2020 (9) TMI 986 - HC - VAT and Sales Tax

Benefit of concessional rate of tax - difficulty in obtaining 'C' forms - purchase of High Speed Diesel from suppliers in other States - HELD THAT - The petitioner is entitled to the inclusion of High Speed Diesel Oil as a commodity in the registration certificate. The issue involved in the Writ Petition is squarely covered by a decision of this Court in M/S. DHANDAPANI CEMENT PRIVATE LTD., M/S. TERU MURUGAN BLUE METAL VERSUS THE STATE OF TAMIL NADU, THE PRINCIPAL COMMISSIONER COMMISSIONER OF COMMERCIAL TAXES, THE ASSISTANT COMMISSIONER (ST) , THE JOINT COMMISSIONER (ST) TERRITORIAL, THE DEPUTY COMMISSIONER (ST) 2019 (2) TMI 1850 - MADRAS HIGH COURT , wherein it was held that The Petitioner in these Writ Petitions has stated on affidavit that it is unable to download the C forms from the websites as the same stand blocked from use. Upon enquiry with the Assessing Authorities, they have been informed that the benefit of the decision in M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) 2018 (10) TMI 1529 - MADRAS HIGH COURT Ltd can be extended only to those dealers in that are party to the decision. This stand is unacceptable in so far as the decision of this Court as well as other High Courts, one of which has been confirmed by the Supreme Court, are decisions in rem, applicable to all dealers that seek benefit thereunder, of course, in accordance with law. The State has, after the date of the above order, filed a Writ Appeal in THE COMMISSIONER OF COMMERCIAL TAXES, CHEPAUK, CHENNAI, THE ADDITIONAL COMMISSIONER (CT) VERSUS THE RAMCO CEMENTS LTD. AND THE STATE TAX OFFICER, THE JOINT COMMISSIONER (CS) (SYSTEMS) VERSUS SUNDARAM FASTENERS LIMITED 2020 (3) TMI 450 - MADRAS HIGH COURT challenging the decision in the case of Ramco Cements that has been considered and dismissed by a Division Bench of this Court. Mrs.G.Dhanamadhri, submits that the State intends to challenge the order in Writ Appeal by way of a Special Leave Petition. As on date, the order in Writ Appeal is final, and following the rationale thereof, the Writ Petition is allowed.

Summary

Issues involved:
1. Entitlement to 'C' Forms for purchase of High Speed Diesel from suppliers outside Tamil Nadu to avail concessional benefit of tax.
2. Applicability of decision in the case of M/s. Ramco Cements Ltd. regarding the entitlement to 'C' Forms.
3. Challenge by the State against the decision in the case of Ramco Cements Ltd.
4. Registration under the CST Act for purchasing dealers.

Entitlement to 'C' Forms for purchase of High Speed Diesel:
The petitioner, a dealer, sought the benefit of concessional tax rates by obtaining 'C' Forms for purchasing High Speed Diesel from suppliers in other states. The court noted that the issue was previously addressed in the case of M/s. Dhandapani Cement Pvt. Ltd. vs. The State of Tamil Nadu, where it was held that the benefit of concessional rates is available to dealers making inter-state purchases. The court referred to decisions by other High Courts and the Supreme Court confirming this position. The State did not dispute this position, and the court directed all assessing authorities in Tamil Nadu to apply this rationale to pending assessments until any contrary decision is made.

Applicability of decision in the case of M/s. Ramco Cements Ltd.:
The State filed a Writ Appeal challenging the decision in the case of Ramco Cements Ltd., which was dismissed by a Division Bench. The court clarified that the liability to pay tax on purchases is independent of the liability of the seller under the CST Act. It emphasized that purchasing dealers can obtain registration under the CST Act even if they are not liable to pay tax as sellers. The court rejected the contention that dealers had lost their entitlement to registration under the CST Act and affirmed the right of purchasing dealers to continue registration.

Challenge by the State against the decision in the case of Ramco Cements Ltd.:
The State intended to challenge the decision in the Writ Appeal through a Special Leave Petition. However, as the Writ Appeal decision was final, the court allowed the petitioner's request to include 'High Speed Diesel Oil' as a commodity in the registration certificate, permitting the issuance of 'C' Forms accordingly within a specified timeframe.

Registration under the CST Act for purchasing dealers:
The court clarified that even dealers solely purchasing goods in inter-state trade can secure registration under the CST Act, irrespective of their liability to pay tax as sellers. It emphasized the continuity of registration for dealers under the CST Act, rejecting the contention that certain dealers had lost their registration entitlement. The court dismissed the State's Writ Appeals, directing authorities not to restrict the use of 'C' Forms for inter-state purchases and quashing related circulars and proceedings.