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TMI Blog2018 (10) TMI 1529X X X X Extracts X X X X X X X X Extracts X X X X ..... titioners are not one and the same - Held that:- It is very clear that though the goods as defined under Section 2(d), is purchased by the dealer by availing benefit of concessional rate of tax under Section 8(3)(b), it is not necessary that such dealer must be a person of manufacturing or processing only the same goods for sale to avail such benefit. On the other hand, if the said goods so purchased is put into use for the mining or for the telecommunication network or for the generation and captive consumption of electricity or distribution of the same or any other form of power as well, such of those dealers, who are engaged in those activities are also entitled to the benefit under Section 8(3)(b). The benefit that is being enjoyed by the dealer out of the unamended provision of Section 8(3)(b) should continue to flow till any change is made to the said provision. 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 - decided in favor of petitioner. - W.P.Nos.19458 to 19460, 19584, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 048, 26879, 27037, 27054, 27061 of 2018) Mr.R.S.Pandiyaraj (in W.P.Nos.27616, 27625 and 27708, 28002, 28015, 28024, 28030 and 28033 of 2018) For the Respondents : Mrs.Narmadha Sampath Additional Advocate General-VIII Assisted by Mr.M.Hariharan Additional Government Pleader Mrs.G.Dhana Madhri Government Advocate Mr.V.Haribabu Additional Government Pleader COMMON ORDER In all these writ petitions, filed by individual petitioners, the common grievance expressed before this Court is against the letter dated 31st May 2018 issued by the Commissioner of Commercial Taxes, Chepauk, Chennai-5 to all Joint Commissioners of his territorial jurisdiction, individual communication dated 17.07.2018 and a notice dated 17.07.2018. 2. Through the said letter dated 31.05.2018, the Commissioner of Commercial Taxes informed all Joint Commissioners that any dealer, who deals in petroleum crude, high speed diesel, motor spirit (petrol), Aviation Turbine Fuel, Natural gas and Liquor, are alone entitled to effect purchases from other State by availing the concessional rate of tax. In other words, according to the Commissioner of Commercial Taxes, those dealers, who are not deali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to file their objections as to why penalty should not be levied as they have generated 'C' Forms for purchasing HSD, which is ineligible. 6. As all these writ petitions project a common cause aggrieved against the above proceedings of the Revenue, I take the leading case in W.P.Nos.19458 of 2018 to 19460 of 2018 for discussing the facts and circumstances, which warranted filing of these writ petitions. 7. The case of the petitioners is as follows: (a) The petitioner is engaged in mining of lime stone and manufacture of cement in the State of Tamil Nadu. The petitioner was registered under the Tamil Nadu Value Added Tax Act, 2006 and Central Sales Tax Act, 1956. The petitioner is also registered under the Tamil Nadu Goods and Services Tax Act, 2017 and Central Goods and Service Tax Act, 2017 and Integrated Goods and Services Tax Act, 2017 on the file of the second respondent herein. As per the Registration Certificate of the petitioner issued under the CST Act, with effect from on 01.10.2015, they are entitled to purchase high speed diesel oil, light diesel oil at concessional rate of tax against issue of 'C' declaration forms for use of the same in mining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst respondent issued the impugned circular dated 31.05.2018 and further impugned communications. The above instruction of the first respondent is erroneous, without jurisdiction and contrary to the provisions of CST Act,1956. In respect of another similarly placed dealer, who was also engaged in the business of limestone and manufacture of cement, the Chhatisgarh High Court in Writ Petition (TP) No.83 of 2018 dated 18.05.2018 in the case of Shree Raipur Cement Plant (A unit of Shree Cement Limited) Vs. State of Chhattisgarh, Finance Department (Tax Division) held that the petitioner's registration certificate under the CST Act is still valid and the goods defined under section 2(d) of the CST Act, 1956 including high speed diesel and thus, the petitioner therein is entitled for issuance of 'C' form for interstate purchase/ sale of high speed diesel against the said 'C' form. Similar orders were passed by the Punjab and Haryana High Court in the case of Caparo Power Limited vs. State of Haryana in CWP.No.29437 of 2017 dated 28.03.2018 and the Rajasthan High Court in the case of Hindustan Zinc Limited several others vs. The State of Rajasthan Ors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id 2% goes to the selling State only. After purchasing the goods from other States, only if the purchaser in Tamil Nadu again manufactures any one of the 6 goods out of it and sells either locally or interstate, the State of Tamil Nadu would