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of <h1>Court rules against additional GST liability undertaking for Extra Neutral Alcohol; cites statutory limits.</h1> <h3>United Spirits Ltd., Pernod Ricard India (P) Ltd., Versus State Of Goa, through the Finance Secretary, Goa., Commissioner Of State Tax, Goa, Commissioner Of Commercial Taxes, Goa.</h3> United Spirits Ltd., Pernod Ricard India (P) Ltd., Versus State Of Goa, through the Finance Secretary, Goa., Commissioner Of State Tax, Goa, Commissioner ... Issues Involved:1. Legality of the undertaking required for the issuance of C and F Forms.2. Authority of the State to impose conditions not specified in the CST Act, CST Rules, or Goa Rules.3. Applicability of the GST regime to Extra Neutral Alcohol (ENA).4. Prejudice and rights of petitioners in the context of statutory compliance.Detailed Analysis:1. Legality of the Undertaking Required for the Issuance of C and F Forms:The petitioners challenged the requirement imposed by the respondents to furnish an undertaking for the payment of all taxes, interest, and penalties if the GST Council decides that ENA is covered under the GST Law, as a precondition for the issuance of C and F Forms under the CST Act and Rules. The petitioners argued that they have fulfilled all necessary conditions under the CST Act and that there is no provision in the CST Act, CST Rules, or Goa Rules that empowers the respondents to insist on such an undertaking. The court agreed with the petitioners, stating that the impugned direction and undertaking are ultra vires as they introduce an additional precondition not contemplated by the statutory provisions.2. Authority of the State to Impose Conditions Not Specified in the CST Act, CST Rules, or Goa Rules:The court emphasized that the issuance of C and F Forms is governed by the statutory provisions of the CST Act, CST Rules, and Goa Rules. The court noted that the OM dated 21.04.2021, which required the undertaking, is an executive instruction and cannot interfere with or introduce additional conditions to the statutory provisions. The court referenced several precedents, including Tata Steel Ltd. v. Jharkhand, Chowhan Machinery Mart v. State of Orissa, and Manan Auto Link Pvt. Ltd. v. State of Gujarat, which established that the State cannot impose additional conditions for the issuance of C Forms beyond those specified in the statutory framework.3. Applicability of the GST Regime to Extra Neutral Alcohol (ENA):The respondents argued that ENA is covered under the GST regime and not the CST Act. However, the court noted that the GST Council, of which the State of Goa is a part, has decided to maintain the status quo and apply the CST regime to ENA used for the manufacture of alcohol for human consumption. The court found that the State of Goa has accepted and acted upon this arrangement, as evidenced by the OM dated 21.04.2021. Therefore, the court declined to address the larger issue of whether ENA is covered under the GST regime, as it was not relevant to the specific challenge in these petitions.4. Prejudice and Rights of Petitioners in the Context of Statutory Compliance:The court rejected the respondents' argument that no prejudice would be caused to the petitioners by furnishing the undertaking. The court held that insisting on compliance with an ultra vires requirement constitutes prejudice. The court also noted that the petitioners might expose themselves to liabilities not contemplated by the existing statutory provisions by furnishing the undertaking. The court referenced several decisions, including Rexnord Electronics and Controls Ltd. v. Union of India, which highlighted the potential for independent contractual liability arising from such undertakings.Conclusion:The court declared the impugned direction and undertaking as ultra vires and restrained the respondents from enforcing them. The court directed the respondents to consider the petitioners' applications for the issuance of C and F Forms in accordance with the law, without insisting on the impugned undertaking. The applications were to be disposed of expeditiously, within six weeks from the date of the judgment. The rule was made absolute, and no order for costs was issued.
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