TaxTMI 
TaxTMI 
2025 (8) TMI 1342
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.... Tax Act (GST, Act), which replace the existing Goa Value Added Tax Act, 2005 (GVAT, 2005) and the Central Sales Tax Act, 1956, (CST Act) are aggrieved by the action of the Respondents based on trade Circulars, refusing them Form 'C' in terms of the CST Act, which would enable them to procure High Speed Diesel (HSD) at a concessional rate and this refusal is on the premise that the Petitioners have ceased to be 'Dealer' under the CST Act. This action according to the Petitioners, the Dealers under the CST Act, has resulted in denial of the privilege conferred under Section 8(3) of the CST Act in respect of the procurement of the HSD, at concessional rate against Form 'C'. Though the Petitions involve common question, we briefly highlight the factual position qua each Petition. In Writ Petition No. 876 of 2017 2. Petitioner no. 1, Vedanta Ltd., a company incorporated under the provisions of Companies Act, 1956, with its registered office being situated in Panaji, Goa, is inter alia, engaged in mining of iron ores for sale and claim to be a bulk purchaser of 'High Speed Diesel' (HSD) used for mining of iron ores. The Petitioner no. 2, is the shareholder ....
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....the trade circulars, which form the basis of the impugned decision. As far as Sesa is concerned, it is pleaded that pursuant to the refusal granted of declaration Form 'C' in favour of Petitioner, the Respondent no. 6, a registered person under Karnataka Value Added Tax Act, 2005 and the CST Act and one of the selling dealers of the Petitioner have deposited the tax with the Respondent no. 5, the authority responsible for administration and levy and collection of VAT and CST in Karnataka and the Respondent no. 6 being the Petitioner's selling dealer, has encashed the bank guarantees and paid the amount to Respondent no. 5. The Petition in Writ Petition no. 856 of 2016, therefore, seek refund of CST of Rs. 1,23,38,392/- including interest paid by Respondent nos. 5 and 6. 5. We have heard learned Counsel Mr. Gopal Krishna Mudra for the Petitioners, Mr. Raviraj Chodankar, Central Government Standing Counsel for the Union of India and the learned Advocate General Mr. Devidas Pangam along with Mr. Deep Shirodkar, Additional Government Advocate, for Respondent-State. The Writ Petition no. 876 of 2017 having been already admitted on 04.05.2018, on completion of pleadi....
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....pments. (d) for use in the generation or distribution of electricity or any other form of power. (e) for use in the packing of goods for sale/resale. The dealer extracts in mining, the following classes of goods - Iron ore (lumps & fins) -" There was an amendment in the registration certificate from time to time and with effect from 21.08.1994, the items included in the registration certificate for use in the manufacture and processing for goods from sale specified thus : "H.S.D. (high speed diesel) & petrol which are used for running and maintenance of machinery for mining and processing of iron ore for sale, furniture and fittings used in the manufacture for sale of barges and other vessels." 7. Vedanta Limited was issued Form 'C' in form of a declaration [See Rule 12(1)] on 24.8.2017 with its existing registration since 06.07.1963, with reference to Reliance Industries Limited, Karwar, Karnataka. In regards the goods used in manufacturing/processing for goods of sale as per the annexure appended thereto and this covered HSD with the purpose being indicated as manu/processing. The invoice details along with the Form 'C' ce....
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....icate of registration till the occurrence of the subsequent events. 9. In exercise of the powers conferred under Article 246A read with the Union List and the State List respectively, the Central Goods and Services Tax Act, 2017 ('CGST Act') and the Integrated Goods and Services Tax Act, 2017 ("the IGST Act") were enacted by the Parliament and respective State Goods and Services Tax Acts ("the SGST Acts") were enacted by each of India's State Legislature and Union Territory GST Acts were enacted by each Union Territory. The CGST Act and SGST Acts levy tax (GST) on the "inter-State" supply of goods and services, while the IGST Act levies tax (GST) on the "inter-State" supply of goods and services. The petroleum products i.e. Petroleum crude, High Speed Diesel, Motor spirit (commonly known as petrol), Natural gas and Aviation Turbine Fuel ('specified petroleum products'), is declared to remain outside the ambit of GST till a notified date. Further, GST Council, a Constitutional body is set up under Article 279A of the Constitution of India, have been conferred the powers to recommend the date on which GST would become leviable on the specified petroleum products. Till such noti....
