis.nic.in have to pay the tax at the rate of 28% and however, by way of interstate sale and by issuing ‘C’ Form, these petitioners are paying tax only at the rate of 2%. Therefore, it is contented that there is a huge leakage of revenue for the State.
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 27
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
23. Let me consider the above objection of the respondents. It is true that the definition of term goods as previously defined under section 2(d) of the Central Sales Act, 1956, has changed after the introduction of GST and by substitution by Act 18 of 2017 with effect from 01.07.2017. The definition of “goods” under section 2(d) prior to amendment was an inclusive definition, which reads as follows:
“2.Definitions:- In this Act, unless the context otherwise requires,-
…(d) “goods” includes all materials, articles, commodities and all other kinds of movable property, but does not include Newspapers, Actionable claims, Stocks, Shares and Securities;”
24. After amendment, the term goods is defined under Section 2(d) as follows:
“2.Definitions:- In this Act, unless the context otherwise requires,-
http://www.judis.nic.in [(d) “goods means –
- Petroleum crude;
- High speed diesel;
- Motor spirit (commonly known as petrol)
- Natural gas
- Aviation turbine fuel and
- Alcoholic liquor for human consumption.]”
- Therefore, it is evident that the inclusive definition of “goods” as stood prior to the amendment has now become exhaustive, after the amendment, confining only to the above six products. Therefore, the term goods wherever occurs in the Central Sales Tax Act, 1956, has to be construed in the light of the definition made under Section 2(d) after the amendment.
- By keeping the above statutory position with regard to the definition of goods in mind, let me consider the objections raised by the respondents with regard to the purchase made by these petitioners in respect of petroleum products/HSD outside the State of Tamilnadu as an interstate trade. I have already extracted Section 8(3)(b) supra. The crux of the contentions raised by the respondents to deny the benefit under Section 8(3)(b) to these petitioners is that the http://www.judis.nic.in purchasing goods and manufacturing or selling goods of the petitioners are not one and the same. In other words, only when the goods purchased and the goods manufactured or sold, are one and the same and more particularly, only when such goods also falls under any one of the six items referred to under section 2(d), the petitioners are entitled to the benefit under
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 28
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
section 8(3)(b).
27. I have given my careful consideration to the above said contentions and also perused the above said provision of law viz., Section 8(3)(b) with utmost care. In my considered view, the above contention of the respondents cannot be accepted as valid in law in view of the fact that Section 8(3)(b) stands unamended even as on today and holds the field. As per the said provision of law, the dealer, who purchases the goods in the course of interstate trade, is entitled to get the benefit of concessional rate of tax, if the purchased goods is used by the said dealer in anyone of the following activities:
- in the manufacture of processing of goods for sale;
- use in the telecommunication network;
- use in mining;
- use in the generation or distribution of electricity or any other form of power; http://www.judis.nic.in
- Therefore, it is very clear that though the “goods” as defined under Section 2(d), is purchased by the dealer by availing benefit of concessional rate of tax under Section 8(3)(b), it is not necessary that such dealer must be a person of manufacturing or processing only the same goods for sale to avail such benefit. On the other hand, if the said goods so purchased is put into use for the mining or for the telecommunication network or for the generation and captive consumption of electricity or distribution of the same or any other form of power as well, such of those dealers, who are engaged in those activities are also entitled to the benefit under Section 8(3)(b).
- At this juncture, it is to be noted that though the definition of “goods” under Section 2(d) was amended as stated supra, the legislature thought fit not to amend Section 8(3)(b) in any manner. On the other hand, in their wisdom, left the said provision as it is, so as to enable the dealers, who come within the purview, ambit and scope of Section 8(3)(b) to enjoy the benefit derived out of the said provision continuously as they were enjoying even before the amendment of Section 2(d).
- Even otherwise, if there is an ambiguity in a provision of http://www.judis.nic.in law or two provisions under the same statute contradict each other, the benefit of interpretation out of such ambiguity or contradiction should always go in favour of the assessee, since tax laws need to be with absolute clarity, not to give any room for interpretation in more than one way. Therefore, even assuming that there is a contradiction between Section 2(d) and Section 8(3)(b) of the CST Act, in terms of the understanding of the definition of “goods” or context in which it has to be dealt with under Section 8(3)(b), I am of the firm view that the benefit that is being enjoyed by the dealer out of the unamended provision of Section 8(3)(b) should continue to flow till any change is made to the said provision.
