Bombay High Court
Sesa Mining Corporation Ltd., Thr. Its … vs Union Of India, Thr. The Secretary And 3 … on 28 July, 2025
Author: Bharati Dangre
Bench: Bharati Dangre
2025:BHC-GOA:1588-DB
2025:BHC-GOA:1588-DB
WP-876-17-WP-856-2018.doc
Andreza
IN THE HIGH COURT OF BOMBAY AT GOA
WRIT PETITION NO. 876 OF 2017
AND
WRIT PETITION NO. 856 OF 2018
-----------------------------
WRIT PETITION NO. 876 OF 2017
1. Vedanta Limited, an existing company
within the meaning of Companies Act, 1956,
having its office at Sesa Ghor, 20, EDC
Complex, Patto, Panaji, Goa, India, through
its authorized Signatory, Benicio Menezes,
S/o Louis Menezes, 48 years age, married,
R/o Colvale Bardez, Goa.
2. Gregory Dsouza, S/o Michael Dsouza,
Major of age, married, R/o Porvorim,
Salvador do Mundo, Paithona, Bardez, Goa,
403521, Shareholder of the Petitioner No. 1 ... Petitioners
Company.
Versus
1. Union of India, Through the Secretary
Department of Revenue, Ministry of Finance,
Government of India. North Block, New Delhi-
110001.
2. State of Goa, Through the Secretary,
Finance Department, Porvorim, Goa.
3. The Assistant Commercial Tax Officer,
Panaji ward (Appropriate Assessing
Authority), Panaji, Goa, First Floor, PA
Building, Near A.I.R., Altinho, Panaji, Goa, Pin
Code-403001.
4. Commissioner of Commercial Taxes,
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Vikrikar Bhawan, MG Road, Panaji, Goa,
403001.
5. Additional Commissioner, Commercial
Amendment carried out as per order
Taxes, Panaji, Goa. dated 09.01.2019.
6. The State of Karnataka, Through the
Deputy Commissioner of Commercial Taxes
(Audit)-4-1, D.V.O.04, V.T.K.02, Koramangala,
Bengaluru 560034, Karnataka. Amendment carried out as per
order dated 30.09.2019 in MCA
7. Reliance Industries Ltd. No. 62/2. Reliance No. 73.2024(F).
Building, 2nd Floor, Richmond Road,
... Respondents
Bengaluru-560025, Karnataka.
AND
WRIT PETITION NO. 856 OF 2018
1. Sesa Mining Corporation Limited an
existing company within the meaning of
Companies Act, 1956, having its registered
office at Sesa Ghor, 20 EDC Complex, Patto
Panaji, Goa, India, through its authorized
signatory, Benicio Menezes, S/o Louis
Menezes, 48 years age, married, R/o Colvale,
Bardez, Goa.
2. Mr. Azad Shaw, S/o Shri Riya Ram Shaw,
Major in age, Indian National, Resident of flat
205, Building 3, Kamat Royale, Caranzalem, ... Petitioners
Panaji-Goa, Shareholder of the Petitioner No. 1
Company.
Versus
1. Union of India, Through the Secretary
Department of Revenue, Ministry of Finance,
Government of India, North Block, New Delhi-
110001.
2. State of Goa, Through the Secretary,
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Finance Department, Porvorim, Goa.
3. The Assistant Commercial Tax Officer,
Panaji ward (Appropriate Assessing
Authority), Panaji, Goa,
4. Commissioner of Commercial Taxes,
Vikrikar Bhawan, MG Road, Panaji, Goa
403001.
5. The State of Karnataka, Through the Deputy
Commissioner of Commercial Taxes (Audit) -
Amendment carried out as
4-1, D.V.O.04, V.T.K.02, Koramangala, per order dated 19.08.2024
Bengaluru 560034, Karnataka. in MCA No. 328.2024.
6. Reliance Industries Ltd., No. 62/2. Reliance
Building, 2nd Floor, Richmond Road, ... Respondents
Bengaluru-560025, Karnataka.
Mr. Gopal Krishna Mudra, Advocate for the Petitioners.
Mr. Raviraj Chodankar, Central Government Standing Counsel for
Respondent no.1.
Mr. Devidas Pangam, Advocate General with Mr. Deep Shirodkar,
Additional Government Advocate for Respondent nos. 2, 3 and 4.
CORAM: BHARATI DANGRE &
NIVEDITA P. MEHTA, JJ.
RESERVED ON : 2nd JULY 2025
PRONOUNCED ON : 28th JULY 2025
JUDGMENT (Per Bharati Dangre, J.)
1. The two Petitions before us are, inter alia, filed by the
Petitioners engaged in mining in ores for sale and in the wake of the
new regime with the introduction of Goods and Service Tax Act (GST,
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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 of
Petitioner no.1 Company.
The present Petition is filed as the Petitioners are aggrieved by
the action of the Respondents in denying of issuance of declaration in
Form ‘C’ as required by the Petitioners to procure HSD from outside
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State of Goa at concessional rates of Central Sales Tax Act, 1956 (CST
Act 1956) on the premise that the Petitioner ceases to be a Dealer under
the CST Act,1956 w.e.f. 01.07.2017 and also on a premise that the
registration of the Petitioner under the CST Act has become infructuous
as the Petitioner is not liable to pay tax under the Goa Value Added Tax
Act, 2005 or the CST Act, 1956.
In short, the Respondents have proceeded against the Petitioner
by presuming that on introduction of Goods and Service Tax Act, 2017
(GST Act), the procurement of the HSD under concessional rates under
Section 8 of the CST Act is permissible only if the Dealer is engaged in
the sale of HSD.
3. The Petition has therefore assailed the order dated 25.09.2017
passed by the Commercial Tax Officer, Panaji, revoking the declaration
Form ‘C’ in exercise of powers conferred under Section 21 of the
General Clauses Act, 1897 and declaring that the declaration Form ‘C’
issued to any person/selling dealer, shall be of no consequence since it
stand revoked.
This was followed by the Order dated 06.02.2018, which partly
allowed the claim of Petitioners in respect of diesel used at Codli mine
but rejection of rest of the claim. This Order being assailed before the
Additional Commissioner of Commercial Tax and Appellate Authority
under Section 9(2) of the CST Act, read with Rule 31, 32, 33, 34 and 35
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of the Goa Value Added Tax Rules, 2005, by an Order dated
28.06.2018, the Order in original is upheld and follow the same
reasoning and dismiss the appeal.
As a consequence, the Petition also seek direction to the
Respondents to process the Petitioner’s application for issuance of
Form ‘C’ within a reasonable time frame.