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....at every dealer whose turnover of sales during the year exceeds for a specified limit, shall be liable to pay tax under the Goa VAT Act, 2005 and Section 3(5) prescribed that for the purpose of calculating the turnover for liability to tax, the term turnover of sales shall be taken, whether such sales are taxable or not or of taxable goods or not. The term 'goods' was defined in Section 2(p) of the State VAT Act to mean, Petroleum crude, High Speed Diesel, Motor spirit, Natural gas, Aviation Turbine Fuel and alcoholic liquor for human consumption. 12. The CST Act, 1956 is an Act of the Parliament formulating the principles for determining when a sale or purchase of goods took place during the course of intra-State trade of commerce or outside the State or in the course of import into or export from India, to provide for the levy, collection and distribution of taxes on sales of goods in the course of Intra-State trade of commerce. Section 7 of the said Act provide for registration of Dealers and every dealer liable to pay tax under the said Act should obtain a registration under the CST Act. Sub-section (2) of Section 7 make it clear that any dealer liable to pay tax under th....
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....ferent stock piles with a view to producing ore of the required specifications and loading it into the ship by means of the mechanized ore handling plant. 14. In the existing regime, the Petitioners' registration certificate under the CST Act included various goods, which included fuel i.e. High Speed Diesel (HSD) for mining of iron ore for sale. In the light of the statutory regime, in respect of the HSD purchased from outside State of Goa, Petitioners have obtained Form 'C' from the relevant authority and provided the same to the supplier of HSD so as to procure the same at concessional rate of CST at 2% in terms of Section 8 of the Act read with Rule 13 of the Central Sales Tax Act Registration and Turnover Rules, 1957. A registered dealer is entitled to procure the goods from another registered dealer situated in another State on payment of concessional rate of CST on fulfilling the two conditions; (i) The goods should be specified in the purchasing dealer's registration certificate as being intended for resale by him or used by him in the manufacture or processing of goods for sale or telecommunication network or in mining, or in the generation or distribution of e....
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.... registered under the Goa Value Added Tax Act, 2005 and secured registration under the CST Act, 1956 and consequent to the passing of the 101st Amendment Act 2016, which paved the way for enactment of GST and CGST and integrated GST Act, the power of the State and Union of India to levying tax of six goods i.e. alcoholic liquor for consumption as has been reiterated and has been retained whereas all other goods have been subjected to levy of GST and the CST Act. In the wake of the aforesaid development, it was concluded that the registration granted earlier under sub-section (1) of Section 7 of the CST Act, the dealer whose liability has not ceased has become infructuous and therefore the attempt on part of the dealer to procure Form 'C' is to avoid local VAT at the rate of 19% of the diesel they have purchased from Karnataka against Form 'C' by claiming concessional rate at 2%. 17. The said Order, on being challenged in the present Petition, on 04.10.2017, the Division Bench at Goa, while issuing notice, was pleased to grant ad-interim relief in terms of prayer clause (c) thereby restraining the Respondents from taking any action in furtherance of the impugned Order dated 25.09....
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.... mining. It was found that the dealer is engaging transportation services from private truck owners and transporters who transport mineral ore from several places in Goa to processing plant at Amona jetty. For this transportation service the dealer M/s Vedanta Limited is making payment on the basis of rate fixed per kilometre per ton of the ore transported from one place to another. This is a service procured by the dealer M/s Vedanta Limited from the open market and while making the payment M/s Vedanta Limited is deducting the amount towards the sale value of High Speed Diesel (H.S.D) supplied to the transporter on monthly credit basis. Thus the dealer M/s Vedanta Limited is re-selling the H.S.D purchased through inter-state against Declaration Form-C to the private truck owners and instead of taking price in cash, it is adjusted by deducting in the monthly transportation bill." The conclusion derived in the impugned order is, that the Petitioner's case is a case of resale of HSD purchased through intra-state against declaration Form 'C' falsely claiming as used in mining and the dealer M/s. Vedanta is also not paying any VAT to the resale of HSD to private truck owners. On ....
