TaxTMI 
TaxTMI 
2018 (10) TMI 1529
X X X X Extracts X X X X
X X X X Extracts X X X X
....9411, 29412, 29801, 29807, 29813, 29794, 29798, 29803, 29811, 29818, 29822, 29896, 29900, 29903, 29891, 29897, 29904, 29888, 29890, 29894, 29905, 29911, 29915, 29922, 29923, 29926, 30057, 30060, 30063, 30065, 30347, 30351, 30436, 30438, 30441, 30439, 30440, 30443, 30451, 30452, 30457, 30462, 30464, 30468, 30473, 30477, 30481, 30474, 30479, 30480, 30482, 30485, 30487, 30494, 30495, 30497, 30498, 30499, 30500, 30501, 30504, 30508, 30510, 30512, 30515, 30521, 30523, 30531, 30535, 30540, 30777, 30781, 30783, 30785, 30787, 30789, 30805, 30807, 30810, 31091, 31092, 31094, 31158, 31160, 31162, 31220, 31224, 31225, 32153, 32157, 32159, 32182, 32183, 32185, 32223, 32226, 32228, 32098, 32102, 32106, 32578, 32581, 32580, 32591, 32595, 32597, 32606, 32608, 32611, 32617, 32619, 32621, 32627, 32628 and 32630 of 2018. 26-10-2018 Mr. Justice K. Ravichandrabaabu For the Petitioners : Mr.R.L.Ramani, Senior Counsel (in WP Nos.19458, 19459 & 19460 of 2018) Mr.P.Rajkumar (in WP Nos.19584, 22034, 23491, 23497, 23830, 23944, 24024, 24707, 24708, 25184, 25316, 25317, 25859, 25867, 26131, 26135 & 26805 of 2018) Mr.R.Kumar (in WP.No.20845 of 2018) Mr.J.R.Pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ded IOC, BPCL, HPCL, Shell Reliance Industries, ONGC. 2. Major Distilleries that included Golden Vats, SNJ Distilleries and TASMAC. 3. Major Hotels that included ITC, Oriental Hotels, Crown Plaza, GRT Hotels, SAS Hotels Enterprises. TAJ GVK Hotels, Hablis Hotels etc. 4. Major Clubs, Resorts, Cultural Associations that included Presidency Club, Madras boat Club, Madras Gymkhana Club, Ootacamund Club, Andhra Social Cultural Association, Ideal Beach Resorts, etc." 3. Thus, the Commissioner of Commercial Taxes excluded the following category, as not entitled to purchase petroleum products as the goods manufactured by persons falling under the following category are being taxed under GST. "Other Dealers not related to the above category being Spinning Mills, Blue Metal crusher Unit, ILFS Tamil Nadu Power Company, Housing Promoters, Cement Companies (Ramco Cement), Mines, Nuclear Power Corporation etc." 4. In the impugned communication dated 17.07.2018 issued to the individual writ petitioners, the Revenue informed the respective writ petitioners that they cannot generate online 'C' Forms from 01.07.2017 for those six commodities, which a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bine fuel and (vi)Alcoholic liquor for human consumption (b) Section 8 of the CST Act, 1956 deals with rates of tax on sales in the course of the interstate trade or commerce. As per Rule 12(1) of the CST (Registration and turnover) Rules, 1957, the declaration referred in Section 8(4) shall be in Form C. When goods of the description prescribed in Section 8(3) of the CST Act 1956 are purchased from other States on interstate sale basis, the same can be purchased at the rate of 2% against issue of 'C' declaration forms to the seller. Central Sales Tax Act, 1956, has not been repealed by the CGST Act, 2017. Thus, even after 01.07.2017, the levy of tax on the sale of petroleum, high speed diesel, motor spirit (Petrol), Natural Gas, Aviation Turbine Fuel and Alcoholic Liquor for human consumption is governed by the provisions of the CST Act 1956 and the State Value Added Tax Acts. The provisions of TNGST Act, 2017, CGST Act, 2017 and IGST Act,2017 are not applicable in respect of the above said those six items. Hence, even after 01.07.2017, the petitioner continued to purchase high speed diesel oil and low speed diesel on interstate basis against the issue of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....poultry feed and broiler chicken. These petitioners are purchasing the petroleum product/HSD for captive power generation of electricity and use the same in their manufacturing activities. 9. A common counter affidavit is filed by the respondents. The crux of the objections raised by the respondents is as follows: a) The writ petition is not maintainable for the reason that the impugned letter is nothing but an internal communication to cause certain verification of the eligibility in issue of declaration forms with an intention to safeguard the State exchequer. It is a general administrative communication not intended to any assessee in particular. It is not a circular. b) As per the amended definition of "goods" in Section 2(d) of the CST Act, 2017 from 01.07.2017, the goods that can be dealt by any dealer administered under CST Act, 1956, are petroleum crude, HSD, Motor Spirit, Natural Gas, Aviation Turbine Fuel and alcoholic liquor for human consumption and therefore, those goods alone can be purchased at a concessional rate against issue of 'C' declaration form and either disposed or sold or exported outside the country. Though the dealers....
