Gujarat High Court
Gaurav Contracts Company vs State Of Gujarat on 2 May, 2019
Author: Harsha Devani
Bench: Harsha Devani, Bhargav D. Karia
C/SCA/6348/2019 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 6348 of 2019
With
R/SPECIAL CIVIL APPLICATION NO. 6353 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS.JUSTICE HARSHA DEVANI
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
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1 Whether Reporters of Local Papers may be allowed to Yes
see the judgment ?
2 To be referred to the Reporter or not ? Yes
3 Whether their Lordships wish to see the fair copy of the No
judgment ?
4 Whether this case involves a substantial question of law No
as to the interpretation of the Constitution of India or any
order made thereunder ?
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GAURAV CONTRACTS COMPANY
Versus
STATE OF GUJARAT
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Appearance:
UCHIT N SHETH(7336) for the Petitioner(s) No. 1
MR UTKARSH SHARMA, ASSISTANT GOVERNMENT PLEADER for the
Respondent(s) No. 1,2
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CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 02/05/2019
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C/SCA/6348/2019 JUDGMENT
COMMON ORAL JUDGMENT
(PER : HONOURABLE MS.JUSTICE HARSHA DEVANI)
1. Rule. Mr Utkarsh Sharma, learned Assistant Government Pleader waives service of notice of rule on behalf of the respondents in both the petitions.
2. Since common questions of law are involved in both these petitions, the same were taken up for hearing together and are decided by this common judgment.
3. The facts stated briefly are that the petitioners in each case are partnership firms and are dealers registered under the Central Sales Tax Act, 1956 (hereinafter referred to as the "CST Act"). In both the cases, the petitioners are engaged in operating mines, for which purpose they require heavy earth moving machinery and for which diesel is required. Since the petitioners were intending to purchase such diesel in the course of inter-State trade and commerce, they made an application dated 13.10.2018 for incorporation of High Speed Diesel Oil in the registration certificate under the CST Act. The petitioners also addressed letters dated 17.12.2018 to the jurisdictional officer informing him of the on-line application made for incorporation of diesel in the registration certificates under the CST Act. In both the cases, the on-line applications made by the petitioners were allowed and the registration certificate was approved. The petitioners have placed on record a copy of the snapshot of the website of the Commercial Tax Department which clearly reflects the same. The fact that addition of High Speed Diesel Oil as eligible goods for use in mining had been approved with effect from 24.10.2018 was also visible on the website. However, Page 2 of 15 Downloaded on : Sun Jun 30 22:11:39 IST 2019 C/SCA/6348/2019 JUDGMENT thereafter, the petitioners received letters dated 27.2.2019 of the jurisdictional authority informing the concerned petitioner that the application for amendment of registration certificate had been erroneously approved because the concerned officer was seeking guidance of the superior authority on the issue and till such time, the approval for amendment of registration certificate under the CST Act has been put on hold. Being aggrieved, the petitioners have filed the present petitions.
4. Mr. Uchit Sheth, learned advocate for the petitioners submitted that the impugned letter issued by the second respondent State Tax Officer is without authority of law, arbitrary and illegal. It was submitted that it is well settled that an authority does not have the power to review its own order unless such power is expressly conferred. Referring to the provisions of section 7 of the CST Act, it was submitted that the officer who approved the application for amendment of registration certificate under the CST Act had no jurisdiction to review his decision and put the approval on hold. It was pointed out that the jurisdictional officer has kept the approval in abeyance for seeking guidance of the superior authority, to submit that the jurisdictional officer, being a quasi- judicial authority, has to take an independent decision on any application made before him. Moreover, once the jurisdictional officer has already approved the application for amendment of registration, putting the approval of amendment of registration on hold on the ground that he wants to seek guidance from the superior officer is also without jurisdiction and illegal.
