TaxTMI 
TaxTMI 
2019 (3) TMI 21
X X X X Extracts X X X X
X X X X Extracts X X X X
....s are based upon the same set of facts and also involve the same question of law and as such are being taken up together for its consideration. Both the petitioners i.e., in WP(C) No.366/2018 and WP(C) 915/2018 are engaged in the manufacture and sale of clinker for which diesel is used as a raw material. 3. In furtherance of their activities, the petitioners purchased diesel from the respondent IOCL from its establishments located in the State of Assam and utilized the same for the purpose of manufacture of clinker in their industrial set up located in the State of Meghalaya. As the diesel purchased by the petitioners in the State of Assam, is used by them for manufacturing of clinker in the State of Meghalaya, such purchases constitute an inter-state sale. In order to facilitate the purchase, the petitioners take the benefit of using the Form-C under the Central Sales Tax Act, 1956 (for short, CST Act of 1956) and subject themselves to the payment of Central Sales Tax (CST) under the provisions of Section 8 (1) of the Act of 1956. 4. On the contrary, if the petitioners are unable to or are prevented from taking the benefit of the Form-C, the CST @ 2% as provided under Sectio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ake their inter-state purchases of the aforesaid six goods against Form-C or Form-F, as the case may be. v) Clause-9 of the said Circular clarifies that the dealers who up to 30.06.2017 were making inter-state purchase of petroleum and high speed diesel (among the six retained goods) against Form-C for use in manufacture or processing of goods, other than the aforesaid six goods, having ceased to be dealers under the CST Act of 1956 w.e.f. 01.07.2017, as their liability to pay tax under the AVAT Act of 2003 has ceased w.e.f. 01.07.2017, the registration earlier granted in their favour became invalid w.e.f. 01.07.2017. It is further provided that consequently such dealers whose registration under the CST of 1956 became invalid cannot make interstate purchase of the six goods against Form-C w.e.f. 01.07.2017. Clause-9 provides a further clarification that the six goods can be purchased or received on the strength of Form-C or Form-F, as the case may be for re-sale or for being used in a manufacture or processing of a goods which would also be within the six goods. 7. The implication of the clarification given in the Circular of 05.09.2017 would be that in the event a deal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....CST Act of 1956. Dr. A. Saraf, learned senior counsel also submits that the effect of the Circular dated 05.09.2017 declaring and clarifying that a dealer who purchases any of the six goods for interstate sale, uses them for the manufacture of a good other than the six goods, would cease to be a dealer under the CST Act, 1956 would be that the authorities while issuing the Circular have the word goods appearing for the fourth time in section 8(3) of CST Act, 1956 to be a good as defined under Section 2(d) of the Act. According to Dr. Saraf, such effect of the declaration would be contrary to the principle laid down by the Supreme Court in paragraph-18 of Printers (Mysore) Ltd Vs. Asstt. Commercial Tax Officer reported in 1994 2 SCC 434 wherein, it has been provided that the word "good" occurring for the fourth time in the section cannot obviously refer to raw material. If any of the six goods defined under Section 2(d) of the CST Act of 1956 are used as raw material for manufacturing a final good, the final good cannot obviously retain its original characteristic as one of the six retained goods. But the provision in the Circular dated 05.09.2017 that the finished goods upon being ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dealers under the CST Act of 1956 having ceased to have its effect as provided in the Circular dated 05.09.2017, they would now be liable to pay tax under the AVAT of Act 2003 in respect of any purchase of the six aforesaid goods, even if such purchases were made in course of interstate sale, but resulted in being used as a raw material for manufacturing of a good other than the six goods. 12. Mr. Saikia, also submits that the provisions laid down by the Supreme Court in Printers (Mysore) Ltd, (supra) would be inapplicable in the present case, inasmuch as, in Printers (Mysore) Ltd (supra) the factual background was that on the newspaper having been excluded from the purview of the word goods by the amendment of 1958 of the CST Act, whether it can be construed as a good as appearing for the fourth time under Section 8(3)(b) of the CST Act of 1958. But in the instant case, the issue for consideration would be entirely different and, therefore, the provisions laid down by the Supreme Court in paragraph 18 of Printers (Mysore) Ltd. (supra) would not be applicable. 13. Mr. Saikia also relies upon the office memorandum dated 07.11.2017 of the Ministry of Finance Department of Reven....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., may, notwithstanding that he is not liable to pay tax under the Act, apply for registration. The pre-requisite of being entitled for a registration under Section 7(2) of the CST Act of 1956 is that the dealer so registered is liable to pay tax under the sales tax law of the State, which in the present case would be AVAT Act of 2003. Therefore, if according to the authorities in the State of Assam in the Taxation and Finance Department the petitioners are not liable to pay any tax under the AVAT Act of 2003, from 01.07.2017 onwards, the authorities may withdraw the registration under Section 7(2) of the CST Act of 1956, inasmuch as, the pre-requisite of Section 7(2) of being liable to pay tax under the state sales tax law ceases to exist. 17. But to a query raised as to under what provisions the petitioners would now be liable for payment of sales tax, upon withdrawal of their registration under Section 7(2) of CST Act of 1956, where the petitioners were entitled to pay a tax of 2% under Section 8(1) of the Act for the interstate purchase of diesel made by them for producing the clinker in the State of Meghalaya, it is replied by Mr. D. Saikia, learned Senior Additional Advocat....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... notified by the Government on the recommendation of the Council." Section 9(2) of AGST Act of 2017:- (2) The State tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel, shall be levied with effect from such date as may be notified by the Government on the recommendations of the Council." 