2021 (2) TMI 964 - HC - VAT and Sales Tax

Concessional benefit of tax - purchase of High Speed Diesel from suppliers in other States - difficulty in obtaining C-Form - HELD THAT - Petitioner fairly submits that the issue involved in this 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 till such time the order of this court in the case of M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) 2018 (10) TMI 1529 - MADRAS HIGH COURT is either stayed or reversed it is incumbent upon all Assessing Authorities within the State of Tamil Nadu to apply the rationale of the decision to all pending assessments. 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. 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 holding that Appellant State and the Revenue Authorities are directed not to restrict the use of 'C' Forms for the inter-State purchases of six commodities by the Respondent/Assessees and other registered Dealers at concessional rate of tax and they are further directed to permit Online downloading of such Declaration in 'C' Forms to such Dealers. The Circular letter of the Commissioner dated 31.5.2018 stands quashed and set aside along with the consequential Notices and Proceedings initiated against all the Assessees throughout the State of Tamil Nadu. Mr.Jaya Pratap submits that the State intends to challenge the order in Writ Appeal by way of a Special Leave Petition - As on date, however the order in Writ Appeal is final, and following the rationale thereof, this 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. Challenge to the order of the learned Single Judge in the case of M/s. Ramco Cements Ltd.
3. Interpretation of Sections 7(1) and 7(2) of the CST Act regarding liability to pay tax and registration of purchasing dealers.
4. Continuation of registration under the CST Act for purchasing dealers.
5. Rights of purchasing dealers under the CST Act post-amendment in 2017.
6. Freedom of trade and right to purchase in the course of inter-State Trade or Commerce under the GST regime.
7. Use of 'C' Forms for inter-State purchases of six commodities at a concessional rate of tax.

Detailed Analysis:
1. The judgment addressed the issue of entitlement to 'C' Forms for purchasing High Speed Diesel from suppliers in other states to avail a concessional tax benefit. The decision was based on previous rulings favoring dealers in similar cases, emphasizing the application of decisions in rem to benefit all dealers seeking the same advantage, subject to the law. The court directed the Assessing Authorities in Tamil Nadu to implement the rationale of the decision in all pending assessments until further legal developments.

2. A Writ Appeal was filed by the State challenging the decision in the case of M/s. Ramco Cements Ltd. The Division Bench dismissed the appeal, emphasizing the independent liability of purchasing dealers to pay tax under Sections 7(1) and 7(2) of the CST Act. The judgment clarified that even dealers not liable to pay tax under the CST Act as sellers could obtain registration and continue under the Act. The court rejected the contention that purchasing dealers had lost their entitlement to registration.

3. The judgment highlighted that the amendment in 2017 to the definition of 'goods' under the CST Act did not affect the rights of purchasing dealers, including the use of 'C' Forms for concessional purchases. It emphasized the continuity of the CST Act's operation for both selling and purchasing dealers, ensuring the freedom of trade in inter-State commerce.

4. The court rejected the Revenue's contentions that sought to restrict purchasing dealers' rights based on the type of goods sold, emphasizing that such restrictions would lead to unconstitutional classifications. The judgment dismissed the Writ Appeals filed by the State, directing the authorities to allow the use of 'C' Forms for inter-State purchases and quashing the circular restricting such usage.

5. The State expressed intent to challenge the Writ Appeal judgment through a Special Leave Petition. However, as of the current status, the Writ Petition was allowed based on the finality of the Writ Appeal order and the rationale provided therein.