2019 (3) TMI 21 – GAUHATI HIGH COURT – 2019 (21) G. S. T. L. 484 (Gau.) – Levy of CST – Benefit of lower CST or exemption from CST post GST – Procurement of high speed diesel oil for manufacturing – Section 8 (1) of the Act of 1956 – inter-state sale – clinker – benefit of the Form-C – concessional rate of duty – validity of Circular of 05.09.2017 – Held that:- From a bare perusal of the Circular dated 05.09.2017, it is discernible from Clause 9 thereof that a dealer who purchased one of the six retained goods for the purpose of inter-state sale and used it for manufacturing of a finished goods, which would be a good, other than the six retained goods, is not liable to pay sales tax under the CST Act of 1956 and also under the AVAT Act of 2003 and to that extent his registration under Section 7(2) of the CST, Act of 1956 ceases to exist.
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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
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itution (One Hundred And First Amendment) Act, 2016 and 9(2) of the CGST Act of 2017, read with Section 9(2) of the AGST Act of 2017 and the admitted position of the respondent authorities in the Central Govt and the State Govt that neither the date for levy of tax under the GST Acts of 2017 had been notified in respect of the five aforementioned goods, including high speed diesel oil and nor there is any recommendation by the Goods and Services Tax Council as regards the date to make the GST Acts applicable in respect of the said goods, we are unable to accept with the contention of the learned Senior Additional Adovate General that upon withdrawal of the registration of the petitioners under Section 7(2) of the CST Act of 1956, they would now be subjected to a levy of tax under the GST Acts of 2017.
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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
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In the event, if the respondent authorities are of the view that the manufactured goods would also have to be amongst the six retained goods for availing the benefits of Section 8(3) of the CST Act of 1956, the appropriate remedy for implementing the same cannot be an withdrawal of the registration of the dealer u/s 7(2) of the Act by providing that in the circumstance, the dealer is no longer leviable under the AVAT Act of 2003.
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The circular dated 05.09.2017 is accordingly set aside.
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Petition disposed off. – Case No. : WP (C) 366/2018 And Linked Case : WP(C) 915/2018 Dated:- 4-9-2018 – MR ACHINTYA MALLA BUJOR BARUA, J. For The Petitioner : DR. ASHOK SARAF For The Respondent : MR. D SAIKIA(SR. ADDL. AG) JUDGMENT & ORDER (CAV) Heard Dr. A. Saraf, learned senior counsel for the petitioners. Also heard Mr. D. Saikia, learned Senior Additional Advocate General for the authorities of the State of Assam in the department of Finance and Taxation as well as Mr. S.C. Keyal,
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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 Section 8(1) of the CST Act, 1956 would not be applicable and rather they would be subjected to payment of sale tax under the local laws. 5. The respondents under the State of Assam in the Finance and Taxation Department through the Commissioner of Taxes, Assam had issued a Circular No.7/2017-GST dated 05.09.2017 by which, a clarification was given on certain aspects of the CST Act of 1956 as regards the liabilities returns, registrations to be made and also as regards the eli
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se-4 of the Circular of 05.09.2017 provides that although some dealers were registered under Section 7(2) of the CST Act of 1956 as because they were earlier liable to pay sales tax under the AVAT Act of 2003, but consequent upon the repeal of AVAT Act of 2003, w.e.f. 01.07.2017, the dealers not selling the aforesaid six goods are no more liable to pay tax under the Act of 2003 and, therefore, upon cessation of their liability under the AVAT Act of 2003, they are not eligible for registration under Section 7(2) of the CST Act of 1956 and the registration earlier granted to them under Section 7(2) became invalid. iv) Clause-5 thereof provides that such dealers who continue to make interstate sale of only the aforesaid six goods will continue to be liable to pay tax under the CST Act of 1956 and their registration under the Act continues to remain valid and they can also make their inter-state purchases of the aforesaid six goods against Form-C or Form-F, as the case may be. v) Clause-9
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n given in the Circular of 05.09.2017 would be that in the event a dealer purchases any of the aforesaid six goods, for the purpose of it being used in the manufacture of any goods, which is other than the aforesaid six goods, such dealers can no longer avail the benefit of paying CST @ 2% by utilizing the benefit of Form-C. 8. In the present writ petition, the said Circular of 05.09.2017 has been assailed on the following grounds:- Firstly, the Commissioner of Taxes, Assam had no jurisdiction to issue the Circular dated 05.09.2017, by which it was declared that the dealers making inter-state purchase of petrol and high speed diesel against Form-C for use in the manufacture or processing of goods, other than the six goods ceased to be dealers under the CST Act of 1956, w.e.f. 01.07.2017. Secondly, even after the amendment of the CST Act of 1956 and the AVAT Act of 2003, the six goods continue to remain taxable under the CST Act of 1956 and AVAT Act, 2003 and therefore, the grant of reg