23. The provisions of the AGST Act of 2017 in respect of the definition of the word 'goods' and Section 9(2) thereof, are pari materia with that of the definition of the word 'goods' under Section 2(52) and Section 9(2) of the CGST Act of 2017, respectively. Further Section 174(1) of the CGST Act of 2017 does not provide that the provisions of the CST Act of 1956 stood repealed. In other words, the provisions of CST Act of 1956 as regards the six retained goods as indicated above continues to have its force and had not been repealed by the GST Act of 2017. 24. It is also taken note of that Section 12(5) of the Constitution (One Hundred and First Amendment) Act, 2016 provides as follows:- (5) The Goods and Services Tax Council shall recommend the date on which the goods and service....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s retained under Section 2(d) of the CST Act of 1956 and also included under Entry 54 of the State List of the Seven Schedule of the Constitution of India , the provisions of the AVAT Act of 2003 still continues to have its force and the concerned goods are leviable to a tax under the Act. Further upon perusal of the provision of the AVAT Act of 2003, no such provision in discernable, which provides that upon the six retained goods being used as a raw material, if the good so manufactured is not amongst the six goods, the purchase of any of the six goods will not be leviable under the AVAT Act of 2003. 28. From the said point of view the submission of Mr. D. Saikia, learned Senior Additional Advocate General that even upon the withdrawal of their registration under Section 7(2) of the CSGT Act of 1956, the petitioners would continue to be leviable for a tax under the AVAT Act of 2003, would be acceptable. 29. But the question that would arise would be if the petitioners continue to remain leviable for a tax under AVAT Act of 2003, which admittedly is a State law, they would also continue to remain entitled to have their registration under Section 7(2) of the CST Act of 1956 i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onger liable to pay a tax under the AVAT Act of 2003 is incorrect and unacceptable. 33. As the very basis for withdrawing the registration under section 7(2) of the CST Act of 1956 is that from 01.07.2017 onwards the dealers dealing in interstate purchase of high speed diesel oil and using in for manufacture of good other than the six goods are not liable to pay a tax under the AVAT Act of 2003 and as discussed hereinabove, the very basis of not being liable to pay tax under the AVAT Act of 2003 being incorrect and unacceptable, the provision for withdrawing or enforcing a cession of the registration of such dealers under section 7(2) of the CST Act of 1956 as provided in Clause-9 of notification dated 05.09.2017 is also found to be unacceptable and unsustainable. 34. In the alternative, if the provision of the circular dated 05.09.2017 that such dealers involving in interstate purchase of high speed diesel and using it as a raw material for the manufacture of a good other than the six goods, are not liable to be leviable under the AVAT Act of 2003 from 01.07.2017 and at the same time as already concluded they are also not liable to be leviable under the GST Acts, the resulta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ular thing done to any goods amounts to or results in the manufacture of goods within the meaning of that term; or (j) any set-off can be claimed on any particular transaction of purchase and if it can be claimed, what are the conditions and restrictions subject to which such set-off can be claimed, the Commissioner shall make an order determining such question: Provided that, before giving such decision, the Commissioner may, in his discretion, ask an officer appointed to assist him to make such inquiries as he considers necessary for the decision of the question. (2) Any registered dealer or any association of trade, commerce, industry may apply in the prescribed form and manner to the Commissioner for determination of such question and the Commissioner shall, after giving the applicant a reasonable opportunity of being heard, make an order determining such question. (3) No question which arises from an order already passed, in the case of an applicant, by any authority under this Act or the Tribunal, shall be entertained for determination under this section. (4) No decision of the Commissioner under this section shall affect the valid....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... exercising his jurisdiction under Section 3(5)(b) of the AVAT Act of 2003 seeks to take away the aforesaid six goods from being subjected to a levy of taxes under the AVAT Act of 2003. In other words, the Commissioner by exercising a power to issue orders, instructions, directions for proper administration of the Act, had withdrawn a statutory provision, providing for a particular kind of dealer to be leviable under the AVAT Act of 2003, which accordingly would be impermissible under the law. Therefore, it cannot be accepted that the Circular dated 05.09.2017 was issued in exercise of its power under Section 3(5)(b) of the AVAT Act of 2003. 41. Similarly under Section 105 of the AVAT Act of 2003, the Commissioner can pass an order if any question arises as provided in Sub Clause (a) to Sub Clause (j) of Section 105 (1). But none of the provisions of Sub Clause (a) to Sub Clause (j) empowers the Commissioner to take away the statutory requirement of being leviable to a tax under the AVAT Act of 2003, if a dealer purchases any of the six goods mentioned in Entry 54 of the State list of the 7th Schedule to the Constitution of India and uses it for manufacture of a good which would....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tegory of dealers who makes purchase of any of the six goods and uses it for manufacture of a good other than the six goods would not be covered by Section 8(3)(b) of the CST Act of 1956 and, therefore, would not be entitled to the benefit of paying CST @ 2% as provided under Section 8(1). If that is the purport of the provisions of the Circular dated 05.09.2017, the same cannot be a reason to provide that such dealers who purchases the six goods for inter-state sale and uses it for manufacture of good other than the six goods would not be liable for tax under the AVAT Act of 2003, and, therefore, their registration ceases to exist under Section 7(2) of the CST Act of 1956. 49. As already alluded hereinabove, the entitlement of a registration under Section 7(2) of the CST Act of 1956 is subject to the pre-condition that the dealer is leviable to a tax under the State law i.e, in the instant case, the AVAT Act of 2003. Such registration is not relatable as to whether upon being registered; the dealer would be entitled to a levy of CST @ 2% under Section 8(1), upon being covered by the provision of Section 8(3). 50. As the six goods in question had been retained under the AVAT ....