Chattisgarh High Court

Aegis Beverages Pvt. Ltd vs State Of Chhattisgarh on 11 May, 2022

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                                                                              AFR

               HIGH COURT OF CHHATTISGARH, BILASPUR
                         WPT No.134 of 2019
                       Reserved on 26-04-2022
                      Pronounced on 11-05-2022

      Aegis Beverages Pvt. Ltd. A Company Incorporated Under The
       Companies Act, 1956, Having Its Registered Office At 23 Sarat Bose
       Road, Annapurna Building, Flat No. 3a, 3rd Floor, Kolkata- 700020
       Having Unit At Plot No. 41, Sector-B Sirgitti Industrial Growth Centre,
       Post Sirgitti, Bilaspur-495004 Through Its Authorised Signatory,
       Prakash Kumar Sahu Chhattisgarh.

                                                                    ---- Petitioner

                                      Versus

     1. State Of Chhattisgarh Finance Department (Tax Division) Through
        Principal Secretary Department Of Finance, Mahanadi Bhawan,
        Mantralaya, Atal Nagar, Nawa Raipur, Chhattisgarh., District : Raipur,
        Chhattisgarh

     2. The Commissioner Commercial Taxes Department, Commercial Tax-
        Gst Bhawan, North Block, Sector-19, Atal Nagar, Nawa Raipur,
        District Raipur, Chhattisgarh., District : Raipur, Chhattisgarh

     3. The Deputy Commissioner Commercial Taxes Department,
        Commercial Tax-Gst Bhawan, North Block, Sector-19, Atal Nagar,
        Nawa Raipur, District Raipur, Chhattisgarh., District : Raipur,
        Chhattisgarh

     4. Union Of India Ministry Of Finance (Department Of Revenue)
        Through Joint Secretary (Revenue) Nirman Bhawan, New Delhi.

                                                                ---- Respondents

Present:-

Shri Ashish Surana appears along with Shri Chetan Singh Chouhan, counsel for the petitioner.

Shri Sandeep Dubey, Deputy Advocate General and Ms. Richa Shukla, Deputy Government Advocate for the State/respondents No.1 to 3. Shri Bhupendra Pandey, Central Government counsel for Union of India/respondent No.4.

Single Bench: Hon'ble Shri Justice Sanjay S. Agrawal C.A.V. Order

1. Challenge to this petition is the communication/letter dated

26-07-2019 (Annexure P-1) issued by the respondent No.2-Commissioner-

Commercial Taxes Department, Commercial Tax-GST Bhawan, Raipur,

Chhattisgarh, whereby the petitioner has been denied issuance of "C" form,

which are required for procurement of Extra Neutral Alcohol (In short "ENA")

and Malt Spirit utilized for manufacturing of Indian Made Foreign Liquor (In

short "IMFL") used for human consumption, owing to which, the petitioner

has been deprived of the concessional rate of tax levied under the Central

Sales Tax Act, 1956 (hereinafter referred to as "CST Act").

2. Learned counsel for the petitioner submits that the petitioner is a

registered dealer under the CST Act and the Chhattisgarh Value Added Tax

Act, 2005 (hereinafter referred to as "VAT Act") and is also a License Holder

under the State Excise Department, whereby the petitioner has been issued

the license of foreign liquor-9 and authorizing him to manufacture the IMFL.

