2021 (4) TMI 190 - HC - VAT and Sales Tax

Issuance of C forms - Concessional rate of tax - purchase of High Speed Diesel from suppliers in other States - HELD THAT - The issue is covered by a decision of this Court in M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) 2018 (10) TMI 1529 - MADRAS HIGH COURT where it was held that The respondents are directed to permit these petitioners to download 'C ' forms, as has been done in the past for the purpose of purchasing petroleum products against the issuance of 'C' declaration forms. Petition allowed.

Summary

Issues:
1. Issuance of "C" forms under the Central Sales Tax Act, 1956 for the purchase of High Speed Diesel from suppliers in other States.
2. Interpretation of the provisions of the Central Sales Tax Act, 1956 regarding entitlement to "C" Forms for purchase of High Speed Diesel from suppliers outside Tamil Nadu.

Analysis:
Issue 1:
The High Court addressed the issue of issuance of "C" forms under the Central Sales Tax Act, 1956 for the purchase of High Speed Diesel from suppliers in other States. The court referred to a previous decision in M/s Ramco Cements Ltd. v. The Commissioner of Commercial Taxes, where it was held that dealers purchasing High Speed Diesel from neighboring States through inter-state sales are entitled to the concessional rate of tax. The court highlighted that decisions of other High Courts, such as the Punjab and Haryana High Court, have also ruled in favor of the dealers. Despite the State's intention to challenge the order, the court directed all Assessing Authorities in Tamil Nadu to apply the rationale of the decision to pending assessments until the order is stayed or reversed.

Issue 2:
The court examined the interpretation of the provisions of the Central Sales Tax Act, 1956 concerning the entitlement to "C" Forms for purchasing High Speed Diesel from suppliers outside Tamil Nadu. It was emphasized that the liability to pay tax on the purchase of goods is an independent obligation of the purchasing dealer, separate from the seller's liability under the Act. The court clarified that even dealers only purchasing goods in inter-State trade can secure registration under the CST Act. The judgment rejected the contention that dealers had lost their entitlement to registration under the Act, emphasizing that the scope of the Act remained intact despite amendments. The court upheld the rights of purchasing dealers to obtain goods at a concessional rate against "C" forms, emphasizing the freedom of trade in inter-State commerce. The court dismissed the Revenue's contentions, stating that denying such rights would lead to unconstitutional classification and confirmed the views expressed by other High Courts.

Overall, the judgment allowed the writ petition, dismissed the State's appeals, and directed the Revenue Authorities not to restrict the use of "C" Forms for inter-State purchases of specified commodities, quashing previous circulars and proceedings against dealers in Tamil Nadu. The Supreme Court also dismissed the Special Leave Petitions filed by the Commercial Taxes Department, upholding the High Court's decision.