2018 (5) TMI 1494 - HC - GST

Court orders issuance of C-Form under CST Act for high speed diesel purchases

The court held that the petitioner is entitled to C-Form under the CST Act, 1956 for high speed diesel purchases, as high speed diesel is not governed by ... Issuance of C-Form for concessional inter State purchases - inter State trade or commerce - scope of goods under amended definition of 'goods' in the CST Act - effect of Section 9(2) of the CGST Act - exclusion of specified petroleum products pending notification - repeal and saving - CST Act not repealed by the CGST Act - validity of CST registration post GST roll out - requirement of statutory cancellation procedure for termination of CST registrationIssuance of C-Form for concessional inter State purchases - inter State trade or commerce - scope of goods under amended definition of 'goods' in the CST Act - effect of Section 9(2) of the CGST Act - exclusion of specified petroleum products pending notification - Entitlement of the petitioner to issuance of C Form for high speed diesel purchased in the course of inter State trade and used in manufacture after 1 7 2017. - HELD THAT: - The amended definition of 'goods' in Section 2(d) of the CST Act, 1956 expressly includes high speed diesel. Section 9(2) of the CGST Act, 2017 (and the corresponding State provision) defers levy of GST on specified petroleum products, including high speed diesel, until a notification is issued on the recommendation of the GST Council. The CGST Act's repeal and saving provision does not repeal the CST Act; consequently, inter State trade in high speed diesel continues to be governed by the CST Act until GST is notified for that product. Applying these principles, the petitioner's entitlement to obtain C Form for inter State purchases of high speed diesel survives the roll out of GST. The State's online refusal based on an invoice date error is to be rectified and the petitioner's pending application on the official portal entertained for issuance of C Form. [Paras 31, 36, 39]Petitioner entitled to issuance of C Form for inter State purchase/use of high speed diesel; respondents directed to rectify the website error and issue C Form.Validity of CST registration post GST roll out - requirement of statutory cancellation procedure for termination of CST registration - repeal and saving - CST Act not repealed by the CGST Act - Whether migration to the GST regime automatically cancels the petitioner's registration under the CST Act, 1956. - HELD THAT: - The CGST Act, 2017 did not itself repeal the CST Act and there is no provision that effects automatic cancellation of a CST registration upon migration to GST. Cancellation of a CST registration is governed by the procedure in the CST Act (Section 7(4)(b)) read with the Rules (Rule 9), and no such cancellation proceedings have been initiated against the petitioner. Consequently, the petitioner's CST registration continues to be valid, albeit limited to goods covered by the amended definition in Section 2(d). The State's contention of automatic cancellation on migration is therefore rejected. [Paras 37, 38]Migration to GST does not automatically cancel CST registration; petitioner's CST registration remains valid to the extent of goods in Section 2(d).Final Conclusion: Writ petition allowed in part: petitioner entitled to C Form for inter State purchase/use of high speed diesel and State directed to issue the same after rectifying the online error; migration to GST does not effect automatic cancellation of CST registration which remains valid limited to the goods specified in the amended Section 2(d). Issues Involved:1. Entitlement to C-Form under the CST Act, 1956 post-CGST Act, 2017.2. Validity of registration under the CST Act, 1956 after migration to the GST regime.3. Applicability of Section 9(2) of the CGST Act, 2017 to high speed diesel.4. Automatic cancellation of CST registration upon GST migration.5. Non-issuance of C-Form due to non-utilization prior to 1-7-2017.6. Requirement of filing returns under the CST Act, 1956 post-GST.Detailed Analysis:1. Entitlement to C-Form under the CST Act, 1956 post-CGST Act, 2017:The petitioner argued that it is entitled to C-Form under the CST Act, 1956 for high speed diesel used in manufacturing cement, as high speed diesel is excluded from the CGST Act, 2017 by Section 9(2). The court noted that the CST Act, 1956 was not repealed by the CGST Act, 2017, and high speed diesel is still governed by the CST Act, 1956. Therefore, the petitioner is entitled to C-Form for inter-State purchases of high speed diesel.2. Validity of registration under the CST Act, 1956 after migration to the GST regime:The petitioner contended that its CST registration remains valid as it has not been cancelled following the procedure under Section 7(3)(b) of the CST Act, 1956 read with Rule 9 of the Rules of 1957. The court held that the registration certificate under the CST Act, 1956 continues to be valid for goods defined in Section 2(d) of the CST Act, 1956, including high speed diesel, despite the petitioner’s migration to the GST regime.3. Applicability of Section 9(2) of the CGST Act, 2017 to high speed diesel:Section 9(2) of the CGST Act, 2017 excludes high speed diesel from the GST regime until notified by the Government on the GST Council's recommendation. Since no such notification has been issued, high speed diesel remains outside the CGST Act, 2017’s purview, and the inter-State trade of high speed diesel is governed by the CST Act, 1956.4. Automatic cancellation of CST registration upon GST migration:The respondents argued that the petitioner’s CST registration automatically stood cancelled upon GST registration. The court rejected this, stating that cancellation of CST registration requires a specific procedure under Section 7(4)(b) of the CST Act, 1956 and Rule 9 of the Rules of 1957, which was not followed. Thus, the petitioner’s CST registration remains valid for the defined goods.5. Non-issuance of C-Form due to non-utilization prior to 1-7-2017:The court dismissed the argument that the petitioner cannot be issued C-Form for high speed diesel because it was not utilized before 1-7-2017. It held that if the petitioner is lawfully entitled to C-Form, it cannot be denied based on non-utilization prior to the CGST Act, 2017’s implementation.6. Requirement of filing returns under the CST Act, 1956 post-GST:The respondents claimed that the petitioner did not file returns under the CST Act, 1956 post-GST. The court found this argument fallacious, noting that the petitioner’s inability to file returns was due to the non-issuance of C-Form, which the petitioner had requested but was denied.Conclusion:The court concluded that the petitioner is a registered dealer under the CST Act, 1956, and its registration remains valid for inter-State purchases of high speed diesel. The respondents are directed to issue C-Form to the petitioner for high speed diesel and rectify their official website to facilitate this. The writ petition was allowed, and each party was directed to bear its own costs.