Bombay High Court
Vvf (India) Ltd vs The State Of Maharashtra And 2 Others on 31 October, 2018
Author: Riyaz I. Chagla
Bench: M.S.Sanklecha, Riyaz I. Chagla
S.R.JOSHI wp-932-2018
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 932 OF 2018
VVF (India) Ltd., .. Petitioner.
v/s.
The State of Maharashtra & Others .. Respondents.
Mr. Sridharan, Sr. Advocate with Mr. Prakash Shah and Mr. Sriram
Sridharan, i/b. PDS Legal, for the Petitioner.
Mr. V.A. Sonpal, Special Counsel 'B' panel with Mr. Pradeep S. Jetly and
Mr. Dushyant Kumar, for the Respondents.
CORAM: M.S.SANKLECHA &
RIYAZ I. CHAGLA, JJ.
DATE : 31st OCTOBER, 2018.
P.C:-
Heard. RULE.
2 This Petition under Article 226 of the Constitution of
India, primarily challenges non-issue of 'C' Form under the Central Sales Tax Act, 1956 (the Act) in respect of natural gas purchased by the Petitioner from the supplier/ dealer in the State of Gujarat. This, issuance of 'C' Forms entitles the Petitioner to concessional rate of Central Sales Tax at 2%.
3 The natural gas purchased/ obtained by the Petitioner from the dealers in State of Gujarat is utilized for manufacture of chemicals 1 of 5 ::: Uploaded on - 03/11/2018 ::: Downloaded on - 04/11/2018 00:32:33 ::: S.R.JOSHI wp-932-2018 and also for the generation of electricity. It is the case of the Petitioner that in terms of the amended definition of goods in Section 2(d) of the Act, w.e.f. 1st July, 2017 read with Section 8 of the Act, it is entitled to the benefit of lower tax at 2% under the Act on the entire purchase of natural gas. However, for the purposes of interim relief, the claim is restricted to the extent the purchased natural gas is used for generation of electricity. Therefore, the Petitioner have repeatedly sought the issue of 'C' Form Certificate from the Respondent. This is so, as to forward to its supplier in Gujarat who have charged concessional tax at 2% on the basis of Section 8 of the Act. However, Respondent are not issuing the same.
4 As against the above, it is the case of the Revenue that the Petitioner is not entitled to the benefit of concessional tax and consequent issue of 'C' Form under the CTS Act. This for the reason that the natural gas which is purchased from the dealers in Gujarat, are not used exclusively in the generation of electricity and/or any of the goods as defined in Section 2(d) of the Act w.e.f. 1st July, 2017.
5 It is not disputed before us that a part of the natural gas which is purchased from dealers in Gujarat, is used in the generation of electricity. This fact, has been examined by an Officer of the Respondent namely Mr. Vitthal S. Marwade, Deputy Commissioner of Sales Tax, who on examination of the use of natural gas by the Petitioner, made a proposal that 'C' Form could be issued to the Petitioner to the extent natural gas is used in the process of power generation. However, Mr. Sonpal, learned Counsel for the Respondent states that this is merely a proposal which has not been accepted by the Commissioner. But at this stage, even he does not dispute the use of natural gas 2 of 5 ::: Uploaded on - 03/11/2018 ::: Downloaded on - 04/11/2018 00:32:33 ::: S.R.JOSHI wp-932-2018 purchased from Gujarat in generation of electricity. The benefit of 'C' Form is being denied on the natural gas purchased from the State of Gujarat only because it is partly used in manufacture of goods not entitled to concessional rate of tax.
6 Prima facie, we are of the view that, where it possible to bifurcate and/or measure the use of natural gas in generation of power, the benefit of 'C' Form to the extent of its user in generation of electricity, is to be granted. This on facts has been found to be possible by the report submitted by Mr. Vitthal S. Marwade, Deputy Commissioner of Sales Tax. In fact, he has recommended/ proposed grant of 'C' Form to the extent natural gas is used in generation of electricity. No bar in the Act or the Rules framed thereunder, has been shown to us, which would deprive the party from claiming the benefit of 'C' Form even to the extent of permitted use of the input under the CST Act. In case, a part of the inputs are used in items not entitled to its benefit respect of applications for 'C' Form already made, Respondent will file an affidavit of its Managing Director of the extent of user of natural gas in generation of power with the Respondents in support of its pending applications. For the future, we are informed by the Petitioner, that it will make separate purchases of natural gas for use in generation of electricity. The Petitioner's Managing Director would also file an undertaking in this Court that it would claim 'C' Form only to the extent the natural gas purchased from the dealers in State of Gujarat is used in the generation of electricity.
7 The other issue is whether at the stage of application for 'C' Form made by Registered dealer, is adjudication called for. It is an un- disputed position that the Petitioner holds Registration under the Act.
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Once, the Petitioner is registered as a dealer under the Act, then that registration permits/ allows the dealer to purchase the goods mentioned therein from outside the State and seek concessional rate of tax by applying for issue of 'C' Form to the Respondent Nos.1 and 2. Prima facie, Respondent Nos. 1 and 2 are obliged to grant/issue the same. In fact, this view is supported by the decision of the Kerala High Court in Colourgraphs v/s. Sales Tax Officer, Ernakulam, 1993 page 347, as well as the decisions of other Courts in Chanda Paints (Madras) Ltd., v/s. Commercial Tax Officer 61 STC 335, Dawar Brothers v/s. State of Madhya Pradesh (M.P.) 44 STC 286, T.V.P. Nambair v/s. State of Madras (Writ Petition Nos. 1379 and 1380 of 1967), all relied upon in the Colorgraph (supra). As observed in the above cases, in case, it is found that the natural gas obtained/ purchased from the dealer in the State of Gujarat are not used for the intended purposes namely - generation of power to the extent declared by the Petitioner, then it would be open to the Respondent to invoke the provisions of the Act and the Rules framed thereunder for the purposes of imposing penalties.
8 The grant of interim relief will not prohibit the Respondents from making enquiries to the extent of use of the natural gas for the stated purposes i.e. generation of electricity. Thereafter, if required, Respondent are at liberty to move this Court for variation of this order.
9 In view of the above, till the final disposal of this Petition, there shall be ad-interim relief in terms of prayer clause (cc2).
10 It is made clear that, in case, the Petition is dismissed, the Petitioner will not claim any equities on the basis that it acted upon the order of this Court. The Petitioner's Managing Director to file an 4 of 5 ::: Uploaded on - 03/11/2018 ::: Downloaded on - 04/11/2018 00:32:33 ::: S.R.JOSHI wp-932-2018 undertaking to this Court, stating that in case, the Petition is dismissed, then Petitioner will make good the loss suffered by the State of Gujarat/ Dealer etc., as determined by the Court on account of the Respondent's issuing 'C' Form to the Petitioner on the basis of this interim order.
11 Respondent waives service. Hearing expedited.
(RIYAZ I. CHAGLA,J.) (M.S.SANKLECHA,J.)
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