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 29
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
- The petitioner sought to claim the impugned communication as a Circular. It is contended by the respondents that the same is only an internal communication, which cannot be put to challenge. A careful perusal of the said communication, whether it is a circular or an internal communication, undoubtedly indicate that the Commissioner of Commercial Taxes had already come to a conclusion and issued direction to his subordinates not to allow the registered dealers to download ‘C’ declaration forms, if they are not the dealers dealing with the above said six goods alone. Therefore, it is evident that the said http://www.judis.nic.in communication dated 31.05.2018 certainly affects the rights of the petitioners directly and consequently prevents them from enjoying the benefit, they derived all along under Section 8 of the Central Sales Tax Act, 1956, more particularly, when all these petitioners are coming within the purview and scope of sub section (3)(b) of Section 8, as discussed supra.
- The other two impugned communications were also issued as a consequence of the circular/letter issued by the first respondent dated 31.05.2018. Out of those two communications dated 17.07.2018, it is stated in one communication that the respective petitioner is not entitled to generate online ‘C’ Forms from 01.07.2017 onwards for those commodities, which are not under GST Act, 2017. Likewise, in the other communication dated 17.07.2018, after reiterating the very same contentions, the respective petitioners were called upon to show cause as to why penalty cannot be levied for generating the ‘C’ Forms for purchasing the HSD from 01.07.2017 onwards. Therefore, it is evident that both these communications dated 17.07.2018 are not only against the ambit and scope of Section 8(3)(b) of the CST Act, 1956 and also against the principles of natural justice, as admittedly the petitioners were not issued with any notice http://www.judis.nic.in of proposal before taking such decision. Even in the impugned show cause notice, the respective petitioners were called upon only to show cause as to why penalty cannot be levied and not to show cause as to why the generation of ‘C’ Forms shall not be prohibited.
- Therefore, it is evident that the respondents have already come to a conclusion that these petitioners are not entitled to generate ‘C’ Forms for purchasing petroleum products by way of interstate trade from 01.07.2017 onwards, unless these petitioners/dealers are also dealers, who deal with those six goods alone. In other words, according to the respondents, these petitioners, who are not dealers in those six goods and on the other hand, manufacturers/dealers of other goods than the one referred to one under Section 2(d), after amendment, are not entitled to avail the payment of concessional rate of tax while they purchase the petroleum products from outside the State. When such purchase is not prohibited anywhere under the CST Act, 1956 and on the other hand, the said purchase and consequential use of such purchased goods are permitted under Section 8(3)(b) as discussed supra, I am of the firm view that the respondents do not have jurisdiction to issue the impugned communications, which in effect, is nullifying the provision made under Section 8(1), (3)(b) of http://www.judis.nic.in the CST Act, 1956, as stated supra.
- Further, it is to be noted that Union of India through its Department of Revenue, State Tax Division, dated 07.11.2017 has issued Official Memorandum specifically by stating that amendment made to Section 2(d) of the Central Sales Tax Act, 1956, does not affect the provision of Section 8(3)(b) of the CST Act, relating to telecommunication network or mining or generation or distribution of electricity or any other form of power. The said Memorandum reads as follows:
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 30
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
Subject: Clarification regarding definition of goods in sub-section (3)(b) of section 8
of the Central Sales Tax Act, 1956.
The undersigned is directed to say that opinion of Department of Legal Affairs, Ministry of Law was solicited on the issue Whether the definition of goods the phrase manufacture or processing of goods in section 8(3)(b) of the Central Sales tax Act would be as per the definition provided for under section 2(d) of the central sales tax Act or that the word goods when it appears in the phrase manufacture or processing of goods means any goods i.e., goods which fall within GST as well as goods which do not come under ambit of GST.
