TaxTMI 
TaxTMI 
2026 (7) TMI 716
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....tion, Special Civil Application No.23028 of 2019, has been filed by the petitioners for the following prayers: "28. In view of the aforesaid premises, the Petitioners humbly pray that: RELIEFS CLAIMED A. This Hon'ble Court may be pleased to strike down and declare the impugned notification (annexed at Annexure A) in so far as it required reduction of input tax credit in respect of purchases of coke resold in the course of inter-State trade and commerce and subjected to tax under the CST Act as violating Article 286(3) of the Constitution of India read with Section 15(b) of the CST Act; B. In the alternative this Hon'ble Court may be pleased to declare that the impugned notification (annexed at Annexure A) cannot lead to denial of reimbursement as per Section 15(b) of the CST Act in assessment under the Vat Act; C. This Hon'ble Court may be pleased to issue writ of mandamus or writ in the nature of mandamus or any other appropriate writ or order quashing and setting aside impugned show cause notice dated 17.12.2019 annexed at Annexure B); D. This Hon'ble Court may be pleased to declare and clarify that denial of reimb....
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....advocates appearing for the respective parties that in the later judgment in the case of Hides and Skin Owners Seva Mandal (supra), this Court has considered the judgment of the Division Bench, dated 22.07.2014, rendered in the case of Kadwani Forge Ltd. (supra). In the instant case, the petitioner has prayed for striking down and declaring the entry No.2 of Notification No.(GHN-14) VAT-2010-S.11(6)(2)-TH, dated 29.06.2010, of the Gujarat Value Added Tax Act, 2003 (for short 'the VAT Act') to the extent that it requires reduction of input tax credit qua trading of goods declared to be of special importance under Section 14 of the Central Sales Tax Act, 1956 (for short 'the CST Act'). 6.1 The petitioner No.1 is a proprietorship concern engaged in the business of trading in petroleum coke and is registered under the VAT Act and the CST Act. It is the case of the petitioner that the Article 286(3) of the Constitution of India as it stood during the period-in-question, the coal including coke in all forms was declared to be goods of special importance and the conditions to be abided by the States in so far as declared goods were concerned, were stipulated under Section 15 of the CST....
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.... sale of goods made from within the State and used in inter-State sales can be said to be unconstitutional and/or arbitrary and/or excessive delegation of powers. The impugned notifications ar absolutely ę within the powers conferred on the State under Section 11(6) of the VAT Act and the same is in the larger public interest and with a view to see that the development programmes of the State are not adversely affected due to reduction in tax revenue. In view of the reduction of central sales tax by the State Government and Central Government failed to compensate the State for the losses on account of reduction in central sales tax." 9. Subsequently, it appears that in the case of Hides and Skin Owners Seva Mandal (supra), the very same Notification was challenged to the extent that it requires reduction of input tax credit in respect of purchases of hides and skins resold in the course of inter-State trade and commerce. It was prayed that the said Notification may be declared as violative of Article 286(3) of the Constitution of India read with Section 15(b) of the CST Act. Further, it was prayed that the impugned Notification cannot lead to denial of reimbursement as per ....
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.... 26. As noted hereinabove, in the above decision, the court has referred to the submissions advanced with respect to the challenge to the impugned notification in the context of declared goods. But as noted earlier, the learned Advocate General had drawn a distinction and had stated that section 15 of the CST Act would not come to the aid of petitioners therein inasmuch as the goods purchased and sold were not both declared goods as contemplated by section 15 of the CST Act. The Division Bench in the above decision has not specifically dealt with the contention regarding article 286(3) of the Constitution of India read with section 15(b) of the CST Act in the context of goods which are both purchased and sold as declared goods. Thus, while the impugned notification was also challenged in respect of declared goods and the aspect of section 15(b) of the CST Act was also placed before the court and the court has recorded the submissions, but in the findings recorded by it, the court has not dealt with the contentions based on section 15(b) of the CST Act. Thus, while the said notification can be said to have been upheld by the court, the decision rendered by the court cannot be sa....
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....he whole of the tax so levied. Therefore, rule 45 of the Gujarat Sales Tax Rules was in consonance with section 15(b) of the CST Act. It is, therefore clear, that even the rule making body, at the relevant time when rule 45 came to be enacted, was conscious of the fact in case of sale of declared goods in the course of inter-State trade or commerce, the whole of the State tax has to be refunded. Under the GVAT Act, since there is no specific provision for refund of State tax levied on declared goods sold in the course of inter-State trade or commerce, input tax credit is granted instead. 32. While sub-section (6) of section 11 of the GVAT Act permits the State Government to specify any goods or class of goods that shall not be entitled to whole or partial tax credit, the said provision cannot be read to mean that it empowers the State Government to override the provisions of section 15(b) of the CST Act and curtail the extent of reimbursement that has to be granted thereunder. When section 15(b) of the CST Act permits the State law to provide for the manner in which such reimbursement is to be granted, which may be subject to restrictions or conditions, it means that it is....
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....ole of the State tax paid by the petitioners on the declared goods purchased in the State and sold in the course of inter-State trade and commerce. XXX 38. In the light of the above discussion, the petition succeeds and is accordingly allowed. It is hereby held that the impugned Notification No. (GHN-14) VAT-2010-S.11(6)(2)-TH dated 29th June, 2010, as amended by the Notification No.(GHN-14) VAT-2014-S.11(6)(4)-TH dated 23rd September, 2014, shall not be applicable to goods which are both purchased and sold as declared goods. The action of the respondents in reducing the input tax credit in respect of purchases of hides and skin resold in the course of inter-State trade and commerce is hereby held to be violative of article 286(3) of the Constitution of India read with section 15(b) of the Central Sales Tax Act, 1956. Accordingly, the respondents are directed to grant input tax credit for the whole of the tax paid by the petitioners on declared goods purchased and resold in the course of inter-State trade or commerce." 10. Thus, the subsequent judgment distinguishes the earlier judgment dated 22.07.2014 in the case of Kadwani Forge Ltd. (supra) by reco....