get tax revenue either in the form of Local VAT or 2% CST. On the other hand, if the purchasing dealer uses the above purchased goods for the manufacture of GST goods and sells it again to another state only IGST accrues to the destination state and in such scenario the state of Tamil Nadu stands devoid of any tax revenue out of the above transaction. Hence, the restriction of concessional levy on purchase of those six goods for the dealers dealing in GST goods is valid in all aspects. d) The definition of Dealer provided under CST Act, 1956 is applicable only for those who are registered under CST Act 1956 and in the event of smooth transition from erstwhile Act to GST Act 2017, the registration under CST Act automatically vanished and does not exist independently without the support base of local VAT Act. e) As per the communication in the Gazette of India, New Delhi, dated 5th May 2017, whereby the Ministry of Law and Justice had pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional rate of tax. Further, in the above said judgment, the High Court has interpreted the word, the sales tax law of the appropriate State found in Section 8(1) of the CST Act 1956 as inclusive of SGST Act also. But the sales tax law of the appropriate state mentioned in the above section refers only Value Added Tax that existed prior to introduction of GST. Thus, even though there are discrepancies in the above said judgment of the Hon'ble High Court, when the judgment was taken up by the Haryana Government before the Hon'ble Supreme Court of India by way of SLP, the same was dismissed by the Supreme Court, which does not mean that State of Tamil Nadu should also continue to admit that dealers such as the petitioner are bestowed with such incorrect apprehension, interpretations and rights to purchase at lower rate a commodity not under GST and utilize it to produce an end product in the ambit of GST and enjoy the same. 10. A rejoinder has been filed by the petitioner, wherein it is stated as follows: a) When the Legislature thought it fit to amend various sections of the CST Act, 1956 and also introduce the CGST Act, 2017, and IGST Act, 2017, it has thought it fit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x law of the appropriate State . It does not say TNVAT Act, 2006 . d) From the above, it is clear that Value Added Tax Law has been included in the definition of sales tax law and the above definition does not restrict the sales tax law to mean Value Added Tax Law alone. From 01.07.2017, the sales tax law providing for levy of taxes on the sale or purchase of goods generally is TNGST Act, 2017, CGST Act, 2017 and on specified goods is TNVAT Act, 2016. The petitioner being a registered under the TNCST Act, 2017 and the CGST Act, 2017 is entitled to continue to be registered under the CST Act, 1956. All the contentions now raised by the respondent herein have already been raised by the respective State Governments in the said judgements and duly considered by the said High Courts and the judgment of the Punjab Haryana High Court has also been affirmed by the Supreme Court by dismissing the SLP vide order dated 13.08.2018 in SLP(C)No.20572/2018. 11. Mr.R.L.Ramani, learned Senior Counsel, Mr.P.Rajkumar, Mr.S.P.Parthasarathy and Mr.R.Kumar, learned counsels appeared and argued for the petitioners. A written submission is also filed in W.P.Nos.19458 to 19460 of 2018. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; manufactured product comes within the purview of GST Act. The second Notice is for the purpose of imposing penalty under Section 10-A of the CST Act for alleged mis-use of declarations. In such circumstances, the petitioners were constrained to file these writ petitions. f) The very same legal issue whether a dealer is entitled to issue 'C' declaration forms and purchase petroleum products from outside the State and use the same in the generation of electricity, after the introduction of G.S.T. with effect from 01.07.2017, was considered by the Division Bench of the High Court of Punjab Haryana in the case of Caparo Power Ltd in CWP No.29437 of 2017 dated 28.03.2017 dated 28.03.2018 . The petitioner in the said case is engaged in generation of electricity through its power plant. In the said judgment, the legal issue was considered in detail and it was decided in favour of the assessee. The writ petition was allowed by the Punjab Haryana High Court and the respondents were directed to issue 'C' declaration forms for the purchase made by the petitioner from the oil companies in Gujarat and used in the generation or distribution of electricity at its power p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Memorandum dated 07.11.2017 issued by the Ministry of Finance and therefore liable to be quashed. 