Writ Petition No. 856 of 2018
4. This Petition is filed by Sesa Mining Corporation Limited along
with its shareholder Mr. Azad Shaw, who is aggrieved by the Order
dated 29.01.2018 passed by the Assistant Commissioner Commercial
Tax Officer, Panaji, an Order passed on an application for issuance of
declaration of Form ‘C’ for inter-state purchasers of High Speed Diesel
(HSD). The said Petition also raised challenge to 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
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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 pleadings, it is taken up for final
hearing and as far as Writ Petition No. 856 of 2018 is concerned, since
it was tagged along with the Petition of Vedanta Limited by Order dated
12.03.2019, on completion of pleadings, both the Petitions are taken up
for final hearing.
6. Focusing our attention on Writ Petition No. 876 of 2017, filed by
Vedanta Limited, the Petitioner no. 1 engaged in mining of iron ore for
sale claim to be largest exporters of iron ore in India and amongst other
things procured HSD, which is used for mining iron ore for sale.
Vedanta Limited, erstwhile known as Sesa Goa Limited, secured
registration certificate under Section 18 of the Goa Value Added Tax
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Act, 2005 on 27.12.2017, which was renewed from time to time and
obtained a registration as a Dealer.
The Dealer changed the name of the business from Sesa Goa
Limited to Sesa Starlite Limited w.e.f. 20.09.2013 and was granted the
renewal of the certificate from 2014 to 2017 in that name. On
21.05.2019, the Dealer changed the name of business from Sesa Starlite
Limited to Vedanta Limited and therefore the subsequent registration
certificate is obtained in the name of ‘Vedanta Limited’.
However, the registration details clearly provide that the
Company conducted business since 1970 and incurred the VAT liability
from 01.04.2005. Similarly, the Company also secured a registration
under the Central Sales Tax Act, 1956, with its effective date of
registration being 06.07.1963 in the name of Sesa Goa Limited. The
CST Act (Registration and Turnover) Rules, 1957, in Form ‘B’ certified
Sesa Goa Limited to be a Dealer under Section 7(2) of the Central Sales
Tax Act, 1956 and then the nature of its business was set out of ‘mining
and exporting of iron ore’.
The said Certificate include the following clause :
“The class(es) of goods specified for the purposes of sub-sections
(1) and (3) of section 8 of the said Act is/are as follows and the
sales of these goods in the course of inter-State trade to the
dealer shall be taxable at the rate specified in that sub-section
subject to the provisions of sub-section (4) of the said section:-
(a) for resale.
(b) for use in the manufacture or processing of goods for
sale.
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(c) for use in mining Machinery, spares, exploves, fuses,
detonators, tyres and tubes, paints batteries & other mining
equipments.
(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’ certificate against the invoice are
placed on record as a part of the Petition making it clear that the
statutory declaration Form ‘C’ issued in favour of of the Petitioner
against the invoice of commodity HSD to be sold by Reliance Industries
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Limited from 2017 in the wake of Form ‘C’ certificate issued from
24.08.2017.
8. In the Petition filed by Sesa Mining Corporation, the background
facts are somehow similar as it can be discerned from the Petition that
Dempo Mining Corporation received registration certificate under
Section 18 of the Goa Value Added Tax Act, 2005 on 27.12.2007, and
the certificate described him to be a Dealer manufacturing for sale the
following classes of goods :
“(i) sale of iron ore;
(ii) sale of old vehicles;
(iii) sale of scrap;”
M/s. Dempo Mining Corporation changed to Dempo Mining
Corporation Private Limited in the year 2002 and w.e.f. 19.11.2010, the
Dealer changed its name to M/s. Sesa Goa Mining Corporation Limited.
This certificate received renewal from time to time but the Dealer
changed its name to Sesa Mining Corporation and, therefore, from 2011
onwards, the renewal of registration certificate under the GVAT Act,
2005 is granted in the name of Sesa Mining Corporation Limited.
The certificate in favour of Dempo Limited, issued on
21.06.1963 while it registered the Private Company as Dealer under
Section 7(2) of the Central Sales Tax Act, 1956, described the business
as wholly-mining and the class(es) of goods specified for the purpose of
sub-section (1) and (3) of Section 8, and the sales of the goods in the
course of inter-state trade to the Dealer was declared to be taxable at
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the rates subject to the provisions of sub-section(4) and the said goods
were set out as below :
“…
(c) for use in mining, Surveying instruments with
accessories………………… fuel……..”
The certificate issued in favour of Dempo Mining was also
amended from time to time as regards the inclusion of various goods
which would be entitled for the benefit of Section 8 of the CST Act.
Sesa Mining Corporation Limited also preferred an application for
issuance of Form ‘C’ for inter-state purchase of HSD with Reliance
Industries Limited being seller from the year 2017.
The Petitioner continued to avail the benefit as against the
class(es) of goods as set out in its certificate 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
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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 notified date, the levy under Central Excise Act, CST Act and State
VAT laws on specified petroleum products would continue.
Accordingly, the powers conferred on the Central Government
vide Entry 84 of the Union List to levy duty of Excise is inter alia
restricted to the manufacture and production of the specified
petroleum products in India. Similarly, the powers conferred on the
State Government under Entry 54 of the State List to levy VAT on intra-
state sale of goods is inter alia restricted to sale of specified petroleum
products.
10. The Central Goods and Services Tax Act, 2017, (CGST Act, 2017),
provided for levy and collection on tax on intra-State supply of goods or
services or both by the Central Government and Section 9 thereof,
prescribe that there shall be levied a tax called the Central Goods and
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Services Tax Act on all inter-State supplies of goods and services or
both, except on the supply of alcoholic liquor for human consumption
and undenatured extra neutral alcohol or rectified spirit used for
manufacture of alcoholic liquor, for human consumption at such rate
as may be notified by the Government on the recommendations of the
GST Council.
Sub-section(2) of Section 9 prescribed that the Central Tax on
the supply on the 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 recommendations of the Council.
Similarly, Goa Goods and Services Tax Act, 2017, came to be
enacted, with Section 9 as its charging section, prescribing that the
State Goods and Service Tax is levied on intra-State ‘supplies of goods
and services’ at such rate as may be notified by the Government on
recommendations of the GST Council and an identical provision in
form of sub-section (2) of Section 9, related to the levy on supply on
Petroleum crude, High Speed Diesel, Motor spirit (commonly known as
petrol), Natural gas and Aviation Turbine Fuel as may be notified by
the Government on recommendations of the Council.