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....ted ad-interim relief permitting him to obtain Form 'C' pending final disposal of the matter subject to furnishing an appropriate undertaking to the revenue authorities of supplier to the Petitioner's selling dealers and the compliance has been ensured. According to Mr. Mudra, as directed by this Court, the Respondent no. 3 passed an order on 06.02.2018 partly allowing issuance of Form 'C' but, he would make a specific statement that no Form 'C' has been issued to the Petitioner till date. Apart from this, there was also partial rejection of Form 'C' premised on the ground that the Petitioner is supplying HSD to the transporters for transporting iron ore from mines to the processing plant and such supply would amount to resale of purchase of HSD and cannot be considered as it is used in mining operation. On this aspect, the Counsel placed reliance on the decisions of Chowgule Pvt. Ltd vs. Union of India (supra), where it has been held that for purpose of Section 8 of the CST Act, the expression 'for use in mining', would also cover the activity of transportation of ore from mining sites to the processing plants. Reliance is also placed on the decision in the case of CIT vs. Sesa....
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....nning and maintenance of machinery for mining and processing of iron ore for sale and, therefore, in the backdrop of the mechanism adopted of engaging private trucks for transportation of the ore and permitting the claim towards fuel to be deducted from the amount to be paid, it cannot avail the benefit of Form 'C' as the Company was reselling the fuel and it has not used the mining activity. According to him, if the registration of the goods is for this purpose and to this extent, he would submit that the Respondent-Company cannot take benefit of Form 'C'. In any case by relying upon the affidavit filed by the Additional Commissioner of Commercial Taxes, he would submit that the judgment of the Apex Court in Chowgule & Co. Pvt. Ltd. vs. Union of India (supra), is not applicable to the case of the Petitioner, which is now an unregistered person and there is no provision under the CST Act to issue declaration to an unregistered person. Heavy reliance is placed upon the trade circular of 4/2017 which has clarified the position on the issue of requirement of registration under section 7 of the CST Act, 1956 and that Section has not been amounted consequent upon implementation of GS....
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....to the prescribed authority, a declaration duly filled and signed by the registered dealer to whom the goods are particularly sold in a prescribed form obtained from the prescribed authority. The goods of the description referred to in sub-section (3) of Section 8, were therefore liable to pay tax of 2% of the turnover or the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of that State, whichever is lower. 26. Section 9 pertain to the levy and collection of tax and the tax payable by a dealer under the Act of Sales of Goods affected by him in the course of inter-state trade or commerce was allowed to be collected by the Government in the State from which the movement of goods commenced with a proviso prescribing that in case of sale of goods during their movement from one State to another being subsequent to the first sale in respect of the same goods, the tax shall be levied and collected, where said subsequent sale has been effected by a registered Dealer, in the State, from which the registered dealer obtained or could have obtained the Form prescribed in connection to the purchase of such goods and where such subseq....
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....uction of Article 246A in the Constitution, in form of a special provision with respect to Goods and Services Tax, conferring exclusive power to make laws with respect to Goods and Services for supply of goods or services or both, which take place in the intra-state trade of commerce in the Parliament and thereby amending entry 84 in union list of the 7th Schedule and also amending entry 54 of the State List, with term 'goods' defined in Section 2(d) of the CST Act, 1956 being substituted to include six commodities which include High Speed Diesel (HSD). The term 'Dealer' defined in Section 2(b) means a person who carries on the business of buying, selling, supplying or distributing goods directly or indirectly for cash or for differed payment or for commission, remuneration or what valuable considerations, which now reads, 'goods' as amended in Section 2(b). Section 8 of the CST Act, which prescribe the rate of tax on sales in the course of inter-state trade or commerce, read thus : 8. Rates of tax on sales in the course of inter-State trade or commerce.- (1) .. (2) ... (3) The goods referred to in sub-section (1) (a) ... (b)....