4.1 It was submitted that even on merits, the authorities have erred in putting on hold the approval for amendment of Page 3 of 15 Downloaded on : Sun Jun 30 22:11:39 IST 2019 C/SCA/6348/2019 JUDGMENT registration certificate under the CST Act. The attention of the court was invited to the provisions of sub-section (3) of section 8 of the CST Act, to submit that inter-State sales are taxable at concessional rates. The goods need to be of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or for use by him in mining. In the case of the petitioners, High Speed Diesel Oil is required for operating earth moving machinery used in mining. Thus, diesel is required to be purchased for use in mining, and hence, the petitioners are entitled to incorporate High Speed Diesel for use in mining in the registration certificate under the CST Act. It was, accordingly, urged that the petitions require consideration and that the impugned letters deserve to be quashed and set aside.
5. Opposing the petition, Mr. Utkarsh Sharma, learned Assistant Government Pleader invited the attention of the court to the definition of "goods" as defined under section 2(d) of the CST Act after the same came to be amended by the Taxation Laws (Amendment) Act, 2017, to point out that the definition of goods is now restricted to the six specified items mentioned thereunder. It was submitted that prior to the coming into force of the GST Act, the petitioners were not dealing in or claiming usage of any of the items as specified in the amended section 2(d) of the Act and, therefore, the registration of the petitioners under the CST Act ceased to be active upon the goods and service tax regime coming into force and the petitioners having migrated to the provisions of the said Act, and, therefore, post migration the petitioners are registered under the Goods and Services Tax Act with effect Page 4 of 15 Downloaded on : Sun Jun 30 22:11:39 IST 2019 C/SCA/6348/2019 JUDGMENT from 1.7.2017. It was submitted that the petitioners made a request for amendment of the CST registration certificate so as to include High Speed Diesel Oil as commodity on 13.12.2018; however, at the time when such application was made, the petitioners could not be said to be holding a valid registration under the CST Act and, therefore, granting such amendment would be contrary to the active registration of the petitioners under the GST Act.
5.1 It was submitted that in view of the fact that upon the Taxation Laws (Amendment) Act, 2017 coming into force, section 2(d) of the CST came to be amended and the definition of "goods" was restricted to the commodities specified thereunder, the registration certificates of dealers who were dealing or claiming usage of commodities other than those specified under the amended definition would no longer be said to be active, and, therefore, such registration certificate cannot be amended.
5.2 Insofar as keeping the order by virtue of which the amendment had been permitted and High Speed Diesel had been included as commodity in the CST registration certificate of the petitioners in abeyance is concerned, it is submitted that the whole objective behind it was to ensure that nothing contrary to the statute is permitted and if need arises, the higher authority may look into the whole issue and resolve the same in accordance with law. It was further submitted that the CST registration of the dealers has been kept active on the portal only to enable the dealers to look into annual returns and to ensure that assessment related issues can be taken care of, otherwise, insofar as the petitioners are concerned, Page 5 of 15 Downloaded on : Sun Jun 30 22:11:39 IST 2019 C/SCA/6348/2019 JUDGMENT they are registered under the GST Act.
6. In rejoinder, Mr. Uchit Sheth, learned advocate for the petitioners invited the attention of the court to the provisions of section 7 of the Act and more particularly, sub-sections (4) and (5) thereof, to point out that there is no automatic cancellation of registration once it is granted under the CST Act and, therefore, the contention that the registration of the petitioners ceased to be acted upon the coming into force of the GST Act is contrary to the legal provisions. It was submitted that the petitioners have filed applications for amendment of the registration certificates to incorporate High Speed Diesel Oil which, at present, is not covered by the GST Act and hence, if the petitioners want the benefit of reduced rate of tax, they need the certificate of registration to be amended for the purpose of availing the benefit under section 8(3) of the CST Act. It was contended that, therefore, in the absence of their registration under the CST Act being cancelled, that the registration of the petitioners does not cease to exist.
6.1 In support of his submissions, the learned advocate placed reliance upon the decision of the Supreme Court in The State of Madras v. N.K. Nataraja Mudaliar, (1968) 22 STC
376. Strong reliance was placed upon the decision of the Punjab and Haryana High Court in Cargo Power Limited v. State of Haryana and others, (2018) 53 GSTR 24 (P&H), wherein the court has held that even after the implementation of the Central Goods and Services Tax Act, the items mentioned in amended entry 54 are governed by the CST Act. Further, a notification under section 9(2) of the Haryana Goods Page 6 of 15 Downloaded on : Sun Jun 30 22:11:39 IST 2019 C/SCA/6348/2019 JUDGMENT and Services Tax Act, 2017 not having been issued, natural gas continues to be covered under the CST Act. The court further noted that the registration certificate given to the petitioner therein under the CST Act had not been cancelled till date and that as per section 7(4) of the CST Act, the registration certificate granted has to be amended or cancelled and that such provisions had not been invoked.
