2025 (8) TMI 1342 - HC - VAT / Sales Tax

Form C for concessional HSD denied where registration limits fuel use to running and maintenance of specified mining machinery

Vedanta Limited, Gregory Dsouza, Sesa Mining Corporation Limited, Mr. Azad Shaw Versus Union of India, Through the Secretary Department of Revenue, Ministry of Finance, Government of India., State of Goa, The Assistant Commercial Tax Officer, Panaji, Commissioner of Commercial Taxes, Panaji, Additional Commissioner, Commercial Taxes, Panaji, Goa, The State of Karnataka, Reliance Industries Ltd.

Vedanta Limited, Gregory Dsouza, Sesa Mining Corporation Limited, Mr. Azad Shaw Versus Union of India, Through the Secretary Department of Revenue, ... ISSUES PRESENTED AND CONSIDERED 1. Whether registration under the Central Sales Tax statute (and the corresponding State VAT statute) became invalid or infructuous w.e.f. the commencement of the GST regime, thereby precluding issuance of concessional-dealer declarations (Form C) for specified petroleum products retained outside GST until notified. 2. Whether a registered dealer whose certificate of registration specifically records High Speed Diesel (HSD) and petrol 'for use in running and maintenance of machinery for mining and processing of ore for sale' is entitled to procure HSD at the concessional Central Sales Tax rate against Form C when (a) some HSD is consumed in activities arguably ancillary to mining (transportation) and/or (b) HSD is resold or the supplier/delivery arrangement results in effective resale to third-party transporters. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of CST/VAT registration after commencement of GST Legal framework: The special GST scheme (constitutional amendment and Central/State GST statutes) created a new levy for supplies of goods and services; certain petroleum products were expressly excluded from GST until notified. The CST statute continued to prescribe registration and concessional inter-state purchase procedures (Form C) for goods and classes specified in a dealer's registration certificate. Statutory provisions governing registration, rates (including concessional rates under Section 8 and rules prescribing goods for specified purposes), and the requirement that only registered dealers may collect tax were examined. Precedent treatment: Multiple High Courts examined identical issues post-GST enactment and consistently held that where CST registration subsists and the goods remain governed by CST (because GST on those specified petroleum products had not been notified), the registration under CST/VAT remains effective for the limited purpose of inter-state concessional purchases. Those High Court decisions were not disturbed and at least one challenge to that line was dismissed by the apex forum. Interpretation and reasoning: The Court observed that (a) GST statutes deferred levy on specified petroleum products to a notified date; (b) until such notification, levy under Central Excise/CST/State VAT continued; (c) the CST statutory scheme (including Section 7 registration, Section 8 concessional rate, Section 9 collection and Section 9A prohibition on collection by unregistered persons) remained operative for the specified items; and (d) neither the CST text nor transitional practice mandated automatic cancellation of CST registration for dealers purchasing/using the specified items. Administrative circulars purporting to treat registrations as invalid were inconsistent with the statutory scheme and the consistent judicial exposition. Ratio vs. Obiter: Ratio - A dealer's CST/VAT registration does not automatically become invalid w.e.f. GST commencement for the limited purpose of inter-state purchases of specified petroleum products that remain outside GST until notified; authorities must continue to consider Form C issuance where registration subsists and statutory conditions are met. Obiter - Observations on wider policy considerations of migration to GST and administrative circulars. Conclusion: The Court held that CST/VAT registration continues to be governed by the CST Act for the covered specified petroleum products pending notification shifting them to GST; therefore the mere fact of migration to GST does not ipso facto render prior CST/VAT registration infructuous for the purpose of obtaining Form C for those products. Issue 2 - Entitlement to Form C for HSD where registration limits use and facts show resale/ancillary consumption Legal framework: Section 8(3) of the CST statute and the Central Sales Tax (Registration & Turnover) Rules require (i) that the goods be specified in the purchaser's registration certificate as intended for resale or for use in the manufacture/processing of goods for sale or in mining or power generation, and (ii) that a duly signed declaration in Form C be furnished. Rule 13 prescribes the kinds of goods that qualify (raw materials, machinery, fuel, lubricants, etc.) when used 'in the manufacture or processing of goods for sale or in mining or in generation of electricity.' The certificate of registration is conclusive as to the class(es) of goods for which concessional rate can be claimed. Precedent treatment: Judicial authorities have interpreted 'mining' and 'manufacture/processing' broadly in appropriate factual matrices so as to include many activities up to and including certain transport and handling steps when these form an integrated process. Conversely, authorities have also emphasized that inclusion in the registration is confined to the goods and purposes expressly certified; a certificate may restrict the permitted use, and where goods are not used for the specified purpose or are resold, concessional benefit can be denied. Interpretation and reasoning: The Court distinguished general doctrinal holdings (that transportation may be part of mining/processing if integrated) from the controlling content of the registration certificate. Key points of reasoning: (a) entitlement to concessional rate turns on the goods and the specified purpose recorded in the dealer's certificate; (b) a registration certificate may be expressly restricted (e.g., HSD/petrol 'for running and maintenance of machinery for mining and processing of ore for sale') - such restriction limits the permissible use for concessional treatment; (c) even if some transport activities can constitute part of 'mining/processing' in other cases, that conclusion cannot override a specific limitation recorded in the registration certificate; (d) where evidence shows that HSD was supplied to and consumed by third-party transporters or adjusted as resale (deducted from freight bills), such consumption is resale or use outside the restricted certified purpose and disqualifies the dealer for Form C on that portion; and (e) partial allowance is appropriate where diesel demonstrably used in certified mining machinery/at a specific mine site meets the certificate conditions. Ratio vs. Obiter: Ratio - A dealer is entitled to Form C only for goods and purposes expressly specified in its registration certificate; a registration restriction (e.g., HSD limited to running/maintenance of mining machinery) must be given effect and excludes concessional treatment where the goods are resold or used for purposes outside that certified purpose. Obiter - General observations that transportation can, in appropriate integrated factual scenarios, form part of mining/processing (consistent with earlier judicial statements), but such general principle cannot displace a specific certificate restriction or established evidentiary findings of resale. Conclusions on facts: The Court applied the legal tests to the two factual sets before it. Where the registration certificate expressly limited HSD use to running/maintenance of mining and processing machinery and factual findings established that significant quantities were effectively resold or supplied to private transporters (deducted via freight adjustments), the Court refused relief and denied Form C for the disallowed portion, while upholding Form C for demonstrable in-situ mining consumption at a particular mine. By contrast, where the only ground for refusal was the administrative stance that CST/VAT registration had become invalid post-GST, the Court quashed that refusal and remitted the matter for consideration on merits (without the administrative obstacle), directing the authority to decide issuance of Form C within a specified period.