Executive circular cannot override statutory tax liability or cancel CST registration where State liability continues.

An executive circular cannot alter the statutory tax position or withdraw registration by declaring that dealers have ceased to be liable under the State sales tax law where that liability continues under the governing enactment. The text states that the Commissioner of Taxes, Assam lacked jurisdiction to issue Circular No. 7/2017-GST to the extent it sought to nullify liability and registration, because the retained petroleum goods remained taxable under the Assam Value Added Tax regime and the saving provision in the Assam GST Act. It further states that Section 7(2) CST registration depends on continued State-tax liability, so the declaration that such dealers ceased to be dealers was unsustainable.

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Issues: (i) Whether the Commissioner of Taxes, Assam had jurisdiction to issue Circular No. 7/2017-GST dated 05.09.2017; (ii) Whether the circular could validly declare that dealers purchasing the retained petroleum goods for use in manufacture of other goods ceased to be dealers under Section 7(2) of the Central Sales Tax Act, 1956 and consequently lost the benefit of registration.

Issue (i): Whether the Commissioner of Taxes, Assam had jurisdiction to issue Circular No. 7/2017-GST dated 05.09.2017.

Analysis: The circular was not issued merely for administrative guidance. It sought to alter the statutory position by declaring that a category of dealers would no longer be liable under the Assam Value Added Tax Act, 2003 and would cease to hold valid registration under the Central Sales Tax Act, 1956. The powers under Section 3(5)(b) and Section 105 of the Assam Value Added Tax Act, 2003 permit administrative directions and determination of disputed questions, but do not authorise the Commissioner to take away a statutory levy or to nullify registration by executive clarification.

Conclusion: The Commissioner did not have jurisdiction to issue the circular to that extent.

Issue (ii): Whether the circular could validly declare that dealers purchasing the retained petroleum goods for use in manufacture of other goods ceased to be dealers under Section 7(2) of the Central Sales Tax Act, 1956 and consequently lost the benefit of registration.

Analysis: The retained goods continued to remain taxable under the Assam Value Added Tax Act, 2003 by virtue of the post-amendment regime and the saving provision in the Assam Goods and Services Tax Act, 2017. The precondition for registration under Section 7(2) of the Central Sales Tax Act, 1956 is liability under the State sales tax law. Since that liability continued, the premise that such dealers had ceased to be liable under the State law was incorrect. The circular also could not be supported by the GST enactments, as no notified date had brought the relevant petroleum goods into levy under those enactments. Consequently, the foundation for treating the registration as invalid fell away.

Conclusion: The declaration that such dealers ceased to be dealers under Section 7(2) and the consequential withdrawal of registration were unsustainable.

Final Conclusion: The impugned circular was set aside in its entirety, and the writ petitions were disposed of in favour of the petitioners.

Ratio Decidendi: An executive circular cannot override the statutory scheme or withdraw a dealer's registration by declaring cessation of State-tax liability where that liability continues under the governing enactment.

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