2. Department of Legal Affairs, Ministry of Law http://www.judis.nic.in has confirmed that the term Goods has been specifically defined under the Central Sales Tax Act, 1956 and prima facie the term Goods referred to in section 8(3)(b) of the Central Sales tax Act, 1956 will have same meaning as defined and amended under section 2(d) of the Central Sales Tax Act, 1956, vide Tax Laws Amendment Act, 2017. However it does not affect the provisions of section 8(3)(b) of the CST Act relating to telecommunication network or mining or generation or distribution of electricity or any other form of power. Therefore, it is evident from the above said Memorandum that the Central Government is clear in their stand that the dealers, who are entitled to the benefit under Section 8(3)(b) of the CST Act, shall continue to enjoy such benefit notwithstanding the amendment made to Section 2(d) of the Central Sales Tax Act, 1956.
35. It is to be noted at this juncture that the issue involved in these writ petitions has already been considered by the Punjab and Haryana High Court in the case of Caparo Power Limited vs. State of Haryana and others, in CWP.No.29437 of 2017 and the Division Bench of Punjab and Haryana High Court by its order dated 28.03.2018, rejected the very same contentions raised by the respondents therein and observed that the provisions of Section 8 of http://www.judis.nic.in the CST Act, Rule 12 of the CST (R&T Rules) and declaration of C Form have not undergone any amendment after the implementation of the GST laws and therefore, there cannot be any usage of ‘C’ Form only for the purposes of resale of the six items mentioned in the amended definition of ‘goods’ in the Section 2(d) of the CST Act. The Division Bench further observed that Section 7(2) does not stipulate that only a dealer liable to pay tax under the Sales Tax Law of the appropriate State in respect of any particular goods, is entitled to apply for registration, nor application for registration can be made or ‘C’ Form can be issued only in respect of the sale of the same goods prescribed in the course of an interstate sale. The Division Bench also found that the Registration Certificate given to the petitioner therein under the CST Act has not been cancelled. In those circumstances, the Division Bench of Punjab and Haryana High Court allowed the said writ petition and held that the respondents therein are liable to issue ‘C’ Forms in respect of natural gas purchased by the petitioner therein from Oil Companies in Gujarat and used in the generation or distribution of electricity at its power plants in Haryana. The relevant findings made in the above said case read as follows:
1.The petitioner has challenged the respondents’ refusal to issue `C’ Forms in respect of natural gas http://www.judis.nic.in purchased by it in the course of inter- state trade or commerce and used by
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 31
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
it for the generation of electricity. The petitioner seeks a writ of mandamus directing the respondents to issue `C’ Forms under the Central Sales Tax Act, 1956 and the Central Sales Tax (Registration and Turnover) Rules, 1957 in respect of the inter-state sales of natural gas by certain oil companies based in Gujarat to the petitioner in 1 of 25 Haryana and used by the petitioner for generating electricity.
….
….
4. The issue involved in the present petition is whether after the amendment of the CST Act, the petitioner is entitled to be issued `C’ Forms in respect of the natural gas purchased by it in the course of inter-state sales and used by it for the generation of electricity. We have answered the question in the affirmative, in favour of the petitioner.
….
….
- Mrs. Talwar then contended that the petitioner is not engaged in the business of re-selling the natural gas and is, therefore, not entitled to be issued `C’ Forms. The basis of the argument is that after the CGST Act came into force, the petitioner was not liable to pay any tax on electricity under the HVAT Act and it, therefore, ceases to be a registered dealer as per Section 7 (2) of the CST Act. http://www.judis.nic.in Mrs. Talwar contended that the petitioner’s registration under the CST Act lapsed on the commencement of the HGST Act and it ceased to have any effect. She contended that the petitioner does not sell within the State of Haryana or otherwise the same goods, namely natural gas, that it purchases from the Oil Companies in Gujarat. According 23 of 25 to her, the provisions of the CST Act and in particular Sections 7 and 8 thereof would apply only if the petitioner sold the same goods that it purchased viz. natural gas.
