Petitioner Entitled to C-Form under CST in respect of High Speed Diesel as Central Government didn’t notify it under CGST: Chhattisgarh HC [Read Order]

In Shree Raipur Cement Plant vs. State of Chhattisgarh Finance Department & Ors., the Chhattisgarh High Court held that the petitioner is entitled to be issued C Form under the Central Sales Tax Act, 1956 read with the Central Sales Tax (Registration and Turnover) Rules, 1957 in respect of high speed diesel purchased by it in the course of inter-State trade and used by it in the course of manufacturing of cement, after the promulgation of the Central Goods and Services Tax Act, 2017 with effect from 1-7-2017

In the instant case, the Petitioner is a registered company under the Central Sales Tax (CST) Act, 1956 read with the Central Sales Tax (Registration and Turnover) Rules, 1957. It manufactures cement from mining limestone. For using the mining equipments, the petitioner requires High Speed Diesel. The petitioner Company was permitted to purchase goods in the course of inter-State trade at the rates specified in Section 8(1) of the CST Act, 1956.

With the introduction of the Central Goods and Services Tax Act, 2017 (CGST), the petitioner has also been registered under the CGST Act, 2017 with effect from 1-7-2017. However, from the introduction of CGST, the Revenue stopped issuing C Form to the Petitioner. If the registered dealer fails to procure C Form from the State and thereafter, do not provide C Form to the supplier/seller of another State, then the registered dealer is being exposed to high tax rate imposable on inter-State goods purchases which is much higher as compared to the 2% rate of tax prescribed under the CST. If the declaration C Form is not provided to the sellers of other States, this will lead to increase in the cost of goods being purchased.

The Counsel for the Petitioner argued that the definition of Section 2(d) of the CST Act, 1956 has been amended and High-Speed Diesel has also been brought specifically within the definition of “goods” under the CST Act, 1956.  He pointed out that Section 9(2) of the CGST Act, 2017 clearly provides that the GST on the supply of high speed diesel, including other five goods, shall be levied with effect from such date as may be notified on the recommendations of the Council. The GST Council till this date, has not notified high speed diesel bringing it under the purview of the CGST Act, 2017. Therefore, according to the Counsel, the petitioner was entitled for issuance of C-Form under the CST Act, 1956.

The Counsel for the respondents contended that the petitioner had concededly migrated into the GST regime from the CST regime by getting registration under the CGST Act, 2017 with effect from 1-7-2017, therefore, the petitioner’s registration under the CST Act, 1956 would automatically stand cancelled with effect from 1-7-2017 and as such, he was not entitled for issuance of C-Form. \

The bench comprising of Justice Sanjay K. Agrawal found that the CGST Act, 2017 has not by its repealing provision repealed the CST Act, 1956 which is vivid from the focused perusal of Section 174 of the CGST Act, 2017 and the provisions of the CST Act, 1956 are still applicable for its inter-State trade even after the roll-out of the GST Act confining to “goods” defined in Section 2(d) of the CST Act, 1956. The Judge also found that the Petitioner was having a valid registration certificate that enable him to avail the C-Form.

“The petitioner’s registration certificate under the CST Act, 1956 is still valid for the goods defined in Section 2(d) of the CST Act, 1956, including high speed diesel, and the petitioner is entitled for issuance of C-Form for inter-State purchase / sale of high speed diesel against the said C-Form. Accordingly, the respondents shall be liable and are directed to issue C-Form to the petitioner in respect of high speed diesel to be purchased by the petitioner and used in the course of manufacture of cement” observed the Court.