Rajasthan High Court - Jaipur
The State Of Rajasthan vs Asi Industries Limited on 16 July, 2019
Author: S. Ravindra Bhat
Bench: Chief Justice
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Special Appeal (Writ) No.41/2019
1. The State Of Rajasthan, Through Its Principal Secretary,
Department Of Finance, Secretariat, Jaipur
2. The Commissioner, Commercial Taxes Department,
Government Of Rajasthan, Jaipur
3. The Commercial Taxes Officer, Commercial Taxes
Department, Special Circle-II, Kota
----Appellants
Versus
1. ASI Industries Limited, (Formerly Known As Associated
Stones Industries Kotah Limited), Having Marathon
Innova, 7Th Floor, Off Ganpatrao Kadam Marg, Lower
Parel, Mumbai-400013 and having works at ASI House,
Kudayala Industrial Area, Ramganjmandi, Distt-Kota,
Rajasthan Through Its Authorized Signatory, Shri Santosh
Kumar Marchya, Son Of Shri Bapulalji, Aged About 51
Years, Resident Of ASI Officers Colony, Ramganjmandi,
District Kota, Rajasthan
2. Union Of India, Through Its Secretary, Ministry Of
Finance, Nirman Bhawan, New Delhi
3. Indian Oil Corporation Limited, Having Its Registered
Office At Indian Oil Bhawan, G-9, Aliyavar Jang Marg,
Bandra East, Mumbai-400051 Through Its Chairman And
Managing Director
----Respondents
For Appellant(s) : Mr. R.B. Mathur, Adv. with Mr. Akhil Simlote, Adv.
For Respondent(s) : Mr. G.S. Bapna, Senior Advocate assisted by Mr. Siddharth Bapna, Adv.
Mr. J.P. Gurjar, Adv.
HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA Judgment REPORTABLE:-
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1. The State-appellant is aggrieved from the decision of the learned Single Judge. It is contended that in the absence of Central Sales Tax (CST) Registration the assessee respondent cannot claim a direction to C Forms be issued to it. By the impugned order, the learned Single Judge has directed that C Forms sought not to be issued.
2. The writ petitioner is engaged in mining of minerals out of State of Rajasthan as a input for its activity however, it purchases High Speed Diesel (HSD). That product continuous to be subjected to a State levy. It was earlier subjected to a levy by the Rajasthan Value Added Tax. After the advent of the Goods & Services Tax and the enactment of the Rajasthan Goods and Services Tax Act, it is now taxable under the RGST. The peculiarity of this case is that all goods and services except specified six items are subjected to CGST as is evident from the definition of "goods" under Section 2(52) read with Section 9(2) of the CGST Act. The effect of this provision is that till the GST Council so decides, levy on certain products such as HSD, would be continued by the State and collected by it in accordance with its legal mechanism. That pre-existing regime of taxation of diesel (as adverted to earlier) was subjected to VAT Levy. Issue of Form C has apparently been subject matter of the proceedings in several other courts. On the enactment of the GST Act, business had to be switched over and migrated to GST and also had to obtain registration as GST Dealers-as the new levy covers almost all products on services. Consequently, the assessee/writ petitioner also did so. Immediately thereafter when it stopped obtaining C Forms on the purchases made by it as inputs. The concerned State Authorities refused that benefit containing that they have CST Registrations had ceased with the registration under the GST regime.
3. Almost identical situation had arisen before the Punjab and Haryana High Court in Carpo Power Limited Versus State of Haryana & Ors., 2018 (2) GSTL 248, where much like HSD, issue of C Forms were refused in the case of natural gas procured from (Downloaded on 01/09/2019 at 07:42:11 PM) (3 of 7) [SAW-41/2019] Gujrat for use in Haryana. The Court, ultimately referring to the provisions of GST Act, CST Act and the Haryana Goods and Services Tax Act, held as follows:-
"8. The definition of `goods' in Section 2 (d) prior to the amendment of 2017 included all material, articles, commodities and all other movable property, excluding news papers, actionable claims, stock, shares and securities. Natural gas therefore was included in the term `goods'. Under Section 6 every dealer under the CST Act is liable to pay tax on all sales of goods other than electrical energy effected by him in the course of inter-state trade or commerce. Thus the oil companies were liable to pay tax under the CST Act in respect of the sale of natural gas.
9. Under Section 9 sales tax is levied by the Government of India but is to be collected in the State, from which the movement of goods commenced. Under Section 9 (2) the authorities empowered to re-assess, 16 of 25 collect and enforce payment of tax under the general sales tax law of the appropriate State are to do so even on behalf of the Government of India with respect to the tax due under the CST Act.
14. 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. This continued till the implementation of the Goods & Service Tax. The question is whether the petitioner continues to be entitled to the `C' Forms after the CGST Act, 2017. We think it is.