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.... The petitioner before the GST Act 2017, came in force was registered under the Haryana Value Added Tax Act, 2003 and the CST Act, 1956 and the registration under the CST Act continued till date in respect of natural gas for use in generation or distribution of electricity or any other form of power. The issue that fell for consideration was precisely set out in part 4 of the decision being "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." The issue came to be answered in favour of the Petitioner by examining the provisions of CST Act 1956, Central Sales Tax (Registration and Turnover) Rules, 1957, The CGST Rules, 2017, Haryana Goods and Service Tax Act, 2017 and declaration of Form 'C'. Recording that the petitioner was registered dealer under Section 2(f) of the CST Act and even after the amendment of Section 2(d), which included natural gas, the petitioner continued to be registered, it is also recorded that the definition of goods under CST Act was amended w.e.f. 01.07.2017 to cover only six ....
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....it 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." It is worth to note that the aforesaid decision has been upheld by the Apex Court as the Special Leave Petition filed challenging the same is dismissed on 13.08.2018. 32. One more decision on a similar issue involving high speed diesel (HSD) delivered by the High Court of Rajasthan in a bunch of Petitions in the case of Hindustan Zinc Limited vs. The State of Rajasthan & Ors. S.B. Civil Writ Petition No. 5506/201....
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....tral 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, 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." 34. By relying upon the decision in the case of Carpo Power Ltd vs. State of Haryana & Ors. (supra), the following conclusion was derived : "In the present case too, the Parliament has retained high speed diesel along with petroleum crude, motor spir....
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....n the Maharashtra web portal to view the details of its MVAT and CST registration. Thereafter another circular was issued on 17.11.2012 reiterating the view in the earlier circular. However, since during the pendency of the petitions, the Circulars were withdrawn and the said prayers are not pressed by the petitioners, the prayer in form of ordering and directing the respondents to issue 'C' Forms for the petitioners for the inter-state purchase which is purchased by the petitioner in manufacturing commodities, no longer defined as 'goods' w.e.f. 01.07.2017 in Section 2(d) of the CST Act, 1956, was prayed for. Reliance is placed upon the decision in the case of Carpo Power Ltd vs. State of Haryana & Ors. (supra) and also the decision in case of Tata Steel Ltd. vs. The State of Jharkhand & Ors. 2019 SCC OnLine Jar 1255 and since these decisions were affirmed, in case of Commissioner of Commercial Taxes and Ors. vs. The Ramco Cements Ltd. SLP(C) No. 15785-15788 of 2020 and the Apex Court noted that considering the consistent view of nine High Courts including dismissal of Special Leave Petition by different Benches of the Court and by specifying about exposition of the matters in ....
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....ng of the validity of the notification issued by the State Government, the Court observed thus : "25. Having heard the learned counsels for both sides and upon going through the record, we find that only question that has to be decided in these batch of cases is whether the reasoning given by the State Government in its notification dated October 11, 2017, for denying the issuance of form C to the dealers with respect to all the items included in the definition of "goods" given in section 2(d) of the CST Act, that the dealers who are not selling their end-products which are among the aforesaid six goods, i.e., petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption, are no more liable to tax under the JVAT Act and accordingly, their registration under section 7(2) of the CST Act as well, have come to an automatic end, or have become invalid, can be said to be a valid reasoning and be sustained in the eyes of law. We are of the considered view that in view of the law laid down by the honourable apex court in Printers (Mysore) Ltd.'s case [1994] 93 STC 95 (SC) ; (1994) 2 SC....
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....Commissioner of Sales Tax, M. P. v. Madhya Bharat Papers Ltd. [2000] 117 STC 547 (SC) ; (2000) 2 SCC 15, the dealers are entitled to continue to be registered under section 7(2) of the Act, irrespective of the fact whether they are liable to pay any tax to State or not." 37. In the wake of the aforesaid authoritative pronouncement, we find substance in the arguments advanced on behalf of the Petitioners that merely because of the ushering in of the new regime by enactment the CGST Act and since the Petitioner is migrated to GST by operation of the law, the GVAT and CST registration have become invalid from 01.07.2017 and to that extent, we do not agree with the finding recorded in the impugned orders. 38. Coming to the second issue whether the Petitioners in the two Petitions are entitled for Form 'C', we must segregate the Petition on facts. As far as Vedanta Limited is concerned, it is engaged in mining of iron ore for sale and it holds certificate of registration under Goa Vat Act and CST Act and its certificate issued under the CST Act, included HSD amongst other goods as goods used for mining of iron ore for sale and in respect of the HSD purchased outside State of Goa, ....