- The provisions of Section 8 of the CST Act, Rule 12 of CST (R&T) Rules and declaration Form C have not undergone any amendment after the implementation of the GST laws. There cannot be any occasion to restrict the usage of `C’ Form only for the purposes of re-sale of the six items mentioned in the amended definition of `goods’ in Section 2 (d) of the CST Act. The purchase of the said goods for purposes of re-sale, use in the manufacture or processing of goods for sale, in the tele-communications network or mining or in generation or distribution of electricity or any other form of power would qualify the purchaser for registration under Section 7 (2) of the CST Act. Section 7 (2) does not stipulate that only a dealer liable to pay tax under the sales tax law of the appropriate State in respect of any particular goods is entitled to apply for registration. Nor does section 7 (2) stipulate that an application for registration can be made or `C’ Form can http://www.judis.nic.in be issued only in respect of the sale of the same goods prescribed in the course of an inter-state sale. A dealer liable to pay tax under the sales tax law of the appropriate State in respect of any goods would be covered by Section 7 (2) of the Act.
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 32
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
- There is another aspect of the matter that the registration certificate given to the petitioner under the CST Act till date has not been cancelled. As per Section 7 (4) of the CST Act, the registration certificate granted has to be amended or cancelled. The said provisions have not been 24 of 25 invoked.
- In these circumstances, the writ petition is allowed. It is held that the respondents are liable to issue `C’ Forms in respect of the natural gas purchased by the petitioner from the Oil Companies in Gujarat and used in the generation or distribution of electricity at its power plants in Haryana. In the event of the petitioner having had to pay the oil companies any amount on account of the first respondent’s wrongful refusal to issue `C’ Forms the petitioner shall be entitled to refund and/or adjustment of the same from the concerned authorities who collected the excess tax through the oil companies or otherwise. The concerned authorities shall process such a claim within twelve weeks of the same being made by the petitioner in writing and the petitioner furnishing the requisite documents/form. http://www.judis.nic.in
- The above said decision of the Punjab and Haryana High Court was put to challenge before the Apex Court by the State of Punjab and Haryana in State of Haryana & ors vs. Caparo Power Ltd. & Ors. in the Petition for Special Leave to Appeal (C) No.20572/2018.
- The Hon’ble Supreme Court dismissed the said SLP on 13.08.2018, after hearing both sides by specifically observing that there is no legal and valid ground for interfering with the said order made in Caparo Power Limited’s case. Therefore, it is evident that the said order passed by the Punjab and Haryana High Court in Caparo Power Ltd.’s case, having been confirmed by the Apex Court, as stated supra, is binding on the respondents herein as well and therefore, they are not entitled to take a different stand and contest the matter before this Court.
- It is to be noted further that apart from Punjab and Haryana High Court, the other High Courts have also considered the same issue and have fallen in line with the findings rendered in the Caparo Power Ltd.’s case. The following are the decisions rendered by the other High Courts:
a) In Hindustan Zinc Limited & several others vs. The State of Rajasthan & Ors, the Rajasthan High Court in S.B.Civil Writ Petition No.5506/2018 dated 18.05.2018 has held as follows:
The present writ petitions are preferred against the action of the respondents in not
issuing ‘C’ form for various quarters of the year 2017-18 and quarters thereafter with
a further prayer to direct the respondents to issue ‘C’ form to the petitioner – companies.
…..
…..
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 33
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
Now the Department of Revenue, Ministry of Finance, Sales Tax Division, Government of India has issued the clarification vide Office Memorandum dated 07.11.2017 on the definition of goods in sub- section (3)(b) of Section 8 of the CST Act. As per the said clarification “Department of Legal Affairs, Ministry of Law has confirmed that the term “goods” has been specifically defined under the Central Sales Tax Act, 1956 and prima facie the term “Goods” referred to in section 8(3)(b) of the Central Sales Tax Act, 1956 will have same meaning as defined and amended under Section 2(d) of the Central Sales Tax Act, 1956 vide Tax Laws Amendment Act, 2017.
H o w e v e r , i t d o e s no t a f f e c t t h e p r o v i s i o n s o f s e c t i o n 8 ( 3 ) ( b ) o f C S T A c t r e l a t i n g t o telecommunication network or mining or generation or distribution of http://www.judis.nic.in electricity or any other form of power.” Hence, as per the said clarification on the definition of “goods”, the term “goods” as defined under the CST Act and prima facie the term “goods” referred to in section 8(3)(b) of the CST Act will have the same meaning as defined and amended under Section 2(d)of the CST Act vide Taxation Laws (Amendment) Act, 2017. However, a specific exclusion was carved out stating that the said amendment does not affect the provisions of Section 8(3)(b) of the CST Act relating to (a) telecommunication, (b) mining, (c) generation and distribution of electricity or any other form of power.