7. In the aforesaid backdrop, before adverting to the merits of the case, reference may be made to the record as placed before this court. A perusal of the registration certificate of the petitioners reveals that in the case of the petitioner in Special Civil Application No.6348 of 2019, a registration certificate dated 19.9.1998 under the Central Sales Tax (Registration and Turnover) Rules, 1957 has been issued in favour of the petitioner which is valid with effect from 10.7.1998 till it is cancelled. Similarly, the registration certificate of the petitioner in Special Civil Application No.6353 of 2019 dated 22.9.1992 reveals that the same is valid from 2.9.1992 till it is cancelled.
8. The petitioners by separate letters dated 17.12.2018 addressed to the Central Sales Tax Officer requested him to incorporate "High Speed Diesel" in the Central Sales Tax Registration Certificate for the purpose of mining. It is further stated therein that they have made on-line applications dated 13.12.2018 and that the original registration certificates have been given along with the application dated 6.12.2018. A perusal of the snapshot of the commodity amendment details shows that against commodity type goods in mining under the heading commodity name, High Speed Diesel has been inserted and the effective date is 24.10.2018. By the impugned Page 7 of 15 Downloaded on : Sun Jun 30 22:11:39 IST 2019 C/SCA/6348/2019 JUDGMENT letters dated 27.2.2019, the second respondent informed the petitioners that they had made applications for incorporation of HSD and LDO as commodity in the CST for mining activity. Guidance is sought for from the Deputy Commissioner of Commercial Tax as to whether HSD and LDO can be incorporated in CST commodity. He has further stated that after guidance is received, action will be taken for amendment and that the petitioner's online applications has been approved through oversight, which is being kept in abeyance. After guidance is received, HSD and LDO shall be incorporated in CST Commodity.
9. In the aforesaid backdrop three questions arise for consideration:
(i) Whether the authority under section 7 of the CST Act has any power to review or keep in abeyance an order passed by it on the ground of seeking guidance from the superior authority?
(ii) Whether upon the coming into force of the Taxation Laws (Amendment) Act, 2017 whereby the definition of goods in the CST Act came to be amended, CST Registrations of dealers other than those dealing in the specified goods would automatically become inactive? and
(iii) Whether a dealer who is registered under the Goods and Services Tax Act cannot also be registered under the CST Act, when the CST Act requires a person who deals in or claims usage of the goods specified thereunder to be registered under that Act for getting the benefit of Page 8 of 15 Downloaded on : Sun Jun 30 22:11:39 IST 2019 C/SCA/6348/2019 JUDGMENT reduced rate of tax under section 8 thereof?
10. Dealing with the first question, it may be necessary to refer to the provisions of section 7 of the CST Act, which to the extent the same are relevant for the present purpose, read as under:-
"7. Registration of dealers.--(1) Every dealer liable to pay tax under this Act shall, within such time as may be prescribed for the purpose, make an application for registration under this Act to such authority in the appropriate State as the Central Government may, by general or special order, specify, and every such application shall contain such particulars as may be prescribed.
(2) Any dealer liable to pay tax under the sales tax law of the appropriate State, or where there is no such law in force in the appropriate State or any part thereof, any dealer having a place of business in that State or part, as the case may be, may, notwithstanding that he is not liable to pay tax under this Act, apply for registration under this Act to the authority referred to in sub section (1), and every such application shall contain such particulars as may be prescribed.