X X X X Extracts X X X X
X X X X Extracts X X X X
....her form of power. The above interpretation is against the very concept of the present VAT Act and the CST Act. That means it is stated that a dealer in generation and supply of electricity or mining of lime stone for manufacture of cement can also purchase any one of the 6 goods which are used for manufacture of other than VAT/CST goods i.e. GST goods. This interpretation was found by State of Tamil Nadu to be inconsistent with the provisions of the CST Act, 1956 and hence a clarification was sought from the Joint Secretary (Revenue) by the then Additional Chief Secretary to Government (FAC) CT&R Department, Chennai-9 in December 2017. The clear intention of the internal communication has been well laid out from the said letter dated 31.05.2018. The said communication issued was aimed at and restricted only towards dealers involved in various business activities and may indulge in misuse of 'C' Form declarations which could be evidently found, keeping in mind the loss of revenue that should accrue and is due to the State, assured as per Section 9(2) of CST Act, 1956, in relation to goods kept out of the purview of CST Act, 1956. f) The Hon'ble Punjab-Haryana H....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be assigned and shall be deemed to have been assigned to the States. Hence, it is only the Central Government which has the sole power to levy tax on the sale or purchase of goods that takes place in the course of inter-state trade or commerce. In such circumstances, when the Central Government has clarified that the amended definition of "goods" under Section 2(d) of the CST Act, 1956 does not affect the provisions of Section 8(3)(b) of the CST Act, 1956 relating to telecommunication network or mining generation or distribution of electricity or any other form of power, the respondent herein/State Government has not power whatsoever to comment/conclude that such an interpretation is inconsistent with the provisions of the CST Act, 1956 and therefore they have decided to issue instructions contrary to the clarification of the Central Government. c) When the Central Government has clarified that it is open to the dealers to purchase the 6 goods mentioned in Section 2(d) of the CST Act, 1956 for use in telecommunication network, mining, generation/distribution of electricity/any other form of power, the State Government cannot deny the same and direct its officers not to pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....956 remains unamended even after 01.07.2017 and the said Section is retained as such. Under Section 8(3)(b) of the CST Act, the petitioners are entitled to issue 'C' declaration forms and purchase petroleum products at concessional rate of 2%. d) On 31.05.2018, the Principal Commissioner has issued the impugned Circular. In the said Circular, the Commissioner has taken the stand that after the introduction of G.S.T., any dealer, who deals in the six goods mentioned under the definition of "goods" under the CST Act, who effect purchase and sales and those, who effect purchase of those goods and manufacture those goods, are alone eligible to be assessed under the CST Act. In other words, any dealer, who deals in those six goods alone, are entitled to effect purchase from other States by availing concessional rate of tax. However, the Commissioner has lost sight of the other part of Sec.8(3)(b) of the CST Act, 1956, which permits purchase of goods of the class or classes specified in the Certificate of Registration for use in mining. Thereafter, on 13.07.2018, a letter was filed by one of the petitioners before the second respondent to the effect that they are eligibl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gain, the Rajasthan High Court in the case of Udaipur Cement Work Ltd. considered the very same issue and followed the judgment in the case of Hindustan Zinc Ltd., which is already referred to. i) It is submitted that as against the judgment of the Division Bench in the case of Caparo Power Limited, the State of Punjab & Haryana filed Special Leave Petition No.20572/2018 and the same was dismissed on 13.08.2018, after hearing both sides. j) From the above, it is very clear that the question of law, which was decided by the Division Bench of the Punjab & Haryana Government is affirmed by the Supreme Court on 13.08.2018. It has a binding effect on all the respondents, especially when the same legal issue is considered and answered in favour of the assessee and also having regard to the fact that Central Sales Tax Act, 1956 is a Central Enactment applicable in all States. Therefore, when the provisions of the Act are considered by one High Court, the same has a binding effect on the officers in other States. k) It is further submitted that the C.S.T. Act is enacted by Parliament. Ministry of Finance, Department of Revenue issued clarification in F.No.28011/0....