The argument so raised by the learned counsel for the respondents cannot be sustained in view of the provisions of Section 9(2) of the GST Act as referred above. Thus, any clarification in the existence of a clear Act will not supercede the provisions of the same.
…..
…..
In the present case too, the Parliament has retained high speed diesel along with petroleum crude, motor spirit, natural gas, aviation turbine fuel and alcoholic liquor for human consumption crude which have been specifically mentioned in Section 9 of the GST Act while defining the ‘goods’. Besides, the registration under Section 7(2) of the Act is still http://www.judis.nic.in valid and has not been cancelled and can be cancelled only within the parameters of Section 4 of the CST Act. Hence, this Court finds that it is obligatory duty of the respondents to issue ‘C’ form to the petitioner – company and any failure on the part of the respondents to do so is without any authority of law. Thus, this Court finds nothing to distinguish the case of the petitioners herein from that of the petitioner in the case of Carpo Power Limited (supra).
Accordingly, the present writ petitions are allowed in the same terms as Corpo Power Limited (supra). It is held that the respondents are liable to issue `C’ Forms in respect of the High Speed Diesel procured for mining purposes through interstate trade. In the event of the petitioners having had to pay any amount on account of the respondents wrongful refusal to issue `C’ Forms the petitioners shall be entitled to refund and/or adjustment of the same from the concerned authorities who collected the excess tax. The concerned authorities shall process such a claim within twelve weeks of the same being made by the petitioners in writing and the petitioners furnishing the
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 34
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
requisite documents/form.
b) In Shree Raipur Cement Plant (A unit of Shree http://www.judis.nic.in Cement Limited) Vs. State of Chhattisgarh, Finance department (Tax Division), the Chhatisgarh High Court has passed an order in Writ Petition (T) No.83 of 2018 dated 18.05.2018. The relevant portion of the said order reads as follows:
1. The short question involved in this writ petition is, whether the petitioner is entitled to be issued C-Form under the Central Sales Tax Act, 1956 read with the Central Sales Tax (Registration and Turnover) Rules, 1957 in respect of high speed diesel purchased by it in the course of inter-State trade and used by it in the course of manufacturing of cement, after the promulgation of the Central Goods and Services Tax Act, 2017 with effect from 1-7-2017.
…..
…..
32. A Division Bench of the Punjab and Haryana High Court in the matter of Carpo Power Limited v. State of Haryana and others 2 while dealing with non-issuance of C-Form with respect to natural gas to a dealer registered under the provisions of the CST Act, 1956, posed the following question for consideration and answered in affirmative. The question framed by Their Lordships states as under: –
“4. The issue involved in the present petition is whether after the amendment of the
CST Act, the petitioner is entitled to be issued ‘C’ Forms in respect of the natural gas
purchased by http://www.judis.nic.in it in the course of inter- state sales and used by
it for the generation of electricity. …”
…..
…..
36. The learned State counsel contended that after introduction and roll-out of the CGST Act, 2017 with effect from 1-7-2017, the petitioner has migrated to the GST regime from the CST regime by virtue of the provisions contained in Section 139 of the CGST Act, 2017 and registered as a dealer under the provisions of the CGST Act, 2017, therefore, the petitioner is not entitled for issuance of C- Form.
The said submission deserves to be rejected for reasons, firstly, that the CGST Act, 2017 has not by its repealing provision repealed the CST Act, 1956 which is vivid from the focused perusal of Section 174 of the CGST Act, 2017 and the provisions of the CST Act, 1956 are still applicable for its inter-State trade even after the roll-out of the GST Act confining to “goods” defined in Section 2(d) of the CST Act, 1956. Secondly, Section 9(2) of the CGST Act, 2017 specifically bars six items
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 35
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
including high speed diesel and to levy GST on high speed diesel, recommendation of the GST Council would be necessary to be notified by the Central Government, neither the GST Council has recommended levy of GST on high speed diesel nor it has been notified by the Central Government particularly when prior to introduction of GST with effect from 1-7-2017, the competent legislature has already http://www.judis.nic.in W.P.(T)No.83/2018 amended the definition of “goods” under Section 2(d) of the CST Act, 1956 and purposefully amended the definition of “goods” mentioning the same items which are barred under Section 9(2) of the CGST Act, 2017 whereby high speed diesel is included.