12. Mrs.Narmadha Sampath, learned Additional Advocate General appeared for the respondents and argued the matter. A written submission is also filed on behalf of the respondents. The sum and substance of the submissions made on behalf of the respondents are as follows: a) The writ petitions are not maintainable and pre-mature and are liable to be dismissed. The petitioner's registration under the CST Act is capable of being assessed by the respondents in terms of Section 7(4)(b) of the CST Act, 1956 read with Rule 9 of the CST Rules, 1957. Hence, the respondents can alter, amend or cancel the registration of the petitioners after following the due process of law, as described under Section 7(4)(b) of the CST Act read with Rule 9 of CST Rules, 1957. The petitioners have filed more than 50 writ petitions before this Court. However, only in respect of three writ petitions (W.P.No.19459/2018, W.P.No.25316/2018 W.P.No.26131/2018), notices issued imposing penalty under Section 10A of the CST Act has been challenged. All the other writ petitioners have challenged the internal c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asing the goods from other States, only if the purchaser in Tamil Nadu again manufactures any one of the 6 goods out of it and sells either locally or interstate, the State of Tamil Nadu would get tax revenue either in the form of Local VAT or 2% CST. On the other hand, if the purchasing dealer use the above purchased goods for the manufacture of GST goods and sells it again to another State, only IGST accrues to the destination State and in such scenario, the State of Tamil Nadu is deprived of any tax revenue out of the above transaction. Even if such manufactured GST goods are sold locally but subsequently moves to other States again the tax accrued to the State is Nil. The definition of Dealer provided under CST Act, 1956 is applicable only for those, who are registered under CST Act, 1956 and in the event of smooth transition from erstwhile Act to GST Act 2017, the registration under CST Act automatically vanished and does not exist independently without the support of local VAT Act. Therefore, once the applicability of definition of dealer under CST Act is not available for a particular dealer, then the benefits provided under the said Act definitely cannot continue to exist a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en cancelled or any proceedings are initiated to do so. 17. Section 8(3)(b) of the CST Act, 1956, which entitles the petitioners to issue 'C' declaration form and purchase petroleum products at concessional rate of tax, reads as follows: 8. Rates of tax on sales in the course of inter-State trade or commerce. - 1. Every dealer, who in the course of inter-State trade or commerce, sells to a registered dealer goods of the description referred to in sub-section (3) shall be liable to pay tax under this Act, which shall be two percent, of his turnover or at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of that State, whichever is lower; ..... ..... (3). The goods referred to in sub-section (1) - ...(b) Are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for re-sale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or in the tele-communications network or in mining or in the generation or distribution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amendment came into force on 01.07.2017. 22. In other words, the crux of the contention of the respondents is that if a dealer having valid Certificate of Registration under the CST Act, 1956, seeks to purchase petroleum products from other State by availing concessional rate of tax against 'C' declaration forms, must be a dealer in dealing with only those six goods defined under Section 2(d) and not a dealer, just to utilise such petroleum products for the purpose of manufacturing or processing of goods for sale or telecommunication network or in mining or in the generation or distribution of electricity or any other form of power, as permitted under Section 8(3)(b) of the said Act. Thus, it is the clear case of the respondents that after the amendment, the CST is made applicable only for those six goods, as mentioned above and therefore, the benefits enjoyed out of the said provision has to be restricted only to the extent of those six goods. It is the further contention of the respondents that if the dealers purchase those six goods locally, they have to pay the tax at the rate of 28% and however, by way of interstate sale and by issuing 'C' Form, these pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the benefit under section 8(3)(b). 27. I have given my careful consideration to the above said contentions and also perused the above said provision of law viz., Section 8(3)(b) with utmost care. In my considered view, the above contention of the respondents cannot be accepted as valid in law in view of the fact that Section 8(3)(b) stands unamended even as on today and holds the field. As per the said provision of law, the dealer, who purchases the goods in the course of interstate trade, is entitled to get the benefit of concessional rate of tax, if the purchased goods is used by the said dealer in anyone of the following activities: a) in the manufacture of processing of goods for sale; b) use in the telecommunication network; c) use in mining; d) use in the generation or distribution of electricity or any other form of power; 28. Therefore, it is very clear that though the goods as defined under Section 2(d), is purchased by the dealer by availing benefit of concessional rate of tax under Section 8(3)(b), it is not necessary that such dealer must be a person of manufacturing or processing only the same goods for sale to avail such benefit. On the other han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit, they derived all along under Section 8 of the Central Sales Tax Act, 1956, more particularly, when all these petitioners are coming within the purview and scope of sub section (3)(b) of Section 8, as discussed supra. 