11. In the regime which existed prior to insertion of Article 246-A in
the Constitution and the enactment of the two statutes in form of
Central Goods and Service Tax Act, 2017 and Goa Goods and Services
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Tax Act, 2017, the existing regime was the Goa Value Added Tax Act,
2005 and Section 3 thereof provided that 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 the sales
tax law of the appropriate State, or where there is no such law in force,
in the appropriate State or any part thereof, any dealer having a place
of business in that State or part, as the case may be, notwithstanding
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the fact that he is not liable to pay tax under the CST Act, must obtain
registration under the Act .
The CST Act, 1956, defined ‘goods’ in Section 2(d) as below :
“Section 2(d) – ‘goods’ means- “goods” includes all materials,
articles, commodities and all other kinds of movable property, but
does not include newspapers, actionable claims, stocks, shares and
securities.
13. Section 8(3) of the CST Act read with Rule 13 of the Central
Sales Tax (Registration & Turnover) Rules, 1957 inter alia provides
specific purposes for which Form C can be issued and it extends the
benefit of sale of goods to a registered dealer on payment of
concessional rate of CST on fulfillment of the following conditions; (i)
The goods should be specified in the purchasing dealer’s registration
certificate as being intended for resale by him or for use by him in the
manufacture or processing of goods for sale or telecommunication
network or in mining, or in the generation or distribution of electricity
or any other form of power; and (ii) The purchasing dealer shall furnish
a duly signed declaration in Form C to the selling dealer who would in
turn furnish Form C to the prescribed authority.
In terms of Section 8(3) of the CST Act, the goods for use in
mining are eligible for the concessional rate of CST against Form ‘C’.
In the wake of decision of the Hon’ble Apex Court
in Chowgule and Co. Pvt. Ltd. v. Union of India1 and a decision
1 (1981) 1 SCC 653
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of this High Court in the case of CIT Vs. Sesa Goa Ltd.2, the
expression ‘mining’ would encompass within its ambit all the activities
from extracting of ore to selling it for export as, (i) extraction of ore
from the mine; (ii) conveying the ore to the dressing plant; (iii)
washing, screening and dressing the ore; (iv) conveying of the ore from
the mine site to the riverside; (v) transport of the ore from the river
side to the harbour by means of barges ; (vi) stacking of the ore at the
harbour in different stock piles according to its physical and chemical
composition; and (vii) blending of the ore from different 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
2 2004 266 ITR 126 Bom
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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 electricity or any other form of power; and (ii) The
purchasing dealer shall furnish a duly signed declaration in Form C to
the selling dealer who would in turn furnish Form C to the prescribed
authority.
15. It is the case of the Petitioners that pursuant to the introduction
of the GST regime w.e.f. 01.07.2017, the Petitioners migrated into GST
regime using its Goa VAT registration number. However, since the
Petitioners business continued to involve purchase of HSD, which was
specifically excluded from the ambit of GST but continued to attract
applicable VAT and CST, the Petitioner continued to pay CST and also
retained the VAT registration and did not apply for its cancellation as
the Petitioner was of the opinion that there is no requirement under the
GST Act for automatic cancellation of such registration.
The Petitioners, therefore, made online application for issuance
of declaration in Form ‘C’ pertaining to invoice dated 21.07.2017 and
the Assistant Commissioner of Sales Tax Office, Panaji, approved the
online request and issued statutory declaration in Form ‘C’ dated
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24.08.2017 for Rs.9,46,762/- pertaining to the purchased invoice dated
21.07.2017.
16. The Petitioner however was served with a show cause notice on
04.09.2017 directing him to show cause as to why the declaration Form
dated 24.08.2017 should not be revoked and the same was issued by
inadvertence. The notice specifically justified its issuance by stating
that the registration of the Petitioner under the Goa Value Added Tax
Act, 2005 and CST Act, 1956 has become infructuous w.e.f. 01.07.2017
and, therefore, the dealer is not eligible for issuance of any declaration
form for any intra-State purchase made on or after 01.07.2017 and
therefore the authority intend to revoke the same by exercising the
powers conferred under Section 21 of the General Clauses Act, 1897.
The show cause notice was subjected to challenge in Writ Petition
filed before the Bombay High Court at Goa and a request was made to
keep adjudication of the matters in abeyance till the final disposal of
the Petition. However, Respondent no. 3 proceeded to adjudicate the
show cause notice and pass the impugned Order dated 25.09.2017 and
the Petitioner filed the present Writ Petition challenging the said Order.
The said order is primarily based upon two essential facts
namely, M/s. Vedanta Limited, was a dealer registered under the Goa
Value Added Tax Act, 2005 and secured registration under the CST Act,
1956 and consequent to the passing of the 101 st Amendment Act 2016,
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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 25.09.2017 and directed to process the
Petitioner’s subsequent application for issuance of Form ‘C’ as due in
terms of relevant CST Act subject to outcome of the Petition.
18. Thereafter, the Petitioner made several applications praying for
issuance of Form ‘C’ for procurement of HSD during the period
01.07.2017 to 31.12.2017 and also furnished requisite undertaking.
According to the Petitioner, the Respondent no. 3 visited the
Petitioners’ Codli Mines and its iron ore processing facility at Amona
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Jetty and directed the Petitioner to furnish various information such as
details of HSD procured, stored and consumed and the Petitioner
complied with the requisite details.
The Respondent no. 3 also sought a detailed statement of the
registration number of vehicle of which the machinery with the Road
Transport Department as well as the value or amount of HSD
consumed by each vehicle. Further, it was also informed that on
verification of the details/statement of consumption of HSD furnished
by the dealer, it was found that the HSD is being consumed for
purposes other than mining i.e. for the purpose of its re-sale to mining
trucks and transporters/private truck owners and therefore it has
become difficult to classify the use of HSD as consumption for mining
purpose and for re-sale. Therefore, a detailed statement was sought
being duly certified, signed and stamped in order to process the
applications for issuance of declaration of Form ‘C’ in terms of the
interim order passed by the Court.
Despite this information being furnished, on 06.02.2018, the
Assistant Commissioner Tax Officer disposed off the application filed
by recording that M/s. Vedanta Limited is an unregistered person
under the Goa VAT Act and CST Act, 1956 do not permit issuance of
any declaration in Form ‘C’ to an unregistered person.