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Act of 2003 six goods namely crude petroleum, high speed diesel, petrol, natural gas, aviation turbine fuel and alcoholic liquor for human consumption were retained for being taxable under the CST Act of 1956 and AVAT Act of 2003. As the said six goods are retained as taxable under the said two Acts, any dealer who intends to purchase any of the said six goods are entitled to be registered or to retain their registration under Section 7(2) of the 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, s
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ould also be a necessary party in the proceeding, inasmuch as, what the Commissioner of Taxes, Assam had provided in the Circular dated 05.09.2017 was in fact, a requirement of the Central Government in the Finance Department and therefore, any adverse orders against the State of Assam would in fact have the implication of being an adverse order against the Central Government. 11. As regards the submission of Dr. Saraf that the Commissioner of Taxes, Assam did not have the jurisdiction to issue the Circular, Mr. D. Saikia by referring to section 9(2) of the CST Act of 1956 contends that the appropriate authorities in the State of Assam assesses, re-assesses, collects and enforces the payment of the tax under the Act on behalf of the Govt. of India and therefore, in order to do the needful, they may exercise all or any of the powers that may be available both under the central laws as well as under the tax laws of the State and therefore, all such powers available to the state authority
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upon the registration of the petitioners as 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,
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asions would have the same meaning as defined under the amended Section 2(d) of the Act. 15. Heard the learned counsel for the parties. From a bare perusal of the Circular dated 05.09.2017, it is discernible from Clause 9 thereof that a dealer who purchased one of the six retained goods for the purpose of inter-state sale and used it for manufacturing of a finished goods, which would be a good, other than the six retained goods, is not liable to pay sales tax under the CST Act of 1956 and also under the AVAT Act of 2003 and to that extent his registration under Section 7(2) of the CST, Act of 1956 ceases to exist. 16. Section 7(2) of the CST Act of 1956 entitles a dealer to get himself registered under the Act, even if, he is not liable to pay sales tax under the CST Act of 1956, but on the other hand, is liable to pay sales tax under the AVAT Act of 2003. If the analogy projected in Clause-9 of the circular dated 05.09.2017 that the registration under Section 7(2) of the CST Act of 19
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ities 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 Advocate General that the petitioners would now be liable to pay the tax under the GST Acts of 2017 or in the alternative, they would now liable to pay the tax at the appropriate rate
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of the Central and Goods Services Tax Act, 2017 (in short CSGT Act of 2017) defines goods as follows:- goods means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply. 21. From a bare reading of the definition of goods under Section 2(52) of the CGST Act of 2017 it is apparent that all kinds of movable property other than money and securities are taxable under the said Act, which apparently, going only by the definition of Section 2(52) would also include the six goods that have been retained under Section 2(h) of the CST Act of 1956. 22. But again Sections 9(2) of the CSGT Act of 2017 and the Assam Goods and Services Act, 2017 (in short AGST Act, 2017) provides as follows:- Section 9(2) of the CGST Act of 2017:- (2) The central tax on the supply of petroleum crude, high speed diesel, motor spirit (
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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 services tax be levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel. 25. From the provisions of Section 9(2) of the CGST Act of 2017 and AGST Act of 2017, respectively and Section 12(5) of the Constitution (One Hundred And First Amendment) Act, 2016 it is discernible that the levy of tax on the five goods namely, petroleum crude, high speed diesel, that motor spirit (commonly known as petrol), natural gas and aviation turbine fuel, which are amongst the six goods retained under the CST Act of 1956, are leviable only with effect from such date as may be notified by the Government on the recommendation of the Goods and Services Tax Council. It has been
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Adovate General that upon withdrawal of the registration of the petitioners under Section 7(2) of the CST Act of 1956, they would now be subjected to a levy of tax under the GST Acts of 2017. 27. As regards the other alternative contention of learned Senior Additional Advocate General that upon withdrawal of such registration under Section 7(2) of the CST Act of 1956 the petitioners would now be liable to pay tax under the AVAT Act of 2003, it is taken note of that under Section 174(1) of the AGST Act of 2017, the provisions of AVAT Act of 2003 in respect of the six aforementioned goods are retained. In other words, in respect of the six aforementioned goods 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 th
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t. From the said point of view the cessation of their registration under Section 7(2) of the Act as provided in the circular dated 05.09.2017 would be unsustainable. 30. For a clarification we have to refer to the provisions of Clause-9 of the circular dated 05.09.2017 which inter alia provides that a dealer who is making interstate purchase of high speed diesel against Form-C for use in the manufacture or processing of a good, other than the aforesaid six goods retained under section 2(d) CST Act of 1956 would cease to be a dealer under section 7(2) of the Act with effect from 01.07.2017 as their liability to pay tax under the AVAT Act of 2003 had ceased to exist from 01.07.2017. 31. The circular dated 05.09.2017 providing for the withdrawal of the registration under section 7(2) of the CST Act of 1956 is based on the reason that such dealers involved in interstate purchase of the six goods and using them for a manufacturing of a good other than the six goods, are no longer leviable t