Explanation.-For the purposes of this sub-section, a dealer shall be deemed to be liable to pay tax under the sales tax law at the appropriate State notwithstanding that under such law a sale or purchase made by him is exempt from tax or a refund or rebate of tax is admissible in respect thereof, (3) xxxx (4) A certificate of registration granted under this action may -
(a) either on the application of the dealer to whom it has been granted, or, where no such application has been made, after due notice to the dealer, be amended by the authority granting it if he is satisfied that by reason of the registered dealer having changed the name, place or Page 9 of 15 Downloaded on : Sun Jun 30 22:11:39 IST 2019 C/SCA/6348/2019 JUDGMENT nature of his business or the class or classes of goods in which he carries on business or for any other reason the certificate of registration granted to him requires to be amended; or
(b) be cancelled by the authority granting it where he is satisfied, after due notice to the dealer to whom it has been granted, that he has ceased to carry on business or has ceased to exist, or has failed without sufficient cause, to comply with an order under sub-section (3-A) or with the provisions of sub-section (3-C) or sub-section (3-E) or has failed to pay any tax or penalty payable under this Act or in the case of a dealer registered under sub- section (2) has ceased to be liable to pay tax under the sales tax law of the appropriate State or for any other sufficient reason."
10.1 Thus, sub-section (1) of section 7 of the Act requires a dealer seeking registration under the CST Act to make an application to such authority in the appropriate State as the Central Government may, by general or special order, specify. Sub-section (4) thereof enables the authority which has granted such registration to amend the certificate of registration.
10.2 Rule 3 of the Central Sales Tax (Registration and Turnover) Rules, 1957 (hereinafter referred to as "the rules") provides for a dealer to make an application under section 7 of the CST Act to the notified authority. It appears that the second respondent State Tax Officer is the notified authority specified by the Central Government to decide applications for registration under section 7 of the CST Act. Therefore, it is for that authority to decide whether or not a dealer is required to be registered under the CST Act or whether or not to make an amendment in an existing certificate as contemplated under clause (a) of sub-section (4) of section 7 of the CST Act. The Page 10 of 15 Downloaded on : Sun Jun 30 22:11:39 IST 2019 C/SCA/6348/2019 JUDGMENT officer who is notified as an authority by the Central Government, is required to act independently while exercising powers under section 7 of the CST Act, and cannot refuse to decide an application on the ground that he wants to seek the guidance of the higher authority. The authority in which powers are vested under section 7 of the CST Act should be competent enough to exercise the powers vested in it on its own without having to seek guidance from anyone, otherwise it reflects on the lack of competence on the part of such authority in discharging the powers vested in it by the Central Government. Therefore, the submission advanced on behalf of the respondents that the whole objective behind keeping the order of approval in abeyance is to ensure that nothing contrary to the statute is permitted and if need arises, the higher authority may look into the whole issue and resolve the same in accordance with Iaw, flies in the face of the provisions of section 7 of the CST Act, and reflects lack of competence on the part of the concerned officer exercising powers vested in him under section 7 of the CST Act. In the opinion of this court, every officer who is notified as an authority under any enactment, while exercising powers specifically vested in him under such enactment, is required to act independently in the discharge of his duties and cannot refuse to exercise the powers vested in him on the ground of seeking guidance from a higher authority.
10.3 Another aspect of the matter is that on a plain reading of section 7 of the CST Act, there is nothing therein to show that any power is vested in the authority to review an order passed by it whereby it has granted registration or amended a registration certificate or to keep such order in Page 11 of 15 Downloaded on : Sun Jun 30 22:11:39 IST 2019 C/SCA/6348/2019 JUDGMENT abeyance. In the facts of the present case, it is an admitted position that the second respondent firstly granted amendment of the registration certificates of the petitioners by including High Speed Diesel as commodity; and thereafter has kept them in abeyance for the purpose of obtaining guidance of the higher authority. In the considered opinion of this court, there being no power vested in the authority to review its order under section 7 of the CST Act or to keep such order in abeyance, the stand of the second respondent in the impugned letters dated 27.2.2019 informing the petitioners that their on-line applications had been approved through oversight and that High Speed Diesel would be included in CST commodity after obtaining guidance of the higher authority cannot be countenanced even for a moment. The impugned letters, therefore, cannot be sustained.