Another reason in the order was spelt out in the following words :
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WP-876-17-WP-856-2018.doc“The dealer M/s Vedanta Limited is having big iron ore plant at
Amona Jetty where iron ore is brought from the other mines and
processed at processing plant. The processed iron ore is stacked
at jetty and thereafter loaded into the barges for transportation
and sale. In this plant & plot it is noted that, there is no mines
and no extraction activities of iron ore from the earth is carried
out. The goods purchased on declaration from-C at concessional
rate of tax @2% should be utilised in 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 verifying the records, the Order however found only a part of
diesel being used by the dealer M/s. Vedanta Limited for trucks owned
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WP-876-17-WP-856-2018.docby the Company and for the machinery used in the mining and,
therefore, a claim was allowed by granting declaration Form ‘C’ for
HSD purchased to inter-state which is used at the mining at Codli
Mines for different quarters but, on the other hand, the HSD not used
in mining but resold to private persons was not allowed.
19. On 04.05.2018, while issuing ‘Rule’, the Court permitted an
appeal to be filed since an appellate forum was available and the
Appellate Authority was directed to take into consideration the
challenge which was sought to be introduced by way of amendment.
It is this appeal which is decided by the Appellate Authority i.e.
Additional Commissioner of Commercial Taxes on 28.06.2018 when
the order under challenge was upheld by upholding the order of the
Assessing Officer. The decision of the Apex Court in case of Chowgule
& Co. Pvt. Ltd. vs. Union of India (supra) on which heavy reliance
was placed to submit that the transportation of ore from mines to the
dressing plant to river side to the the harbour activity of mining and the
same cannot be seen as an inter dependant activity was distinguished
and by elucidating reasoned order, the appeal was dismissed by holding
that the applicant is an unregistered dealer under The Goa VAT Act,
2005 and CST Act, 1956 and there is no provision under the GST Act to
issue declaration Forms to an unregistered person and therefore no
question arose to issue any declaration to the applicant irrespective of
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the order that HSD purchased in intra-state is used in mining or for
resale.
20. It is in the backdrop of the aforesaid facts, we have two Petitions
before us, one filed by M/s. Vedanta Limited (Writ Petition No.
876/2017) and another filed by Sesa Goa Mining Corporation Limited
(Writ Petition Petition No. 856 of 2018), challenging the Order dated
29.01.2018 passed by the Assistant Commissioner Commercial Tax
Officer, adopting a same reasoning with reference to the four trade
circulars issued by the Commissioner of Commercial Taxes, State of
Goa being Trade Circular Nos. 1, 2, 3 and 4 published on 21.09.2017,
21.11.2017, 30.11.2017 and 11.01.2018.
21. Mr. Gopal Mudra, the Counsel for the Petitioner has urged that
in the Petition filed by Vedanta on 04.10.2017, this Court had granted
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
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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 Goa Limited3.
The learned Counsel would submit that upon an appeal being
preferred against the order passed by the first authority against partial
rejection, the authority exceeded the scope of the appeal by passing an
order holding that the Petitioner is not entitled to Form ‘C’ under the
GST regime as because it ceases to be a dealer under the CST Act and
its registration under the Act has become infructuous by conveniently
ignoring that the primary issue is yet to be decided by the Court and the
Petition was admitted with a direction to the Appellate Authority to
decide the issue and the issue was pending before the Court.
His grievance is that despite an existing order in the pending
Petition, the Respondent, Reliance Industry Limited has invoked the
bank guarantee on account of non-submission of Form ‘C’ and
recovered a sum of Rs.8,08,67,206 from the Petitioner.
3 2004 266 ITR 126 Bom
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22. As regards the first issue about procurement of specified goods
against Form ‘C’ post implementation of GST Act, the learned Counsel
would place reliance upon series of decisions including the decision
from this Court, where it has been held that the dealers who are
registered under CST Act would continue to be registered under the
GST Act for the purpose of purchase of goods in absence of any
stipulation for automatic cancellation of their CST registration and the
benefit of the procurement of goods at the concessional rates under
Section 8 would continue to apply. The decision of this Court in case of
VVF (India) Ltd., vs. State of Maharashtra & 2 Ors. 4 is pressed
into service. Similarly, the decision of the Supreme Court affirming the
decision taking a similar view by Gujarat High Court in J. K. Cement
Ltd., vs. State of Gujarat5 is also placed before us. It is, therefore,
urged before us that in the wake of the consistent views from various
High Courts upheld by the Supreme Court, the Petitioner has a right to
purchase HSD at concessional rate against Form ‘C’ even after
introduction of GST Act.
23. The learned Advocate General representing the State, however,
would submit that the order has partly allowed the claim but in the
peculiar facts in Vedanta Ltd. (Writ Petition no. 876 of 2016), he would
submit that the registration certificate described the goods as ‘HSD’
and petrol which are used for running and maintenance of machinery
4 WP No. 932 of 2018 decided on 11.07.2024
5 2020 (3) TMI 140
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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 GST w.e.f. 01.07.2017.
It is therefore urged that in order to obtain any type of declaration
Forms and avail the benefits of the statute, the Petitioner must be
registered dealer under the CST Act and this is permissible only if the
person is liable to pay tax under the CST Act but after 01.07.2017, the
Petitioner has no liability to pay tax under the CST Act and therefore he
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cannot be continued as a registered dealer and not eligible for obtaining
declaration of Form-1 as he is an unregistered dealer and Form ‘C’
cannot be issued to an unregistered dealer.
24. We have considered the statutory scheme existing prior to the
new regime being brought into force by introduction of Article 246A of
the Constitution. The prevailing regime in form of the CST Act, 1956,
required registration by every dealer liable to pay tax on inter-state
sales on all sales effected by him in the course of inter-state trade or
commerce.
The Act describe a sale or purchase to be in the course of inter-
state trade or commerce if the sale or purchase, (a) the occasions of the
movements of good from one State to another, or (b) is effected by a
transfer of document of title to the goods during their movement from
one State to another.
A dealer by virtue of Section 6 of CST Act, 1956, is liable to pay
tax under the Act on sale of any goods effected by him in the course of
inter-state trade of commerce notwithstanding that no tax would have
been payable under the sales tax law of the appropriate State if the sale
had taken place inside that State.
The terms ‘goods’ under CST Act, 1956, included all materials,
articles, commodities and all other kinds of movable property, but does
not include newspapers, actionable claims, stocks, shares and
securities.
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25. Section 8 of CST Act set out the rates of tax on sales in the
course of inter-state trade or commerce and if goods of the class or
classes specified in the certificate of registration of the registered dealer
purchasing the goods as being intended for re-sale by him or subject to
any rules made by the Central Government or used by him in the
manufacture or processing of goods for sale or in the
telecommunications network or in mining or in the generation or
distribution of electricity or any other form of power, the provisions of
sub-section (i) shall not apply unless the dealer selling the goods
furnished 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
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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 subsequent sale has been
effected by an unregistered dealer in the State from which the sale has
been effected.