32. The other two impugned communications were also issued as a consequence of the circular/letter issued by the first respondent dated 31.05.2018. Out of those two communications dated 17.07.2018, it is stated in one communication that the respective petitioner is not entitled to generate online 'C' Forms from 01.07.2017 onwards for those commodities, which are not under GST Act, 2017. Likewise, in the other communication dated 17.07.2018, after reiterating the very same contentions, the respective petitioners were called upon to show cause as to why penalty cannot be levied for generating the 'C' Forms for purchasing the HSD from 01.07.2017 onwards. Therefore, it is evident that both these communications dated 17.07.2018 are not only against the ambit and scope of Section 8(3)(b) of the CST Act, 1956 and also against the principles of natural justice, as admittedly the petitioners were not issued with any notice of proposal before taking su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... processing of goods means any goods i.e., goods which fall within GST as well as goods which do not come under ambit of GST. 2. Department of Legal Affairs, Ministry of Law has confirmed that the term Goods has been specifically defined under the Central Sales Tax Act, 1956 and prima facie the term Goods referred to in section 8(3)(b) of the Central Sales tax Act, 1956 will have same meaning as defined and amended under section 2(d) of the Central Sales Tax Act, 1956, vide Tax Laws Amendment Act, 2017. However it does not affect the provisions of section 8(3)(b) of the CST Act relating to telecommunication network or mining or generation or distribution of electricity or any other form of power. Therefore, it is evident from the above said Memorandum that the Central Government is clear in their stand that the dealers, who are entitled to the benefit under Section 8(3)(b) of the CST Act, shall continue to enjoy such benefit notwithstanding the amendment made to Section 2(d) of the Central Sales Tax Act, 1956. 35. It is to be noted at this juncture that the issue involved in these writ petitions has already been considered by the Punjab and Haryana High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 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. We have answered the question in the affirmative, in favour of the petitioner. .... .... 25. Mrs. Talwar then contended that the petitioner is not engaged in the business of re-selling the natural gas and is, therefore, not entitled to be issued `C' Forms. The basis of the argument is that after the CGST Act came into force, the petitioner was not liable to pay any tax on electricity under the HVAT Act and it, therefore, ceases to be a registered dealer as per Section 7 (2) of the CST Act. Mrs. Talwar contended that the petitioner's registration under the CST Act lapsed on the commencement of the HGST Act and it ceased to have any effect. She contended that the petitioner does not sell within the State of Haryana or otherwise the same goods, namely natural gas, that it purchases from the Oil Companies in Gujarat. According 23 of 25 to her, the provisions of the CST Act and in particular Sections 7 and 8 thereof would apply only if the petitioner sold the same goods that it purchased viz. natural gas. 26. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the Punjab and Haryana High Court was put to challenge before the Apex Court by the State of Punjab and Haryana in State of Haryana ors vs. Caparo Power Ltd. Ors . in the Petition for Special Leave to Appeal (C) No.20572/2018. 37. The Hon'ble Supreme Court dismissed the said SLP on 13.08.2018, after hearing both sides by specifically observing that there is no legal and valid ground for interfering with the said order made in Caparo Power Limited's case. Therefore, it is evident that the said order passed by the Punjab and Haryana High Court in Caparo Power Ltd.'s case, having been confirmed by the Apex Court, as stated supra, is binding on the respondents herein as well and therefore, they are not entitled to take a different stand and contest the matter before this Court. 