15. Entry 54 of the State List of the Seventh Schedule to the Constitution of India as amended by the Constitution (One Hundred and First Amendment) Act, 2016, reads as under :-
"54. Taxes on the sale of petroleum, high speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption, but not including sale in the course of inter-State trade of commerce or sale in the course of international trade or commerce of such goods."(Downloaded on 01/09/2019 at 07:42:11 PM)
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16. After implementation of the GST Act with effect from 01.07.2017, the definition of `goods' under the CST Act was amended. The amended definition of `goods' now covers only six items. What is important is that natural gas is one of them.
17. The definition of `goods' in Section 2 (52) of the CGST Act is very wide. It includes every kind of movable property, excluding money and 19 of 25 securities but including actionable claims, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply. Section 9(2) of the CGST Act provides that petroleum crude, high speed diesel, motor spirit, natural gas and aviation turbine fuel shall be levied tax under the CGST Act from the date as notified by the Government on the recommendations of the Council. Section 2(52) and 9 (2) of the HGST Act are similar to Section 2 (52) and 9 (2) of the CGST Act.
It is pertinent to note that till date, the Government has not issued a notification under either the CGST Act or the HGST Act. Hence inter-state sale of natural gas continues to be governed by the CST Act.
23. Section 9 of the HGST Act levies tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption. Section 7 of the HGST Act defines the scope of supply. It is an inclusive provision and includes all types of supply of goods or services or both such as sale, transfer etc. In this background, it would be appropriate to note that the petitioner purchases natural gas and uses it for generation of electricity. Whereas for the sale of natural gas, the liability to pay tax is of the oil companies under the CST Act, the sale of electricity in the State of Haryana is leviable to tax under the HGST Act. There is no dispute that the sale of electricity is taxable under the HGST Act, though the rate of tax has been fixed at 0%. It has been laid down that even if the rate of tax on the goods is 0%, still it is a taxable item under the Act. The HGST Act thus falls within 22 of 25the ambit of the words "sales tax law" of the appropriate State in Sections 7 and 8 of the CST Act. The words "sales tax law" is defined in Section 2 (i) to mean any law for the time being in force in any State or part thereof which provides for the levy of taxes on the sale or purchase of goods. The HGST Act does so as is evident from Section 9 thereof which stipulates a tax on all intra-state (Downloaded on 01/09/2019 at 07:42:11 PM) (5 of 7) [SAW-41/2019] supply of goods. Section 7 does not specify the state law that levies taxes on the sale or purchase of goods. Hence, any State law that does so including the HGST Act would fall within the ambit of Section 7 of the CST Act. If the HGST Act is not applicable the HVAT Act would be. Thus in either case the ingredients of Section 7 and 8 of the CST Act would be met.
24. The petitioner therefore fulfils all the requirements of Section 7 (2) of the CST Act. It is liable to pay tax in the State of Haryana under the HGST Act. Even though there is no liability under the CST Act, yet it will be a registered dealer under Section 7 (2) of the CST Act.
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 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 (Downloaded on 01/09/2019 at 07:42:11 PM) (6 of 7) [SAW-41/2019] 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.
27. There is another aspect of the matter that the registration certificate given to the petitioner under the CST Act till date has not been cancelled. As per Section 7 (4) of the CST Act, the registration certificate granted has to be amended or cancelled. The said provisions have not been 24 of 25 invoked.
28. In these circumstances, the writ petition is allowed. It is held that 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. In the event of the petitioner having had to pay the oil companies any amount on account of the first respondent's wrongful refusal to issue `C' Forms the petitioner shall be entitled to refund and/or adjustment of the same from the concerned authorities who collected the excess tax through the oil companies or otherwise. The concerned authorities shall process such a claim within twelve weeks of the same being made by the petitioner in writing and the petitioner furnishing the requisite documents/form."
4. This Court has been informed that the special appeal preferred by the State of Haryana against the decision in Carpo Power Limited (supra) (in SLP No.20572/2018), was rejected on 13.08.2018.
5. The learned Single Judge in this case relied upon decision in Hindustan Zinc Limited Versus The State of Rajasthan & Ors. 2019 (64) GSTR 366 (Raj.), decided on 18.05.2018 where a direction was issued to the State of Rajasthan, to provide relief. This Court notices that in Hindustan Zinc Limited (supra) also relied upon Carpo Power Limited. Further, other High Courts to have followed the said ruling in Carpo Power Limited (supra)-the Madras High Court, in the Ramco Cements Ltd. vs. The Commissioner of Commercial Taxes 2019 (64) GSTR 374 (Mad);
the Orissa High Court in N.K. Bhojani (P) Ltd. Versus
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Commissioner of Commercial Taxes 2019 (24) GSTL 28; and Star Cement Meghalaya & Ors. Versus State of Assam & Ors., 2019 (21) GSTL 484.
6. In the light of the above discussion, this Court is of the opinion that denial of C Forms is purely on account of exigencies of advent of the GST regime which compelled the assessee to migrate to and obtain GST Registrations which rendered at the same time its CST registrations ineffective. This was inadvertent and beyond its control.
7. Consequently, the directions issued by the learned Single Judge are upheld. The appeal is accordingly dismissed.
(SANJEEV PRAKASH SHARMA),J (S. RAVINDRA BHAT),CJ Ramesh Vaishnav/Fateh Raj Bohra/33.
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