27. Section 9A contemplate that no person who is not a
registered Dealer shall collect in any respect of any sale by him of goods
in the course of inter-state trade or commerce any amount by way of
tax under this Act, and no registered dealer shall make any such
collection except in accordance with the Act and the Rules made
thereunder.
28. The Petitioner Vedanta was a dealer registered under the Central
Sales Tax Act and also under the Goa VAT Act, 2005, and as far as the
CST registration is concerned, the registration in Writ Petition no. 876
of 2017 i.e. Vedanta Private Limited, as amended w.e.f. 21.08.1994, was
for the following items for use in the manufacture and processing of
goods for sale :
“H.S.D. (high speed diesel) & petrol which are used for running
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of barges and other vessels.”
As far as Sesa Goa Mining is concerned, the Certificate of
Registration, placed on record which was renewed included various
items along with ‘fuel’ and in the wake of the amendment in the
certificate, to the list of goods intended for use in mining and for using
generation of electricity in the course of inter-state, some goods were
added.
29. In the Petitions before us, two issues are involved, the first being
whether in the wake of coming into force of the Goa Goods and Service
Tax Act, 2017, the registration of the Petitioner as a dealer under the
Goa VAT Act, 2005 and under CST Act, 1956, have become invalid
w.e.f. 01.07.2017 and the second issue on facts being whether the
registration certificate of the Petitioners as a dealer under Section 7(2)
of the CST Act, 1956 entitled the Petitioner to avail the benefit under
Section 8 of the CST Act, 1956.
30. As far as the first issue is concerned, we find the same to be
under consideration before various High Courts including the Bombay
High Court in the past and a consistent view being formed, that despite
coming into effect of the CGST Act, 2017, the registration obtained
under the CST Act continued to be governed by the Act in respect of the
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six items included in the definition of ‘goods’ under the CST Act w.e.f.
01.07.2017.
In the wake of the introduction 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 7 th 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)
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(a) …
(b) [***] are goods of the class or classes specified in the
certificate of registration of the registered dealer purchasing
the goods as being intended for re-sale by him or subject to any
rules made by the Central Government in this behalf, for use
by him in the manufacture or processing of goods for sale or in
the telecommunications network or in mining or in the
generation or distribution of electricity or any other form of
power;
However, even this clause stood amended by the Finance Act,
2021, which came into effect from the 1 st day of April, 2021 and the
substituted clause reads thus :
“(b) are goods of the class or classes specified in the certificate of
registration of the registered dealer purchasing the goods as being
intended for re-sale by him or subject to any rules made by the
Central Government in this behalf, for use by him in the
manufacture or processing for sale of goods specified under clause
(d) of section 2;”
What is relevant to note is Rule 13 of the Central Sales Tax
(Registration & Turnover) Rules, 1957, which deserve to be read along
with clause (b) of sub-section (3) of Section 8 and provides thus :
“Rule 13: Prescription of goods for certain purposes :
The goods referred to in clause (b) of sub-section (3) of
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parts, accessories, fuel or lubricants, in the manufacture or
processing of goods for sale or in mining, or in the
generation of distribution of electricity or any other form of
power.”
31. In Carpo Power Ltd vs. State of Haryana & Ors. 6,
subsequent to the introduction of the GST Act, 2017, the Petitioner
challenged the respondents’ refusal to issue ‘C’ Forms in respect of
natural gas purchased by it in the course of inter-state trade and
commerce and used by it for the generation of electricity. The
Petitioner therefore sought mandamus directing the respondents to
issue Form ‘C’ under the CST Act, 1956 and the Central Sales Tax
(Registration and Turnover) Rules, 1957 in respect of the inter-state
sales of natural gas by certain oil companies based in Gujarat to the
petitioner in Haryana and used by the petitioner for generating
electricity.
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.
6 CWP No. 29437 of 2017 decided on 28.03.2018 (High Court of Punjab & Haryana)
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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 items and natural gas being one of them. It
was also noticed that though Section 9(2) of the CGST Act provides that
petroleum crude, high speed diesel, motor spirit, natural gas and
aviation turbine fuel shall be levied tax under the CGST Act from the
date as notified by the Government on the recommendations of the
Council, till date the Government has not issued a Notification under
either CGST Act or HGST Act and, therefore inter-State sales of natural
gas continued to be governed by CST Act. Taking note of the fact that
the petitioner purchases natural gas and uses it for generation of
electricity, whereas for the sale of natural gas, the liability to pay tax is
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of the oil companies under the CST Act, the sale of electricity in the
State of Haryana is leviable to tax under the HGST Act. The Court
observed thus :
“26. The provisions of section 8 of the CST Act, rule 12 of CST
(R&T) Rules and declaration Form C have not undergone any
amendment after the implementation of the GST laws. There
cannot be any occasion to restrict the usage of C form only for
the purposes of re-sale of the six items mentioned in the
amended definition of “goods” in section 2(d) of the CST Act.
The purchase of the said goods for purposes of re-sale, use in
the manufacture or processing of goods for sale, in the
telecommunications network or mining or in generation or
distribution of electricity or any other form of power would
qualify the purchaser for registration under section 7(2) of the
CST Act. Section 7(2) does not stipulate that only a dealer liable
to pay tax under the sales tax law of the appropriate State in
respect of any particular goods is entitled to apply for
registration. Nor does section 7(2) stipulate that an application
for registration can be made or C form can be issued only in
respect of the sale of the same goods prescribed in the course of
an inter-State sale. A dealer liable to pay tax under the sales tax
law of the appropriate State in respect of any goods would be
covered by section 7(2) of the Act.
27. There is another aspect of the matter that the registration
certificate given to the petitioner under the CST Act till date has
not been cancelled. As per section 7(4) of the CST Act, the
registration certificate granted has to be amended or cancelled.
The said provisions have not been invoked.
28. In these circumstances, the writ petition is allowed. It is
held that the respondents are liable to issue C forms in respect
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WP-876-17-WP-856-2018.doccompanies 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
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.7, raising a challenge to the action of the
respondents in not issuing ‘C’ Form of various quarters to year 2017-
2018 and therefore sought direction for issuance of ‘C’ Form to the
Petitioner.