37. Next submission of the learned State counsel is that after introduction and promulgation of GST, the registration certificate of the petitioner issued under the provisions of the CST Act, 1956 and the rules made thereunder would automatically stand cancelled after his migration to the GST regime, has no legs to stand. The registration certificate issued under the CST Act, 1956 can be cancelled only after the initiation of proceeding as prescribed under Section 7(4)(b) of the CST Act, 1956 read with Rule 9 of the Rules of 1957 and the proceeding of cancellation has neither been initiated nor the petitioner’s certificate of registration has been cancelled till this date in accordance with the provisions contained in the CST Act, 1956 and the rules made thereunder. However, it would be clear that the registration certificate of the petitioner issued under the CST Act, 1956 will be limited to the goods as defined in the amended definition of Section 2(d) of the CST Act, 1956 after the promulgation of the CGST Act, 2017 and as such, after the promulgation of the CGST Act, 2017 with effect from 1-7- 2017, inter-State purchase of high speed diesel would still be governed by the provisions of the CST Act, 1956 and would not be governed by the provisions of the CGST Act, http://www.judis.nic.in 2017 and the certificate of registration issued to the petitioner under the CST Act, 1956 would still be valid to the extent of “goods” as defined under the amended definition of Section 2(d) of the CST Act, 1956 including high speed diesel.
…..
…..
39. On the basis of aforesaid analysis, it is held that the petitioner is a registered dealer under the provisions of the CST Act, 1956 read with the Rules of 1957 and his registration certificate under the CST Act, 1956 read with the Rules of 1957 continues to be valid for the purpose of inter-State sale and purchase of high speed diesel despite the petitioner having been migrated to the GST regime with effect from 1-7-2017, as the definition of goods as defined in Section 2(d) of the CST Act, 1956 has been amended prior to coming into force of the CGST Act, 2017 from 1-7-2017 which includes high speed diesel. Further, under Section 9(2) of the CGST Act, 2017, the GST Council has not made any recommendation for bringing high speed diesel within the ambit of the CGST Act, 2017 and therefore the Central Government has not notified high speed diesel to be within the ambit and sweep of the CGST Act, 2017. Thus, the petitioner’s registration certificate under the CST Act, 1956 is still valid for the goods defined in Section 2(d) of the CST Act, 1956, including high speed diesel, and the petitioner is entitled http://www.judis.nic.in for issuance of C-Form for inter-State purchase / sale of high speed diesel against the said C-Form. Accordingly, the respondents shall be liable and are directed to issue C- Form to the petitioner in respect of high speed diesel to be
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 36
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
purchased by the petitioner and used in the course of manufacture of cement and for that, it is further directed to rectify and remove the error on their official website and entertain the petitioner’s application submitted on-line on the official website seeking issuance of ‘C’ Form to the petitioner for said goods.
- The above decisions of various High Courts, more particularly, the order passed by Punjab and Haryana High Court made in Caparo Power Ltd’s case, confirmed by the Hon’ble Supreme Court, would show that the respondents herein are not entitled to take a different stand, especially, when the facts and circumstances in all these cases before this court as well as before the other High Courts, as extracted supra, are one and the same. In other words, the issue involved in these cases as well as the cases before the other High Courts is one and the same, out of which, one decision was confirmed by the Apex Court as well. Therefore, I find that the impugned communications, apart from being without jurisdiction, are not sustainable also on the reasons and findings rendered by the Punjab http://www.judis.nic.in and Haryana High Court on the same issue, confirmed by the Apex Court.
- In fact, though this Court has raised specific query to the learned Additional Advocate General as to how the above decisions rendered by the various High Courts are not applicable to the present facts and circumstances, especially when the issue is one and the same, she is not in a position to convince this Court in any manner and make any distinction on the facts and circumstances of the present case before this Court and the cases dealt with by other Courts.