X X X X Extracts X X X X
X X X X Extracts X X X X
....certain verification of eligibility in issue of declaration forms with an intention to safeguard the State Exchequer. It was a general administrative communication, which was not intended or addressed to any assessee in particular and thus cannot be challenged before this Court by invoking the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. Reliance is placed on the decision of the Hon'ble Supreme Court in the case of State of Orissa and Others vs Mesco Steels Ltd & anr. (2013) 4 SCC 340. b) After the amendment, the CST Act is made applicable only for 6 goods as mentioned above and therefore to that extent of 6 goods alone, the benefits enjoyed out of the original Act has to be restricted. It is pertinent to note that if the dealers had purchased those 6 goods locally (within the State), they have to pay tax at the rate of 28%. However, since it is inter-state Sale and if the dealer is able to produce C-Form, they would be liable to pay only 2%. Hence there is a huge leakage of revenue for the States. c) As per Section 8(3) of CST Act, in order to avail concessional levy on the purchase of the 6 goods from other States,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....phur furnace and high speed diesel oil and petrol. 7. Production of broiler chicks, poultry feed and broiler chicken. 8. Manufacture of steel valve casting products. 9. Manufacture of ready mixed concrete products and sale of sand and jalli. 10. Manufacture of cement including white cement and their substitutes and concrete mixture. 15. While such of those petitioners, who are engaged in mining activities by purchasing petroleum product like HSD for the use of such mining activity, the other petitioners, who are engaged in the other activities, as stated supra, are purchasing petroleum product like HSD for captive power generation of electricity for doing their activity/manufacturing process. 16. All these writ petitioners are commonly aggrieved against the action of the respondents in denying permission to download and issue 'C' declaration forms for purchase of petroleum products at concessional rate of 2%, as has been permitted in the past and till the issuance of the impugned circular. These writ petitioners, by issuing such 'C' declaration forms, purchased petroleum products by interstate trade as contemplated and permi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....her contemplates as to what are the "goods" referred to in sub section (1). It is specifically stated that the "goods" referred to in sub section (1) of Section 8 are goods of the class or classes specified in the Certificate of Registration of the registered dealer. It is further clarified therein that such purchase of goods by the registered dealer is for use by him in the manufacture or processing of goods for sale or in the telecommunication network or in mining or in the generation or distribution of electricity or any other form of power. 19. Thus, it is evident that a registered dealer, who is holding a valid Certificate of Registration, which is in force, if satisfies the requirement contemplated under sub clause (3)(b) of Section 8, is entitled to pay the concessional tax, as provided under sub clause (1) of Section 8. 20. There is no dispute to the fact that even after the introduction of GST, though several drastic amendments were made to CST Act, 1956, this particular provision of law viz., Section 8(3)(b) has not undergone any change. On the other hand, it is admitted by both sides that the said provision still holds the field. 21. It is seen that these petiti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n, which reads as follows: "2.Definitions:- In this Act, unless the context otherwise requires,- ...(d) "goods" includes all materials, articles, commodities and all other kinds of movable property, but does not include Newspapers, Actionable claims, Stocks, Shares and Securities;" 24. After amendment, the term "goods" is defined under Section 2(d) as follows: "2.Definitions:- In this Act, unless the context otherwise requires,- [(d) "goods means - (i)Petroleum crude; (ii)High speed diesel; (iii)Motor spirit (commonly known as petrol) (iv)Natural gas (v)Aviation turbine fuel and (vi)Alcoholic liquor for human consumption.]" 25. Therefore, it is evident that the inclusive definition of "goods" as stood prior to the amendment has now become exhaustive, after the amendment, confining only to the above six products. Therefore, the term "goods" wherever occurs in the Central Sales Tax Act, 1956, has to be construed in the light of the definition made under Section 2(d) after the amendment. 