The facts before the Court reveal that the petitioner-company
engaged in the business of mining of Zinc and other allied metals and
is registered under the CST Act was granted registration for various
classes of goods including high speed diesel. For the purpose of
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running heavy equipments for open cast and underground mines
besides generating electricity for running of the plant and machinery at
the mines and its smelters, the petitioner-company required HSD and
it procured the same from Oil Companies either within the State or
from other States.
In the wake of sub-section (1) and (3) of Section 8 of the CST Act,
the petitioner-company was entitled to procure HSD at a concessional
rate of 2% sales tax through inter-state trade for the purpose of mining
and for this purpose, it was required to tender ‘C’ Form to the Vendor.
33. In the wake of Taxation Laws (Amendment) Act, 2017, an
implementation to GST regime in India, an amendment was brought to
the provisions of the CST Act whereby Clause (d) of Section 2 of the
CST Act providing for definition of ‘goods’ was substituted to cover six
products.
The Court recorded that in light of the said amendment, various
State Governments sought clarification whether the definition of
‘goods’ as it appears in phrase ‘manufacture or processing of goods’ in
Section 8(3)(b) of the CST Act, would be as per the definition provided
under Section 2(d) of the CST Act of that word ‘goods’ when it appears
in the phrase ‘manufacture or processing of goods’ means any goods.
Referring to a clarification by the Department of Revenue, Ministry of
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Finance, Sales Tax Division, Government of India, the Bench recorded
thus :
“Now the Department of Revenue, Ministry of Finance, Sales Tax
Division, Government of India has issued the clarification vide
Office Memorandum dated 07.11.2017 on the definition of goods in
sub-section (3)(b) of Section 8 of the CST Act. As per the said
clarification “Department of Legal Affairs, Ministry of Law has
confirmed that the term “goods” has been specifically defined
under the Central Sales Tax Act, 1956 and prima facie the term
“Goods” referred to in section 8(3)(b) of the Central 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 spirit, natural gas,Page 38 of 57
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crude which have been specifically mentioned in Section 9 of the
GST Act while defining the ‘goods’. Besides, the registration under
Section 7(2) of the Act is still valid and has not been cancelled and
can be cancelled only within the parameters of Section 4 of the
CST Act. Hence, this Court finds that it is obligatory duty of the
respondents to issue ‘C’ form to the petitioner – company and any
failure on the part of the respondents to do so is without any
authority of law. Thus, this Court finds nothing to distinguish the
case of the petitioners herein from that of the petitioner in the
case of Carpo Power Limited (supra)”
35. In VVF (India) Ltd. vs. State of Maharashtra (supra),
decided on 11.07.2024, where the Petitioner involved in manufacture
and sale of oleo-chemicals and personal care products which involve
inter-state purchase of natural gas from Hazira, Gujarat, which is either
utilized for the generation of electricity or as an input in the
manufacture/processing of oleo-chemicals. It was noticed that the
Petitioner possessed registration certificates under the Maharashtra
Value Added Tax Act, 2002 (MVAT) and the CST Act, 1956. The
petitioner pleaded that in terms of Section 8(1) of the CST Act, which
provided for a concessional rate of 2% for goods described in Section
8(3) and 8(4) which provided that for applicability of Section 8(1), the
purchaser shall provide a declaration to the prescribed authority duly
filled and signed by the dealer to whom the goods are sold.
The Petitioner claimed that prior to 01.07.2017, i.e. prior to the
implementation of GST regime, the definition of ‘goods’ in terms of
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Section 2(d) of the CST Act, included all materials, articles,
commodities and all other kinds of movable property except those
excluded. Thus, the petitioner was duly providing Form ‘C’ to its
vendors but when the term ‘goods’ was substituted by Taxation Laws
(Amendment) Act, 2017, the trade Circular was issued on 24.08.2017
by which the existing MVAT and CST registrations of all dealers who
were not involved in sale of any of the six items enumerated in Section
2(d) of CST Act and were deemed to be cancelled on 30.06.2017. The
petitioner made a grievance that its registration under the MVAT and
CST stood cancelled and it was not able to login on 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. 8 and
8 2019 SCC OnLine Jar 1255
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since these decisions were affirmed, in case of Commissioner of
Commercial Taxes and Ors. vs. The Ramco Cements Ltd. 9 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 issue, no interference is warranted. The learned Counsel, therefore,
fairly conceded that the position stands covered and the petitioner was
held entitled for the issuance of ‘C’ Form in respect of natural gas
purchased by the petitioner from the oil company in Gujarat and used
in their manufacturing activities as also in generation of electricity at
captive power plant.
36. One more decision to which we make reference is the decision of
the Jharkhand High Court in case of Tata Steel vs. State of
Jharkhand (supra) in relation to HSD used in manufacturing, mining
or power generation.
The petitioners before the Court were engaged in manufacturing
process, some of them in mining activities and some of them in power
generation. They being bulk purchasers of high speed diesel which they
required for their manufacturing process/mining activities/generation
of power, which is used in manufacturing, mining or generation of
goods which were prescribed to be end products available for sale
9 SLP(C) No. 15785-15788 of 2020
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stating that their end products do not come within the definition of
‘goods’ as defined under Section 2(d) of the Central Sales Tax Act, but
high speed diesel which they required in their manufacturing process,
comes with the definition of ‘goods’, the petitioners were aggrieved by
the impugned circular issued by the State of Jharkhand denying the
issuance of Form ‘C’ for all items indicated in definition of ‘goods’ given
under Section 2(d) of CST Act including the high speed diesel.
The circular was issued on the basis that in coming into force of
the GST regime in the State w.e.f. 01.07.2017, all six items which have
been excluded in Jharkhand Goods and Services Tax, 2017 and
therefore the liability to pay tax under the State GST Act was deferred
till the notification was issued under Section 9(2) of the said Act and
they continued to be governed by the Jharkhand Value Added Tax
(JVAT). The circular provided that since the dealers dealing with goods
except the six items, were no longer liable to pay tax under JVAT, their
registration had come to an end automatically and the dealers are
therefore not entitled to inter-state purchase of the aforesaid goods
under concessional rates.