38. It is to be noted further that apart from Punjab and Haryana High Court, the other High Courts have also considered the same issue and have fallen in line with the findings rendered in the Caparo Power Ltd.'s case. The following are the decisions rendered by the other High Courts: a) In Hindustan Zinc Limited several others vs. The State of Rajasthan Ors , the Raja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST Act while defining the 'goods'. Besides, the registration under Section 7(2) of the Act is still valid and has not been cancelled and can be cancelled only within the parameters of Section 4 of the CST Act. Hence, this Court finds that it is obligatory duty of the respondents to issue 'C' form to the petitioner - company and any failure on the part of the respondents to do so is without any authority of law. Thus, this Court finds nothing to distinguish the case of the petitioners herein from that of the petitioner in the case of Carpo Power Limited (supra). Accordingly, the present writ petitions are allowed in the same terms as Corpo Power Limited (supra). It is held that the respondents are liable to issue `C' Forms in respect of the High Speed Diesel procured for mining purposes through interstate trade. In the event of the petitioners having had to pay any amount on account of the respondents wrongful refusal to issue `C' Forms the petitioners shall be entitled to refund and/or adjustment of the same from the concerned authorities who collected the excess tax. The concerned authorities shall process such a claim within twelve weeks of the same b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in Section 2(d) of the CST Act, 1956. Secondly, Section 9(2) of the CGST Act, 2017 specifically bars six items including high speed diesel and to levy GST on high speed diesel, recommendation of the GST Council would be necessary to be notified by the Central Government, neither the GST Council has recommended levy of GST on high speed diesel nor it has been notified by the Central Government particularly when prior to introduction of GST with effect from 1-7-2017, the competent legislature has already W.P.(T)No.83/2018 amended the definition of goods under Section 2(d) of the CST Act, 1956 and purposefully amended the definition of goods mentioning the same items which are barred under Section 9(2) of the CGST Act, 2017 whereby high speed diesel is included. 37. Next submission of the learned State counsel is that after introduction and promulgation of GST, the registration certificate of the petitioner issued under the provisions of the CST Act, 1956 and the rules made thereunder would automatically stand cancelled after his migration to the GST regime, has no legs to stand. The registration certificate issued under the CST Act, 1956 can be cancelled only after the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondents shall be liable and are directed to issue CForm to the petitioner in respect of high speed diesel to be purchased by the petitioner and used in the course of manufacture of cement and for that, it is further directed to rectify and remove the error on their official website and entertain the petitioner's application submitted on-line on the official website seeking issuance of 'C' Form to the petitioner for said goods. 39. The above decisions of various High Courts, more particularly, the order passed by Punjab and Haryana High Court made in Caparo Power Ltd's case , confirmed by the Hon'ble Supreme Court, would show that the respondents herein are not entitled to take a different stand, especially, when the facts and circumstances in all these cases before this court as well as before the other High Courts, as extracted supra, are one and the same. In other words, the issue involved in these cases as well as the cases before the other High Courts is one and the same, out of which, one decision was confirmed by the Apex Court as well. Therefore, I find that the impugned communications, apart from being without jurisdiction, are not sustainable al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s pre-mature. This again, is not a convincing argument. Going by the impugned communications, it is seen that the respondents have not indicated anywhere that the registration forms issued to these petitioners are proposed to be cancelled. On the other hand, their clear case is that based on such registration, the petitioners are not entitled to download and issue 'C' Forms for the purchase of petroleum products through interstate trade. Thus, when the intention of the respondents are very clear in the impugned communications, the learned Additional Advocate General is not justified in contending as though the respondents are contemplating to cancel the registration through the impugned proceedings. Needless to say that as long as the petitioners are having valid Registration Certificate and as long as section 8(3)(b) of the CST Act as such is holding the field, the respondents are not entitled to deny the benefit derived out of such provision of law to the petitioners, provided they fall under any of the following categories in using the goods so purchased, viz., a) in the manufacture of processing of goods for sale; b) in the telecommunication network; c) in mini ..... X X X X Extracts X X X X X X X X Extracts X X X X
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