26. By keeping the above statutory position with regard to the definition of "goods" in mind, let me ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d as stated supra, the legislature thought fit not to amend Section 8(3)(b) in any manner. On the other hand, in their wisdom, left the said provision as it is, so as to enable the dealers, who come within the purview, ambit and scope of Section 8(3)(b) to enjoy the benefit derived out of the said provision continuously as they were enjoying even before the amendment of Section 2(d). 30. Even otherwise, if there is an ambiguity in a provision of law or two provisions under the same statute contradict each other, the benefit of interpretation out of such ambiguity or contradiction should always go in favour of the assessee, since tax laws need to be with absolute clarity, not to give any room for interpretation in more than one way. Therefore, even assuming that there is a contradiction between Section 2(d) and Section 8(3)(b) of the CST Act, in terms of the understanding of the definition of "goods" or context in which it has to be dealt with under Section 8(3)(b), I am of the firm view that the benefit that is being enjoyed by the dealer out of the unamended provision of Section 8(3)(b) should continue to flow till any change is made to the said provision. 31.The petition....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ate trade from 01.07.2017 onwards, unless these petitioners/dealers are also dealers, who deal with those six goods alone. In other words, according to the respondents, these petitioners, who are not dealers in those six goods and on the other hand, manufacturers/dealers of other goods than the one referred to one under Section 2(d), after amendment, are not entitled to avail the payment of concessional rate of tax while they purchase the petroleum products from outside the State. When such purchase is not prohibited anywhere under the CST Act, 1956 and on the other hand, the said purchase and consequential use of such purchased goods are permitted under Section 8(3)(b) as discussed supra, I am of the firm view that the respondents do not have jurisdiction to issue the impugned communications, which in effect, is nullifying the provision made under Section 8(1), (3)(b) of the CST Act, 1956, as stated supra. 34. Further, it is to be noted that Union of India through its Department of Revenue, State Tax Division, dated 07.11.2017 has issued Official Memorandum specifically by stating that amendment made to Section 2(d) of the Central Sales Tax Act, 1956, does not affect the provis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s and therefore, there cannot be any usage of 'C' Form only for the purposes of resale of the six items mentioned in the amended definition of 'goods' in the Section 2(d) of the CST Act. The Division Bench further observed that Section 7(2) does not stipulate that only a dealer liable to pay tax under the Sales Tax Law of the appropriate State in respect of any particular goods, is entitled to apply for registration, nor application for registration can be made or 'C' Form can be issued only in respect of the sale of the same goods prescribed in the course of an interstate sale. The Division Bench also found that the Registration Certificate given to the petitioner therein under the CST Act has not been cancelled. In those circumstances, the Division Bench of Punjab and Haryana High Court allowed the said writ petition and held that the respondents therein are liable to issue 'C' Forms in respect of natural gas purchased by the petitioner therein from Oil Companies in Gujarat and used in the generation or distribution of electricity at its power plants in Haryana. The relevant findings made in the above said case read as follows: "1.The peti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or purposes of re-sale, use in the manufacture or processing of goods for sale, in the tele-communications network or mining or in generation or distribution of electricity or any other form of power would qualify the purchaser for registration under Section 7 (2) of the CST Act. Section 7 (2) does not stipulate that only a dealer liable to pay tax under the sales tax law of the appropriate State in respect of any particular goods is entitled to apply for registration. Nor does section 7 (2) stipulate that an application for registration can be made or `C' Form can be issued only in respect of the sale of the same goods prescribed in the course of an inter-state sale. A dealer liable to pay tax under the sales tax law of the appropriate State in respect of any goods would be covered by Section 7 (2) of the Act. 27. There is another aspect of the matter that the registration certificate given to the petitioner under the CST Act till date has not been cancelled. As per Section 7 (4) of the CST Act, the registration certificate granted has to be amended or cancelled. The said provisions have not been 24 of 25 invoked. 28. In these circumstances, the writ petition....