Once again, by relying upon Carpo Power Ltd vs. State of
Haryana & Ors. (supra) and Hindustan Zinc Limited vs. The
State of Rajasthan (supra), several authoritative pronouncements
while pronouncing of the validity of the notification issued by the State
Government, the Court observed thus :
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WP-876-17-WP-856-2018.doc“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 SCC 434, wherein it is
clearly held that the use of the expression “goods” referred to in
the first half of section 8(3)(b), i.e., on first three occasions can be
understood in the sense it is defined in section 2(d) of the CST
Act, whereas the expression “goods” in the second half of the
clause, i.e., on the fourth occasion does not and cannot be
understood in the sense it is defined in section 2(d) of the CST
Act, as it refers to the manufactured goods, in the case of the writ
petitioners, their end-products need not be “goods” within the
meaning of section 2(d) of the CST Act. We find no merit in the
submission of the learned counsel for the State that this meaning
has been assigned to the word “goods” appearing in the second
half of section 8(3)(b) of the CST Act, by the apex court in view of
the peculiar facts of that case, as in that case, the benefit of section
was given to the printers publishing the “newspapers” who were
not liable to any tax on the sale of “newspapers” published by
them or that they were enjoying the freedom of press under article
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19(1)(a) of the Constitution of India. The only difference in the
definition of pre and post amendment of “goods” as given under
section 2(d) of the CST Act is that earlier the definition was having
a wider connotation, empassing into it almost all types of goods,
except five goods mentioned therein, i.e., newspapers, actionable
claims, stocks, shares and securities, whereas after the
amendment the restricted meaning has been given to the word
“goods” which shall include the six items only, which are presently
there in the Act. The reasonings given by the honourable Supreme
Court in paragraph 18 of the said judgment, quoted above, have
nothing to do either with non-liability of the press to make any
payment of tax, or the freedom of press under article 19(2) of the
Constitution of India. The reasons given in paragraph 18 of the
said judgment by the honourable apex court fully apply to the
facts of the present case also, which conclusively hold that the
word “goods” appearing in the second half of section 8(3)(b) of
the CST Act may not necessarily mean the “goods” as defined
under section 2(d) of the CST Act. We also find that the
registration of a dealer under section 7(2) of the CST Act is not
subject to any liability of the dealer to pay the tax or not, rather as
laid down by the honourable apex court in 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
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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, the
Petitioner obtained Form ‘C’ from the relevant authority and provided
the same for supplying HSD so as to procure HSD on concessional rate
of CST 2%.
In this regard, we have examined the certificate of registration of
the Petitioner Vedanta Limited who was earlier carrying its business in
the name of Sesa Sterlite Limited and before that was registered as a
dealer as Sesa Goa Limited. The Central Sales Tax (Registration &
Turnover) Rules, 1957, the certificate of registration issued to Sesa Goa
Limited, which was registered under a dealer under Section 7 of the
CST Act, 1956. Its business being mining and exporting of iron ore, the
certificate permitted the class(es) of goods specified for the purposes of
sub-sections (1) and (3) of section 8 of the Act for resale and for use in
mining Machinery, spares, exploves, fuses, detonators, tyres and tubes,
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paints batteries & other mining equipments and also for use in the
generation or distribution of electricity or any other form of power.
This certificate, issued on 11.07.1963, was valid from 06.07.1963
until cancelled. However, in accordance with sub-section (1) of Rule 7
of the Central Sales Tax (Registration & Turnover) Rules, 1957, various
items were included in the registration certificate for use also in the
manufacturing processing for goods for sale and one of this item is
HSD but it is interesting to note the entry which stood included in the
registration certificate w.e.f. 21.08.1994, read thus :
“HSD (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”
The above entry has thus included HSD but it restricted the
registration to the HSD and petrol, which are used for running and
maintenance of machinery for mining and processing of iron ore for
sale. The amendment therefore restricted the availability of the benefit
of Section 8 of the CST Act in respect of the course of the inter-state
trade to the dealer at a concessional rate only for the HSD and petrol
which is used for running and maintenance of machineries for mining
and processing iron ore for sale and also for fittings used for
manufacturing of sales and barges and other vessels.
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39. The learned Counsel for the Petitioner has placed heavy reliance
upon the decision 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 composition. This operation of
blending is carried out by the Assessee, notwithstanding the loading of
the ore into the ship, but in the process of loading itself through the
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mechanical ore handling plant thus performs a dual function, namely,
blending of ore from different stock piles containing ore of different
chemical and physical composition and loading of the blended ore into
the ship for delivery to the foreign buyers.
The different stages of the entire activity of the Assessee were
divided into seven different operations being, namely, (i) extraction of
ore from the mine; (ii) conveying the ore to the dressing plant;
(iii) washing, screening and dressing the ore; (iv) conveying of the ore
from the mine site to the riverside; (v) transport of the ore from the
riverside to the harbour by means of barges; (vi) stacking of the ore at
the harbour in different stockpiles according to its physical and
chemical composition; and (vii) blending of the ore from different
stockpiles with a view to producing ore of the required specifications
and loading it into the ship by means of the mechanised ore handling
plant.
The question that arose for consideration was whether goods
purchased by the assessee for use in the above operations could be said
to be goods purchased for use “in the manufacture or processing of
goods for sale or in mining” so as to attract the lower rate of sales tax
under Section 8(1)(b) of the Central Sales Tax Act, 1956. Referring to
clause (b) of sub section (3) of Section 8 with specific reference of the
words used by him in ‘manufacturing’ or ‘processing’ of goods for sale
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or in mining, or in the generation of distribution of electricity or any
other form of power.
40. When the Assessee made an application to the Sales Tax Officer
for inclusion of 36 items in terms of goods in the certificate of
registration on the ground that they were being purchased by it for use
in iron ore and purchasing it for sale in the export market. The
Assessee made an application in the export market and hence they were
falling within Section 8(3)(b) and Rule 13. The Sales Tax Officer held
that only 11 items of goods could be regarded as goods purchased for
use in mining and the remaining 25 items of goods did not fall within
this description and hence were not included in the Certificate of
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
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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. 10 was relied
upon and the relevant observations reads thus :
“… The decision of this Court in Indian Copper Corporation case
(supra) is directly in point and completely supports this
conclusion which we are inclined to reach on principle. The
assessee in that case was a company which mined copper and
iron ore from its own mines, transported the ore to its factory
and manufactured finished products from the ore for sale.
