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2019 (3) TMI 21 - HC - GSTLevy of CST - Benefit of lower CST or exemption from CST post GST - Procurement of high speed diesel oil for manufacturing - Section 8 (1) of the Act of 1956 - inter-state sale - clinker - benefit of the Form-C - concessional rate of duty - validity of Circular of 05.09.2017 - Held that - From a bare perusal of the Circular dated 05.09.2017, it is discernible from Clause 9 thereof that a dealer who purchased one of the six retained goods for the purpose of inter-state sale and used it for manufacturing of a finished goods, which would be a good, other than the six retained goods, is not liable to pay sales tax under the CST Act of 1956 and also under the AVAT Act of 2003 and to that extent his registration under Section 7(2) of the CST, Act of 1956 ceases to exist. The pre-requisite of being entitled for a registration under Section 7(2) of the CST Act of 1956 is that the dealer so registered is liable to pay tax under the sales tax law of the State, which in the present case would be AVAT Act of 2003. Therefore, if according to the authorities in the State of Assam in the Taxation and Finance Department the petitioners are not liable to pay any tax under the AVAT Act of 2003, from 01.07.2017 onwards, the authorities may withdraw the registration under Section 7(2) of the CST Act of 1956, inasmuch as, the pre-requisite of Section 7(2) of being liable to pay tax under the state sales tax law ceases to exist. The provisions of the AGST Act of 2017 in respect of the definition of the word goods and Section 9(2) thereof, are pari materia with that of the definition of the word goods under Section 2(52) and Section 9(2) of the CGST Act of 2017, respectively - the provisions of CST Act of 1956 as regards the six retained goods as indicated above continues to have its force and had not been repealed by the GST Act of 2017. In view of the provisions of Section 12(5) of the Constitution (One Hundred And First Amendment) Act, 2016 and 9(2) of the CGST Act of 2017, read with Section 9(2) of the AGST Act of 2017 and the admitted position of the respondent authorities in the Central Govt and the State Govt that neither the date for levy of tax under the GST Acts of 2017 had been notified in respect of the five aforementioned goods, including high speed diesel oil and nor there is any recommendation by the Goods and Services Tax Council as regards the date to make the GST Acts applicable in respect of the said goods, we are unable to accept with the contention of the learned Senior Additional Adovate General that upon withdrawal of the registration of the petitioners under Section 7(2) of the CST Act of 1956, they would now be subjected to a levy of tax under the GST Acts of 2017. As the very basis for withdrawing the registration under section 7(2) of the CST Act of 1956 is that from 01.07.2017 onwards the dealers dealing in interstate purchase of high speed diesel oil and using in for manufacture of good other than the six goods are not liable to pay a tax under the AVAT Act of 2003, the very basis of not being liable to pay tax under the AVAT Act of 2003 being incorrect and unacceptable, the provision for withdrawing or enforcing a cession of the registration of such dealers under section 7(2) of the CST Act of 1956 as provided in Clause-9 of notification dated 05.09.2017 is also found to be unacceptable and unsustainable. As it has been concluded that the registration of the petitioners u/s 7(2) of the CST Act of 1956 could not have been withdrawn for an underlying reason that the manufactured good referred in Section 8(3) of the CST Act of 1956 would also have to be amongst the six retained goods, this Court is of the view that the question whether the finished goods would also have to be amongst the six retained goods for the purpose of applying the provisions of Section 8(3) of the Act, need not be answered for the present. In the event, if the respondent authorities are of the view that the manufactured goods would also have to be amongst the six retained goods for availing the benefits of Section 8(3) of the CST Act of 1956, the appropriate remedy for implementing the same cannot be an withdrawal of the registration of the dealer u/s 7(2) of the Act by providing that in the circumstance, the dealer is no longer leviable under the AVAT Act of 2003. The circular dated 05.09.2017 is accordingly set aside. Petition disposed off.
Issues Involved:
1. Jurisdiction of the Commissioner of Taxes, Assam to issue the Circular dated 05.09.2017. 2. Validity of the Circular dated 05.09.2017 in light of the CST Act, 1956 and AVAT Act, 2003. 3. Applicability of Section 8(3) of the CST Act, 1956 post-GST implementation. 4. Impact of the GST Acts, 2017 on the registration and tax liability of dealers under the CST Act, 1956 and AVAT Act, 2003. Issue-wise Detailed Analysis: 1. Jurisdiction of the Commissioner of Taxes, Assam to issue the Circular dated 05.09.2017: The petitioners challenged the jurisdiction of the Commissioner of Taxes, Assam to issue the Circular dated 05.09.2017. The respondents argued that the Commissioner had the authority under Section 9(2) of the CST Act, 1956, Section 3(5)(b) of the AVAT Act, 2003, and Section 105 of the AVAT Act, 2003. However, the court found that the Circular was not for the proper administration of the Act but aimed to make the levy of tax under the AVAT Act of 2003 inapplicable to certain dealers. This action was impermissible under the law, as it effectively withdrew a statutory provision. Thus, the court concluded that the Commissioner did not have the jurisdiction to issue the Circular. 2. Validity of the Circular dated 05.09.2017 in light of the CST Act, 1956 and AVAT Act, 2003: The Circular dated 05.09.2017 provided that dealers making interstate purchases of high-speed diesel against Form-C for manufacturing goods other than the six retained goods would cease to be dealers under the CST Act of 1956 from 01.07.2017. The court found this provision incorrect and unacceptable, as the AVAT Act of 2003 continues to apply to the six retained goods under Section 174(1) of the AGST Act of 2017. The court concluded that the Circular's provision for withdrawing or ceasing the registration under Section 7(2) of the CST Act of 1956 was unsustainable. 3. Applicability of Section 8(3) of the CST Act, 1956 post-GST implementation: The petitioners argued that Section 8(3) of the CST Act, 1956, as interpreted by the Supreme Court, should not restrict the meaning of "goods" to the six retained goods. The respondents contended that the word "goods" in Section 8(3)(b) should have the same meaning as defined under Section 2(d) of the CST Act, 1956. The court noted that irrespective of whether the manufactured goods need to be amongst the six retained goods, this issue does not justify the withdrawal of registration under Section 7(2) of the CST Act, 1956. The court decided not to answer this question for the present. 4. Impact of the GST Acts, 2017 on the registration and tax liability of dealers under the CST Act, 1956 and AVAT Act, 2003: The court examined the provisions of the GST Acts, 2017, and found that the six retained goods are not yet subject to GST as no date has been notified by the government. Therefore, the petitioners cannot be subjected to GST for their interstate purchases of high-speed diesel. The court also found that the petitioners remain liable for tax under the AVAT Act of 2003, and thus, their registration under Section 7(2) of the CST Act, 1956, should not be withdrawn. The court concluded that the Circular dated 05.09.2017 was incorrect in stating that dealers using the six goods for manufacturing other goods are not liable to tax under the AVAT Act of 2003. Conclusion: The court set aside the Circular dated 05.09.2017, concluding that the Commissioner of Taxes, Assam, did not have the jurisdiction to issue it, and the provisions within the Circular were incorrect and unsustainable. The writ petitions were disposed of accordingly.
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