11. Adverting to the second question as to whether upon the coming into force of the Taxation Laws (Amendment) Act, 2017 whereby the definition of goods in the CST Act came to be amended, CST registrations of dealers other than those dealing in the specified goods would automatically become inactive; sub-section (4)(b) and sub-section (5) of section 7 of the CST Act provide for the manner in which a registration certificate granted under that Act can be cancelled. There is no provision in the CST Act which provides that if a dealer stops dealing in a particular commodity or if the commodity in which he is dealing ceases to be goods within the meaning of such expression as envisaged under section 2(d) of that Act, the registration certificate would automatically stand cancelled or would become inactive. In fact there is no concept of an inactive registration. Moreover, the Taxation Laws Page 12 of 15 Downloaded on : Sun Jun 30 22:11:39 IST 2019 C/SCA/6348/2019 JUDGMENT (Amendment) Act, 2017, whereby the definition of goods under section 2(d) of the CST Act came to be amended and came to be restricted to the commodities specified thereunder also does not provide for automatic cancellation of the registration certificates of dealers who were not dealing in the commodities specified in the amended section 2(d).
11.1 It may be noted that pursuant to the coming into force of the Goods and Services Tax Acts, the Gujarat Value Added Tax Act, 2003 (hereinafter referred to as the "GVAT ACT") came to be amended and by virtue of section 27A of that Act, it was provided that all registered dealers not dealing with goods defined in section 2(13) shall be deemed to be deregistered from the date of coming into force of the Gujarat Value Added Tax (Amendment) Act, 2017 and their registration certificates shall stand cancelled. Thus, the GVAT Act provides for automatic deregistration of dealers not dealing with goods denied in section 2(13) thereof, whereas no such provision providing for automatic deregistration of dealers under the CST Act has been made in the Taxation Laws (Amendment) Act, 2017 whereby amendments were made in the Central Sales Tax Act. It is therefore clear that when the legislature wants to provide for automatic cancellation of the registration granted under an enactment, it is expressly provided in such enactment. Since no such provision has been made in the CST Act, no such intention can be read into it and consequently, upon the coming into force of the Taxation Laws (Amendment) Act, 2017 whereby the definition of goods in the CST Act came to be amended, CST registrations of dealers other than those dealing in the specified commodities would not become inactive automatically.
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12. Proceeding to the third question, namely, whether a dealer who is registered under the Goods and Services Tax Act cannot be registered under the CST Act, though the CST Act requires the person who deals in or claims usage of the goods specified thereunder to be registered under that Act for getting the benefit of reduced rate of tax under section 8 thereof, upon the coming into force of the Goods and Services enactments, dealers were required to obtain registration under the respective Goods and Services Tax Act for dealing in the goods covered under those Acts. Since for the present, goods other than the goods mentioned in section 2(d) of the CST Act as amended by section 13 of the Taxation Laws (Amendment) Act, 2017 are not covered by the GST Act, the CST Act has been amended to restrict the definition of goods to those commodities which for the present are not covered by the GST Act. Evidently therefore, dealers dealing in or claiming usage of commodities falling within the ambit of the definition of "goods" as per the amended section 2(d) of CST Act were required to be registered under the CST Act to get the benefit of reduced rate of tax under section 8 thereof. Such dealers may also be dealing in commodities other than those falling within the ambit of the amended section 2(d) of the CST Act and would, therefore, be required to be registered under the respective GST Act also. Therefore, the contention that as the petitioners are dealers who are registered under the GST Act, they cannot be registered under the CST Act, does not merit acceptance. If a dealer is dealing in goods falling within the ambit of the GST Act as well as the CST Act, it is always permissible for him to hold separate registrations under both the Acts in respect of such goods. Therefore, a dealer who is Page 14 of 15 Downloaded on : Sun Jun 30 22:11:39 IST 2019 C/SCA/6348/2019 JUDGMENT registered under the GST Act can also be registered under the CST Act in respect of commodities which fall within the ambit of the expression "goods" as defined under section 2(d) thereof for getting the benefit of reduced rate of tax under section 8 of the CST Act.
13. In the light of the above discussion, the petitions succeed and are accordingly, allowed. The impugned letters dated 27.2.2019 issued by the second respondent are hereby quashed and set aside. Rule is made absolute accordingly, with costs.
(HARSHA DEVANI, J) (BHARGAV D. KARIA, J) Z.G. SHAIKH Page 15 of 15 Downloaded on : Sun Jun 30 22:11:39 IST 2019