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....ision in the case of Chowgule & Co. Pvt. Ltd. & anr. vs. Union of India & Ors. (supra), where the term 'manufacture' and 'processing' as used in Rule 13, came up for consideration and it was held that the test for determining whether manufacture can be said to have taken place and the terms received wider interpretation. The Assessee, a private limited Company, carrying on business of mining and iron ore and selling it in the export market after dressing, washing, screening and blending and carried out an extraction of ore from the mines at Sirigao and Pale is carried on by mechanised process while the extraction of ore from the other mines is done by manual labour. When the ore is extracted from the mines it is carried to the dressing plant where it is washed, screened and dressed and then it is stacked at the mining site from where it is carried by conveyor belts to the river side for being carried by barges to the Mormugao harbour. The Assessee sold the ore only in the export market, it had to supply ore to the foreign buyers and therefore it was required to carry out blending of the ore mined by it in such a manner as to produce ore of the required chemical and physical c....
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.... Registration. This matter was carried up to the level of Judicial Commissioner and ultimately arose for consideration before the Apex Court. In this regard, the specific question formulated for consideration was whether the items of goods purchased by the Assessee for use in carrying the mining ore from the mining site to the river side and from the river side to the Mormugao harbour fell within the description of goods intended for use in processing of ore for sale. 41. Highlighting the Section 8(3)(b) and Rule 13, the goods must be purchased for use "in mining" and not used "in the business of mining", it was held that only the items of goods purchased by the assessee for use in the actual mining operation which are eligible for inclusion in the certificate of registration under this head and these would not include those goods which are purchased by the assessee for use in the operations subsequent to the stacking of the ore at the mining site. In this regard, the following observations of the Apex Court in case of Indian Copper Corporation Limited vs. Commissioner of Commercial Taxes, Bihar & Ors. AIR 1965 SC 891 was relied upon and the relevant observations reads thus :....
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....by the assessee for use in carrying the mined ore from the mining site to the river side and from the river side to the Mormugao harbour fell within the description of goods intended for use in processing of ore for sale within the meaning of Section 8(3)(b) and Rule 13. It further held that if any of these items of goods are purchased by the assessee as being intended for use as "machinery, plant, equipment, tools, spare-parts, stores, accessories, fuel or lubricants" in carrying the mined ore from the mining site to the river side and from the river side to the Mormugao harbour, they would qualify for inclusion in the Certificate of Registration. 42. The aforesaid pronouncement is heavily relied upon by the Counsel for the Petitioner. Following the decision in case of Chowgule Pvt. Ltd vs. Union of India (supra), the learned Counsel would submit that in CIT vs. Sesa Goa Limited (supra), the Division Bench of this Court adopted a similar view when the issue arose whether the ITAT was justified in holding that the assessee is entitled for deduction on investment allowance under Section 32-A of the Income Tax Act, in respect of machinery used in the mining activity, ignoring the ....
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....ction 7(1) 7(2) of the CST Act, 1956 is qua the class(es) of goods specified for the purposes of sub-sections (1) and (3) of Section 8 of the said Act and it is in respect of the sales of these goods in the course of inter-State trade to the dealer which is taxable at the rate specified in that sub-section subject to the provisions of sub-section (4) of the said section, which may be, (a) for resale, (b) for use in the manufacture or processing of goods for sale, (c) for use in mining, (d) for use in the generation or distribution of electricity or any other form of power, and (e) for use in the packing of goods for sale/resale. 45. As far as Vedanta Limited is concerned, the certificate of registration includes HSD and petrol but the registration is for HSD and petrol which are used for running and maintenance of machinery for mining and processing of iron ore for sale, furniture and fittings used in the manufacture for sale of barges and other vessels. The subject of registration are the goods and as per Section 8(3) (b), it is only those goods of the class or classes should be specified in the certificates of registration of Dealer, qua the goods, which are being intended for....