There were several questions which arose for consideration,
before the Court in regard to the assessees’ claim for inclusion
of certain items of goods in its certificate of registration and one
of them was whether the locomotives and motor vehicles used
for removing ore from the place where the mining operations
were concluded to the factory where the manufacturing process
was going on, could be said to be goods intended for use in the
manufacture or processing of goods for sale within the meaning
of Section 8(3)(b) and Rule 13. This Court held that they were
goods falling within this description so as to be entitled to
inclusion in the Certificate of Registration of the assessee and
Shah, J. speaking on behalf of the Court gave the following
reasons for taking this view :
10 AIR 1965 SC 891
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WP-876-17-WP-856-2018.docWe are also of the opinion that in a case where a dealer
is engaged both in mining operations and in the
manufacturing process-the two processes being inter-
dependent-it would be impossible to exclude vehicles
which are used for removing from the place where the
mining operations are concluded to the factory where the
manufacturing process starts. It appears that the process
of mining ore and manufacture with the aid of ore copper
goods is an integrated process and there would be no
ground for exclusion from the vehicles those which are
used for removing goods to the factory after the mining
operations are concluded. Nor is there any ground for
excluding locomotives and motor-vehicles used in carrying
finished products from the factory. The expression “goods
intended for use in the manufacturing or processing of
goods for sale” may ordinarily include such vehicles as are
intended to be used for removal of processed goods from
the factory to the place of storage. If this be the correct
view, the restrictions imposed by the High Court in respect
of the vehicles and also the spare parts, tyres and tubes
would not be justifiable.”
Holding that the machinery, vehicles, barges and other items of
goods purchased 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.
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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 fact that the assessee is engaged in extraction and
processing of iron ore, not amounting to manufacture or production of
any article or thing. Referring to the various steps in the mining
operations identified by the Apex Court in Chowgule & Co. (P) Ltd.
vs. Union of India (supra), it was held that the ore has to be
extracted or raised from earth in which it is embedded and it has to be
brought to the surface and what is brought to the surface is something
new which comes into existence as an article or thing and therefore
winning or extraction of ore would fall within an expression
‘production’ and the assessment would be entitled to the benefit of
Section 32A of the Act.
43. A decision of Allahabad High Court in case of Triveni
Engineering & Industries Ltd. vs. Commissioner, Trade Tax 11,
is also pressed by Mr. Mundra when the question that fell for
11 [2014] 69 VST 353 (All)
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consideration was about the use of diesel purchased by assessee against
Form ‘C’ for cane procurement. Holding that for manufacturing of
sugar, the crushing of sugar is for that purpose and sugarcane has been
transported from its place of storage or where it has been purchased to
the point of crushing pit where it has to be off-loaded for crushing and
since it is integrally connected part of processing and manufacturing of
sugar cane and therefore the diesel purchased against the Form ‘C’ if
used for cane procurement, it was held to be not amounting to violation
of Section 10(d) attracting penalty under Section 10-A of the Central
Sales Tax Act, 1956. Reliance is once again placed upon the decision in
the case of Chowgule & Co. (P) Ltd. vs. Union of India (supra), in
arriving at the aforesaid conclusion by recording that when sugarcane
is transported from storage point to the head for crushing purpose,
such transportation is a part of manufacturing process and there is no
reason why transportation of sugarcane from purchase centres to
factory premises should be excluded from the term ‘manufacture of
sugar’.
44. In the light of the aforesaid, when we have considered the facts
placed before us, we must notice the distinguishing factor as we find
that a dealer is entitled to avail the benefit only as regards the goods
which are specified in the certificate of registration as the certificate of
registration issued under Rule 5(1) certifying an entity to be registered
as a dealer under Section 7(1) 7(2) of the CST Act, 1956 is qua the
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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 resale by him or for use by him in the manufacture or
processing of goods for sale or telecommunication network or in
mining, or in the generation or distribution of electricity or any other
form of power and those are entitled to avail the benefit of clause (b) of
sub-rule (3) of Section 8 of the CST Act, 1956, and no other goods or for
no other purpose. The certificate in favour of the Petitioner Vedanta
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Limited, restricts HSD and petrol only to be used for the purpose
specified therein, and when these goods are subject matter of re-sale or
used in manufacturing or processing of goods for sale or used in mining
or for use in packing of goods for sale/resale for distribution of
electricity, the dealer is entitled for the concessional rate and not
otherwise. This being not the case, we are of the view that the
Petitioner is not entitled for issuance of Form ‘C’ as regards HSD as
claimed by it.
46. Yet another aspect of the matter being the HSD is found
consumed for purposes other than mining i.e. for purpose of re-sale to
mining trucks transporters/private owners and therefore in any case, it
is not used for mining purpose.
The order dated 06.02.2018, a reasoned order has recorded that
the dealer M/s. Vedanta is reselling HSD purchased through inter-State
against declaration of Form ‘C’ to private truck owners and instead of
taking amount in cash, is adjusting the amount in deducting monthly
transportation bills. It is not in dispute that the goods purchased i.e.
HSD at concessional rate is utilized for being used by private truck
owners to transporters to transport to mining from several plants in
Goa to processing plant at Amona Jetty.
The authority has observed that it is a case of re-sale of HSD
falsely claiming as being used in mining. Worth it to note that the
impugned order has permitted a part of diesel to be used by the dealer
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M/s. Vedanta Limited for trucks owned by the Company and for the
machinery used for mining and, therefore, have permitted the claim of
use of diesel in mining activity only at Codli mines and allowed the
declaration Form ‘C’.
47. In our considered opinion, none of the parties have paid
attention to the goods for which the registration is granted, namely,
HSD and petrol, which is used for running and maintenance of
machinery for mining and processing iron ore for sale i.e. restricting its
use to the machineries and had it been a case that the registration was
specifically obtained for the vehicles, the certificate could have said so
but, it only restricts the HSD and petrol used for running and
maintenance of the machinery and it is not possible to segregate the
two terms running and maintenance as they are used qua ‘machinery
for mining and for processing of iron ore for sale’ indicating that the
petrol or diesel which is utilized for operation of the machinery for
mining and processing of iron ore for sale, would be entitled for the
benefit of concessional rate and not otherwise.
It is for this reason, since we do not find that the Petitioner in
Writ Petition no. 876 of 2017 is entitled for the benefit of Form ‘C’ as
regards HSD with its specific restricted use being permitted in the
certificate of registration, on factual aspects, we refuse to issue
direction for issuance of Form ‘C’ as regards the HSD included in its
registration certificate w.e.f. 21.08.1994. We agree with the
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submissions of the learned Advocate General and refuse the relief to
the Petitioner.
48. As far as Writ Petition in Sesa Goa Limited is concerned, we find
the certificate for registration is for ‘goods’ ‘fuel’, which include HSD
but since we find that the application of the company is refused only on
the ground that in the new regime, the Company is not entitled for
issuance to Form ‘C’ and since we have already answered the above
issue as first part of our judgment, we quash and set aside the Order
dated 29.01.2018 and direct the authority to consider the case of the
Petitioner for issuance of declaration without this obstacle standing in
its way but on considering on merits, we expect the order to be passed
within a period of eight weeks from the date of receipt of Order.
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