- The learned Additional Advocate General contended that these writ petitions are not maintainable as against the internal communication. I have already found that the letter dated 31.05.2018 cannot be brushed aside as a simple internal communication, as the finding/conclusion made therein by the Commissioner of Commercial Taxes directly affects the rights of the petitioners conferred under Section 8(3)(b) of CST Act. Therefore, the petitioners are entitled to question the said communication dated 31.05.2018. Even otherwise, it is to be seen that such communication was i s s u e d b y t h e C o m m i s s i o n e r o f C o m m e r c i a l T a x e s w i t h o u t h e a r i n g t h e p e t i t i o n e r s . http://www.judis.nic.in Therefore, the unilateral decision arrived by the Commissioner of Commercial Taxes undoubtedly violates the principles of natural justice. Likewise, the other two communications are also in violation of the principles of natural justice and therefore, the petitioners are entitled to challenge those communications as well. No doubt, under normal circumstances, this Court would remit the matter back to the respondents for reconsidering the issue after hearing the petitioners. I do not think that such remand is required in these cases under the facts and circumstances as discussed supra, more particularly, when the fact remains that Section 8(3)(b) has not been amended and based on which, the petitioners are entitled to avail the benefit under the said provision, while they purchase the petroleum products by way of interstate sale against ‘C’ declaration forms.
- The learned Additional Advocate General further contended that these respondents are entitled to initiate proceedings for cancelling the ‘C’ declaration form and therefore, the present attempt of the petitioners in filing these writ petitions is pre-mature. This again, is not a convincing argument. Going by the impugned communications, it is seen that the respondents have not indicated
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 37
Dated: 26.10.2018 vs The Commissioner Of Commercial … on 26 October, 2018
anywhere that the registration forms issued to these petitioners are http://www.judis.nic.in proposed to be cancelled. On the other hand, their clear case is that based on such registration, the petitioners are not entitled to download and issue ‘C’ Forms for the purchase of petroleum products through interstate trade. Thus, when the intention of the respondents are very clear in the impugned communications, the learned Additional Advocate General is not justified in contending as though the respondents are contemplating to cancel the registration through the impugned proceedings. Needless to say that as long as the petitioners are having valid Registration Certificate and as long as section 8(3)(b) of the CST Act as such is holding the field, the respondents are not entitled to deny the benefit derived out of such provision of law to the petitioners, provided they fall under any of the following categories in using the goods so purchased, viz.,
- in the manufacture of processing of goods for sale;
- in the telecommunication network;
- in mining;
- in the generation or distribution of electricity or any other form of power.
43. Accordingly, all these Writ Petitions are allowed and the impugned proceedings are set aside. Consequently, the respondents are directed to permit these petitioners to download ‘C ‘ forms, as has http://www.judis.nic.in been done in the past for the purpose of purchasing petroleum products against the issuance of ‘C’ declaration forms. No costs. The connected miscellaneous petitions are closed.
26.10.2018 Speaking/Non Speaking Index :Yes/No vri/vsi http://www.judis.nic.in To
- The Commissioner of Commercial Taxes Chepauk, Chennai-600 005.
- The Additional Commissioner (CT) Large Taxpayers Unit 5th Floor, Dugar Towers No.34, Marshalls Road, Egmore, Chennai-600 008.
K.RAVICHANDRABAABU,J.
vri http://www.judis.nic.in PRE DELIVERY COMMON ORDER IN W.P.Nos.19458 to 19460, 19584, 20845, 22034, 23491, 23497, 23830, 23944, 24024, 24051, 24554, 24707, 24708, 24996, 24997, 25184, 25290, 25291, 25316, 25317, 25618, 25622, 25627, 25634, 25695, 25698, 25700, 25709, 25724, 25859, 25867, 26131, 26135, 26219, 26220, 26226, 26232, 26241, 26242, 26245, 26251, 26253, 26254, 26262, 26270, 26287, 26420, 26476, 26481, 26489, 26727, 26752, 26738, 26764, 26805, 26879, 27048, 27037, 27054, 27061, 27616, 27625, 27708 27568, 28002, 28015, 28024, 28030 and 28033 of 2018.
26.10.2018 http://www.judis.nic.in
Indian Kanoon – http://indiankanoon.org/doc/138249361/ 38
