2018 (4) TMI 146 - HC - VAT and Sales Tax

Refusal to issue Form-C - natural gas purchased by petiitoner in the course of inter- state trade or commerce and used by it for the generation of electricity - 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? Held that - A reading of Section 8 of the CST Act and Rule 12 of the CST (R T) Rules along with Rule 7 of the CSTH Rules shows that C Form is to be issued by the tax authorities of the State in which the purchaser of goods is based. The C' Form would be given to the seller who would in turn furnish the same to the prescribed authority for claiming a lower rate of tax. In the present case, the petitioner purchased natural gas from the Oil Companies from Gujarat. The sales occasioned the movement of natural gas from Gujarat to Haryana. The petitioner is a registered dealer in the State of Haryana. The Haryana authorities had been issuing C Forms to the petitioner which were given to the Oil Companies in Gujarat who produced the same before the Gujarat tax authorities and were assessed at a reduced rate of tax - even after the implementation of the CGST Act, the items mentioned in amended entry 54 are governed by the CST Act. Further, a notification under Section 9 (2) of the HGST Act, 2017 not having been issued natural gas continues to be covered under the CST Act. 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 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. 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 - petition allowed - decided in favor of petitioner.

Issues Involved:

1. Entitlement to 'C' Forms for inter-state purchase of natural gas post-GST implementation.
2. Applicability of CST Act provisions post-GST implementation.
3. Definition and scope of "sales tax law" under CST Act.
4. Registration and status of the petitioner under CST Act.
5. Impact of GST laws on existing CST Act provisions and registration.

Issue-wise Detailed Analysis:

1. Entitlement to 'C' Forms for Inter-State Purchase of Natural Gas Post-GST Implementation:
The petitioner challenged the refusal of the respondents to issue 'C' Forms for natural gas purchased inter-state and used for generating electricity. The court held that the petitioner is entitled to 'C' Forms for such purchases even after the implementation of the GST Act, as natural gas continues to be covered under the CST Act. The court noted that the definition of "goods" under the CST Act was amended to specifically include natural gas, thus maintaining its coverage under the CST Act for inter-state transactions.

2. Applicability of CST Act Provisions Post-GST Implementation:
The court analyzed the working of the CST Act before and after the implementation of the GST laws. It concluded that the inter-state sale of natural gas continues to be governed by the CST Act, as the government has not issued a notification under the CGST Act or HGST Act to levy tax on natural gas. Consequently, the provisions of the CST Act, including the issuance of 'C' Forms, remain applicable.

3. Definition and Scope of "Sales Tax Law" Under CST Act:
The court clarified that the term "sales tax law" under Section 7(2) of the CST Act is inclusive and not restricted to any specific sales tax enactment. It includes any law in force in the state for the levy of taxes on the sale or purchase of goods, which encompasses the HGST Act. The court rejected the respondents' argument that only dealers registered under the HVAT Act are covered by Section 7(2) of the CST Act, affirming that the HGST Act qualifies as a sales tax law under the CST Act.

4. Registration and Status of the Petitioner Under CST Act:
The petitioner, registered under the CST Act, continues to be a "registered dealer" within the meaning of Section 2(f) of the CST Act. The court emphasized that the petitioner's registration certificate under the CST Act has not been canceled as per Section 7(4) of the CST Act. Therefore, the petitioner remains entitled to the benefits of being a registered dealer, including the issuance of 'C' Forms.

5. Impact of GST Laws on Existing CST Act Provisions and Registration:
The court observed that the provisions of Section 8 of the CST Act, Rule 12 of the CST (R&T) Rules, and the declaration Form C have not undergone any amendments post-GST implementation. The court ruled that the usage of 'C' Forms is not restricted to the re-sale of the six items mentioned in the amended definition of "goods" in Section 2(d) of the CST Act. The purchase of goods for purposes such as generation or distribution of electricity qualifies for registration under Section 7(2) of the CST Act.

Conclusion:
The writ petition was allowed, directing the respondents to issue 'C' Forms to the petitioner for the natural gas purchased from oil companies in Gujarat and used in the generation or distribution of electricity in Haryana. The court also ordered that any excess tax paid by the petitioner due to the wrongful refusal of 'C' Forms should be refunded or adjusted by the concerned authorities within twelve weeks of the petitioner's claim.

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