TaxTMI 
TaxTMI 
TaxTMI 
2018 (10) TMI 1529
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....13, 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.Prabhakaran (in WP No.24051, 27568 of 2018) Mr.S.P.Parthasarathy ....
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....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 are not under the GST Act, 2017 and that the Government did not amend Section 8(3)(b) of the CST Act, 1956 for the reason that once Section 2(d) of the Section....
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....istration 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 'C' declaration forms inasmuch as the petitioner was using those goods in mining and certificate of registration granted to the petitioner permitted the same. The 'C' declaration forms are being generated by th....
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....ents. 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 are permitted to effect sale or purchase of goods under CST Act, 1956, condition prescribed under Section 8(3) of CST Act, 1956 is that the goods emanating out of the process of mining or generation or distribution of electricity or telecommunication should be of t....
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....d 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 High Court in the case of Tvl.Caparo Power Ltd vs State of Haryana and Others in CWP No.29437 of 2017 dated 28.03.2018, has not considered the vital aspect that the dealer is not at all eligible for Registration under the CST Act, 1956, when they are not dealing in one of the six goods as per the amen....
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....he 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 permit dealers who want to use the 6 goods in these activities to generate "C" declaration forms. It is wrong to state that as per Section 7 of the CST Act, 1956 only the following two categories of dealers can apply for registration: (i) dealers liable to pay tax under the CST Act, 1956 and (ii) dealers liable to pay tax un....
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....mmissioner 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 eligible to issue 'C' declaration forms in respect of the six commodities in the light of the provisions of Section 8(3)(b) of the CST Act, by enclosing the orders passed by the High Court of Chattisgarh and Rajasthan, allowing the eligibility of issuing 'C' Forms. e) On 17.07.2018, two notices were issued. The first notice is to the effect that the petit....
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....missed 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.28011/03/2014-ST-II dated 07.11.2017. The clarification issued by the Ministry of Finance is directly in favour of the petitioners. In such circumstances, the State of Tamil Nadu has no power or jurisdiction to take a view contrary to the stand already taken by Ministry of Finance in their Office Memorandum dated 07.11.2017. l) In view of the above, the impugned Circular issued by the Principal Commissioner dated 31.05....
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....;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, a dealer must either re-sell, or use in manufacture and subsequent sale of the goods or in mining, or in generation/distribution of electricity, or Telecommunication. In other words, in order to issue C-Form, a dealer should be dealing in the 6 goods only and cannot be extended to other goods. In respect of any finished goods on which GST is paid, the petitioners cannot be allowed to download C-Forms. That means, while purchasing one of the a....
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....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 permitted under Section 8(3)(b) of the CST Act, 1956. All these writ petitioners are registered dealers with the respective office of the respondents and there is no dispute to the fact that they are holding a valid Certificate of Registration issued by the respondents under the CST Act, 1956. It is also not in dispute that the said Certificate of Registration entitles the petitioners to purchase petroleum products at concessional rate of tax against 'C' declaration forms for use of the said petroleum product ....
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....hus, 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 petitioners were purchasing the petroleum products, all along, at concessional rate of tax by issuing 'C' declaration forms in view of such entitlement conferred to them under Section 8(3)(b), as stated supra. The trouble started only when the Commissioner of Commercial Taxes of the State of Tamilnadu issued a communication dated 31.05.2018 to all the Joint Commissioners of the State, wherein it was informed that for the purpose of getting the benefit of concessional rate of paying the tax, while purchasing petroleum products by way of interstate trade, t....
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....al 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 consider the objections raised by the respondents with regard to the purchase made by these petitioners in respect of petroleum products/HSD outside the State of Tamilnadu as an interstate trade. I have already extracted Section 8(3)(b) supra. The crux of the contentions raised by the respondents to deny the benefit under Section 8(3)(b) to these petitioners is that the purchasing goods and manufacturing or selling goods of the petitioners are not one and the same. In other words, only when the goods purchased and the goods manufactured or sold, are one and the same and more particularly, only when such goods also falls under any one ....
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....y, 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 petitioner sought to claim the impugned communication as a Circular. It is contended by the respondents that the same is only an internal communication, which cannot be put to challenge. A careful perusal of the said communication, whether it is a circular or an internal communication, undoubtedly indicate that the Commissioner of Commercial Taxes had already come to a conclusion and issued direction to his subordinates not to allow the registered dealers to download 'C' declaration forms, if they are not the dealers dealing with the above said six goods alone. Therefore, it is evident that the said communication dated 31.05.2018 certainly affects the rights of the petitioners....
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.... 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 provision of Section 8(3)(b) of the CST Act, relating to telecommunication network or mining or generation or distribution of electricity or any other form of power. The said Memorandum reads as follows: "Subject: Clarification regarding definition of goods in sub-section (3)(b) of section 8 of the Central Sales Tax Act, 1956. The undersigned is directed to say that opinion of Department of Legal Affairs, Ministry of Law was solicited on the issue "Whether the definition of "goods" the phrase "manufacture or processing of goods" in section 8(3)(b) of the Central Sales tax Act would be as per the definition provided for under section 2(d) of the central sales tax Act or that the word "go....
