Supreme Court: GST Act Doesn't Affect Right of Purchaser of Non-GST Goods to Avail Concessional Rate
The Supreme Court (SC) on 24 March 2021, in the case titled, Commissioner of Commercial Taxes & Anr. (Petitioners) v. The Ramco Cements Ltd. (Respondents) has upheld the decisions of various High Courts (HCs) that the purchasers of Non-GST goods are entitled to get 'Form C' Under Central Sales Tax Act (CST Act) to avail concessional rate even after enactment of the Goods & Services Tax Act (GST Act).
The SC bench consisting of Justices AM Khanwilkar, Dinesh Maheshwari, and Krishna Murari, dismissed the Special Leave Petition (SLP) filed by the tax department. The Court observed that the Punjab and Haryana High Court (HC) took a similar view that the GST Act does not affect the rights of purchasers of Non- GST goods, in the case titled Caparo Power Ltd v. State Of Haryana & Ors.
The Punjab & Haryana HC in its decision in the case Caparo Power (supra) was dealing with a case of the power generation company that sought Form C for intra-state purchase of natural gas used for power generation. The HC held that the sale tax law as defined in Section 2(i) of the CST Act will mean the law for the time being in force in any state for levy of taxes on sale and purchase of goods.
The HC further clarified in the aforesaid judgment that the definition u/s 2(i) of the CST Act is inclusive, and not restrictive. The Act does not restrict the usage of Form C only for resale, but can be used for resale, manufacture, processing, or generation/distribution of electricity.
Six commodities fall under the CST Act for the inter-state trade which includes Petroleum Crude, High-Speed Diesel, Motor Spirit (Petrol), Aviation Turbine Fuel, Natural Gas, and Liquor.
The GST Act came into force on 1 July 2017 and after its enactment, an issue came up- Whether dealers who are purchasing these commodities are entitled to avail of the concessional rate under the CST against Form C declaration?
The Apex Court also upheld the view taken by the Jharkhand High Court in the case titled Tata Steel Limited v. the State of Jharkhand wherein the HC was dealing with the same issue. It had exhaustively answered all the points raised by the department in its special leave petition.
The Top Court examined the said issue and it upheld the decision of Madras High Court in the case titled the Commissioner of Commercial Taxes and Another v. The Ramco Cements Ltd wherein the HC held that such purchasers were entitled to retain their entitlements under the CST Act even after the coming of the goods and services tax.
The division bench of HC comprising of Justices Dr. Vineet Kothari and R Suresh Kumar had held that on reading Section 7 sub-section (1) & (2) of the CST Act, it is clear that the assessees can continue to have registered under the provisions of the CST Act.
The Madras HC in its judgment had remarked that "The definition of 'goods' has been amended under the provisions of CST Act to restrict it to six commodities specified in Section 2(d) of the Act does not mean that the entire scope of the operation of CST Act has been amended. The rights of the purchasing Dealers of the goods including the rights to purchase at a concessional rate against Declaration in 'C' forms continues unabated under Section 8(3)(b) of the Act which has not been amended in 2017."
The Supreme Court concluded stating that, "Considering the consistent view of nine High Courts, including dismissal of special leave petitions by different Bench of this Court, and being satisfied about the exposition on the matters in issue by the High Court of Madras vide impugned judgment and order being a possible view, we decline to interfere in these special leave petitions."