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is leviable under the AVAT Act of 2003, the provisions in the circular dated 05.09.2017 that from 01.07.2017 onwards, the dealers dealing interstate purchase of high speed diesel and using it for manufacture of a good other than the six good are no longer 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 unacce
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. D Saikia, learned Senior counsel that the respondent authorities have the jurisdiction and authority to issue the Circular dated 05.09.2017 in exercise of its power under Section 3(5)(b) of the AVAT Act of 2003 or in the alternative under Section 105 of the Act, it would be apposite to examine the aforesaid provisions. 36. Section 3(5)(b) of the AVAT Act of 2003 is as follows: 3.(5)(b) issue such orders, instructions and directions to such officers and persons as it may deem fit, for the proper administration of this Act. 37. On the other hand, Section 105 of the AVAT Act of 2003 is as follows: 105. Determination of disputed questions.- (1) If any question arises, otherwise than in a proceedings pending before an Appellate Authority or an Appellate Tribunal or a Court, where or not,- (a) any person or association of persons, society, club, firm, company, corporation, undertaking or Government Department is a dealer; or (b) any transaction is a sale or purchase and, if so, the sale or
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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 validity or operation of any order passed earlier by any Prescribed Authority, Appellate Authority, Appellate Tribun
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prior permission of the Government. 38. Section 3(5)(b) of the AVAT Act clearly postulates a situation where it is deemed expedient that for the proper administration of the Act, the Commissioner may issue such orders, instructions and directions to the Officers and persons concerned, as it may deem fit. A reading of the Circular dated 05.09.2017 would indicate that the said Circular is not for the purpose of any proper administration of the Act, but was made for the purpose of making the levy of tax under the Act of 2003 to be inapplicable in respect of those dealers who purchases the six goods included in Entry 54 of the State list of the 7th Schedule to the Constitution of India and retained under Section 2(h) of the CST Act of 1956 and uses it for manufacturing a good other than the six goods. 39. By virtue of Section 174(1) of the AGST Act of 2017, the applicability of the AVAT Act of 2003 in respect of the six goods mentioned in Entry 54 of the State list under the 7th Schedule
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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 be other than the said six goods. 42. From the said point of view also it cannot be said that the Circular dated 05.09.2017 was issued in exercise of power under Section 105 of the AVAT Act of 2003. 43. Both Section 3(5)(b) and Section 105 of the AVAT Act of 2003 confers jurisdiction on the Commissioner to decide any question for proper administration of the Act or to decide as to whether any dealer is liable to pay the taxes in a given circumstances. But the said power cannot be exercised to the extent to declare that the category of dealer, who are oth
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by the learned counsel for the respondents under which the Commissioner of Taxes could have issued the Circular dated 05.09.2017. 47. Accordingly, the contention raised that the Commissioner of Taxes, Assam did not have the jurisdiction to issue the Circular dated 05.09.2017 is answered in favour of the petitioner. 48. Clause 9 of the Circular dated 05.09.2017 also provides a clarification that the dealers making inter-state purchase, amongst others, of high speed diesel against Form C and using it for manufacture or processing of goods other than the six aforementioned goods would cease to be dealers under the CST Act of 1956 w.e.f. 01.07.2017 as their liability to pay taxes under the repealed Act of AVAT Act of 2003 had ceased w.e.f. 01.07.2017. The said clarification perhaps is an indication that such category 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
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er the AVAT Act of 2003, therefore, it cannot be said that it would not be subjected to a levy under the AVAT Act of 2003, merely because an interpretation is sought to be given that they would not be entitled to a levy of 2% of CST under Section 8(1) of the CST Act of 1956, as they do not satisfy the requirements of Section 8(3). 51. As it has been concluded that the registration of the petitioners u/s 7(2) of the CST Act of 1956 could not have been withdrawn for an underlying reason that the manufactured good referred in Section 8(3) of the CST Act of 1956 would also have to be amongst the six retained goods, this Court is of the view that the question whether the finished goods would also have to be amongst the six retained goods for the purpose of applying the provisions of Section 8(3) of the Act, need not be answered for the present. It is so, inasmuch as, irrespective of a decision either in favour of the petitioner that the manufactured good need not be amongst the six retained
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