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ..... ..... Now the Department of Revenue, Ministry of Finance, Sales Tax Division, Government of India has issued the clarification vide Office Memorandum dated 07.11.2017 on the definition of goods in subsection (3)(b) of Section 8 of the CST Act. As per the said clarification "Department of Legal Affairs, Ministry of Law has confirmed that the term "goods" has been specifically defined under the Central Sales Tax Act, 1956 and prima facie the term "Goods" referred to in section 8(3)(b) of the Central Sales Tax Act, 1956 will have same meaning as defined and amended under Section 2(d) of the Central Sales Tax Act, 1956 vide Tax Laws Amendment Act, 2017. However, it does not affect the provisions of section 8(3)(b) of CST Act relating to telecommunication network or mining or generation or distribution of electricity or any other form of power." Hence, as per the said clarification on the definition of "goods", the term "goods" as defined under the CST Act and prima facie the term "goods" referred to in section 8(3)(b) of the CST Act will have the same meaning as defined and amended under Section 2(d)of the CST Act vide Taxation Laws (Amendment) Act, 20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t portion of the said order reads as follows: "1. The short question involved in this writ petition is, whether the petitioner is entitled to be issued C-Form under the Central Sales Tax Act, 1956 read with the Central Sales Tax (Registration and Turnover) Rules, 1957 in respect of high speed diesel purchased by it in the course of inter-State trade and used by it in the course of manufacturing of cement, after the promulgation of the Central Goods and Services Tax Act, 2017 with effect from 1-7-2017. ..... ..... 32. A Division Bench of the Punjab and Haryana High Court in the matter of Carpo Power Limited v. State of Haryana and others 2 while dealing with non-issuance of C-Form with respect to natural gas to a dealer registered under the provisions of the CST Act, 1956, posed the following question for consideration and answered in affirmative. The question framed by Their Lordships states as under: - "4. The issue involved in the present petition is whether after the amendment of the CST Act, the petitioner is entitled to be issued 'C' Forms in respect of the natural gas purchased by it in the course of inter- state sales and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the CST Act, 1956 and the rules made thereunder. However, it would be clear that the registration certificate of the petitioner issued under the CST Act, 1956 will be limited to the goods as defined in the amended definition of Section 2(d) of the CST Act, 1956 after the promulgation of the CGST Act, 2017 and as such, after the promulgation of the CGST Act, 2017 with effect from 1-7-2017, inter-State purchase of high speed diesel would still be governed by the provisions of the CST Act, 1956 and would not be governed by the provisions of the CGST Act, 2017 and the certificate of registration issued to the petitioner under the CST Act, 1956 would still be valid to the extent of "goods" as defined under the amended definition of Section 2(d) of the CST Act, 1956 including high speed diesel. ..... ..... 39. On the basis of aforesaid analysis, it is held that the petitioner is a registered dealer under the provisions of the CST Act, 1956 read with the Rules of 1957 and his registration certificate under the CST Act, 1956 read with the Rules of 1957 continues to be valid for the purpose of inter-State sale and purchase of high speed diesel despite ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e not applicable to the present facts and circumstances, especially when the issue is one and the same, she is not in a position to convince this Court in any manner and make any distinction on the facts and circumstances of the present case before this Court and the cases dealt with by other Courts. 41. The learned Additional Advocate General contended that these writ petitions are not maintainable as against the internal communication. I have already found that the letter dated 31.05.2018 cannot be brushed aside as a simple internal communication, as the finding/conclusion made therein by the Commissioner of Commercial Taxes directly affects the rights of the petitioners conferred under Section 8(3)(b) of CST Act. Therefore, the petitioners are entitled to question the said communication dated 31.05.2018. Even otherwise, it is to be seen that such communication was issued by the Commissioner of Commercial Taxes without hearing the petitioners. Therefore, the unilateral decision arrived by the Commissioner of Commercial Taxes undoubtedly violates the principles of natural justice. Likewise, the other two communications are also in violation of the principles of natural justi....