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....T 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 petitioner has challenged the respondents' refusal to issue `C' Forms in respect of natural gas purchased by it in the course of inter- state trade or commerce and used by it for the generation of electricity. The petitioner seeks a writ of mandamus directing the respondents to issue `C' Forms under the Central Sales Tax Act, 1956 and the Central Sales Tax (Registration and Turnover) Rules, 1957 in respect of the inter-state sales of natural gas by certain oil companies based in Gujarat to the petitioner in 1 of 25 Haryana and used by the petitioner for generating electricity. .... .... 4. The issue involved in the present petition is whether after the amendment of the CST Act, the petitioner is enti....
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....ed 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 is allowed. It is held that the respondents are liable to issue `C' Forms in respect of the natural gas purchased by the petitioner from the Oil Companies in Gujarat and used in the generation or distribution of electricity at its power plants in Haryana. In the event of the petitioner having had to pay the oil companies any amount on account of the first respondent's wrongful refusal to issue `C' Forms the petitioner shall be entitled to refund and/or adjustment of the same from the concerned authorities who collected the excess tax through the oil companies or otherwise. The concerned authorities shall process such a claim within twelve weeks of the same being made by the petitioner in writing and the petitioner furnishing the requisite documents/form." 36. The above said decision o....
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.... 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, 2017. However, a specific exclusion was carved out stating that the said amendment does not affect the provisions of Section 8(3)(b) of the CST Act relating to (a) telecommunication, (b) mining, (c) generation and distribution of electricity or any other form of power. The argument so raised by the learned counsel for the respondents cannot be sustained in view of the provisions of Section 9(2) of the GST Act as referred above. Thus, any clarification in the existence of a clear Act will not supercede the provisions of the same. ..... ..... In the present case too, the Parliament has retained high speed diesel along with petroleum crude, motor spirit, natural gas, aviation turbine fuel and alcoholic liquor for human consumption crude which have been specifically mentioned in Section 9 of the GST Act while defining the 'goods'. Be....
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....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 used by it for the generation of electricity. ..." ..... ..... 36. The learned State counsel contended that after introduction and roll-out of the CGST Act, 2017 with effect from 1-7-2017, the petitioner has migrated to the GST regime from the CST regime by virtue of the provisions contained in Section 139 of the CGST Act, 2017 and registered as a dealer under the provisions of the CGST Act, 2017, therefore, the petitioner is not entitled for issuance of C- Form. The said submission deserves to be rejected for reasons, firstly, that the CGST Act, 2017 has not by its repealing provision repealed the CST Act, 1956 which is vivid from the focused perusal of Section 174 of the CGST Act, 2017 and the provisions of the CST Act, 1956 are still applicable for its inter-State trade even after the roll-out of the GST Act confining to "goods" defined in Section 2(d) of the CST Act, 1956. Secondly, Section 9(2) of the CGST Act, 201....
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....es 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 the petitioner having been migrated to the GST regime with effect from 1-7-2017, as the definition of goods as defined in Section 2(d) of the CST Act, 1956 has been amended prior to coming into force of the CGST Act, 2017 from 1-7-2017 which includes high speed diesel. Further, under Section 9(2) of the CGST Act, 2017, the GST Council has not made any recommendation for bringing high speed diesel within the ambit of the CGST Act, 2017 and therefore the Central Government has not notified high speed diesel to be within the ambit and sweep of the CGST Act, 2017. Thus, the petitioner's registration certificate under the CST Act, 1956 is still valid for the goods defined in Section 2(d) of the CST Act, 1956, including high speed diesel, and the petitioner is entitled for issuance of C-Form for inter-State purchase / sale of high speed diesel against the said C-Form. Accordingly, the respondents shall be liable and are directed to issue CForm to the petitioner in respect of high speed die....
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....missioner of Commercial Taxes undoubtedly violates the principles of natural justice. Likewise, the other two communications are also in violation of the principles of natural justice and therefore, the petitioners are entitled to challenge those communications as well. No doubt, under normal circumstances, this Court would remit the matter back to the respondents for reconsidering the issue after hearing the petitioners. I do not think that such remand is required in these cases under the facts and circumstances as discussed supra, more particularly, when the fact remains that Section 8(3)(b) has not been amended and based on which, the petitioners are entitled to avail the benefit under the said provision, while they purchase the petroleum products by way of interstate sale against 'C' declaration forms. 42. The learned Additional Advocate General further contended that these respondents are entitled to initiate proceedings for cancelling the 'C' declaration form and therefore, the present attempt of the petitioners in filing these writ petitions is pre-mature. This again, is not a convincing argument. Going by the impugned communications, it is seen that the res....