It is contended that the material required for manufacturing of IMFL was

ENA and Malt Spirit and the petitioner has valid permit to purchase the

same. Further contention of learned counsel for the petitioner is that the

petitioner was being issued "C" form till 30-06-2017 for the goods covered

under Section 2(d) of the CST Act, [as applicable up to 30-06-2017], so as

to get the concession of the levy of tax at the rate of 2% by the respondent

department. However, with the enforcement of the Goods and Services Tax

Act, 2017 (hereinafter referred to as "GST Act"), the respondents have

denied the facility of concessional tax by declining to issue "C" form as

required under the CST Act. It is contended further that as the ENA and

Malt Spirit are used for human consumption, therefore, the petitioner is

entitled for "C" form on purchase of such goods. However, owing to

amendment in the definition of "Goods" provided under Section 2(d) of the

CST Act, which came into force with effect from 05-05-2017 by virtue of

Taxation Laws Amendment Act, 2017, dated 04-05-2017, the petitioner has

been denied the said "C" form. While inviting attention to Section 9(2) of the

GST Act, it is contended further that the Alcoholic Liquor used for human

consumption has been kept away from the ambit of the levy of GST and

therefore, despite amendment in the definition of "Goods" under CST Act, it

still covers Alcoholic Liquor, which is used for human consumption for inter-

state purchase of it. The respondent authorities have further erred in

declining the petitioner for issuance of said "C" form under the impugned

communication/letter dated 26-07-2019 (Annexure P-1), which is, therefore,

liable to be set aside, by entitling the petitioner for the same. In support of

his contentions, learned counsel for the petitioner has placed his reliance

upon the decision rendered by the Coordinate Bench of this Court in the

matter of Shree Raipur Cement Plant vs. State of Chhattisgarh and

others, decided on 18-05-2018 in Writ Petition (T)No.83 of 2018.

3. In reply, it is stated by learned counsel appearing for the Respondents

No.1 to 3/State that prior to the amendment in the definition of "Goods", all

the materials, articles and commodities etc. were included under the

definition of "Goods" as provided under clause (d) of Section 2 of the CST

Act with exception of newspaper, actionable claims, stocks, shares and

securities and therefore, the alcohol of any character was also covered

under the said definition. But, owing to amendment in the definition of

"Goods", alcohol of specified nature, i.e. Alcoholic Liquor for human

consumption" alone is covered under it and as the alleged raw materials

used for manufacturing of IMFL do not fall within the ambit of said definition,

the petitioner has, therefore, rightly been denied the said "C" form under

letter impugned dated 26-07-2019 (Annexure P-1). In support of his

contentions, learned State counsel has placed his reliance upon the

decision rendered by the Constitutional Bench of the Supreme Court in the

matter of Synthetics and Chemicals Ltd and others vs. State of U.P.

and others, reported in (1990) 1 SCC 109.

4. I have heard learned counsel for the parties and perused the entire

papers annexed with this petition carefully.

5. Before adverting to the aforesaid contention of the parties, it is

necessary to examine the relevant provision of the CST Act, i.e. Section

2(d) of it, which provides the definition of "Goods" prior to and subsequent to

its amendment.

6. Prior to its amendment, it reads as under:

Section 2(d): "Goods" includes all materials, articles, commodities and all other kinds of movable property, but does not include newspapers, actionable claims, stocks, shares and securities."

And, subsequent to its amendment, which came into force with effect

from 05-05-2017, Section 2(d) of the CST Act provides as under:-

"Goods means-

      (i)     petroleum crude;

      (ii)    high speed diesel;

      (iii)   motor spirit (commonly known as petrol);

      (iv)    natural gas;

      (v)     aviation turbine fuel; and

      (vi)    alcoholic liquor for human consumption

7. A bare perusal and comparison of the aforesaid provision would show

that prior to amendment, all the materials, articles and commodities etc.

were included under the definition of "Goods" with exception of newspaper,

actionable claims, stocks, shares and securities and therefore, by virtue of

the said definition, the alcohol of any character was also covered under the

definition of "Goods". However, by virtue of said amendment in the definition

of "Goods" under Section 2(d) of the CST Act, alcohol of specified nature,

i.e. "alcoholic liquor for human consumption" alone is covered under it. In

view thereof, prior to 30-06-2017, "C" Form was being issued by the

respondent authorities as the ENA and Malt Spirit were covered under the

definition of "Goods" under Section 2(d) of the CST Act, but, since there was

an amendment and according to it, only the "alcoholic liquor for human

consumption" alone was covered under the said definition, as such, ENA

and Rectified Spirit are not fit for human consumption in its original form,

therefore, "C" Form has rightly been denied by the Respondent authorities.

8. At this juncture, it is to be noted the principles laid down by the

Supreme Court in the matter of Synthetics and Chemicals Ltd and others

vs. State of U.P. and others (supra), wherein it has been held that the

Rectified Spirit and the ENA are not the alcoholic liquor for human

consumption. Paras 95 to 97 of the aforesaid judgment are relevant for the

purpose, which read as under:-

95. It was also contended that the State ultimately falls back on the consideration for parting with the privilege to sell alcoholic liquors which has been the basis of series of decisions of this Court based on English and American decisions but according to the learned counsel for the petitioners this doctrine of privilege and consideration for sale of privilege also could be available to the State only in respect of alcohol or alcoholic liquors which are for human consumption. According to the learned counsel by merely widening the definition of intoxicating liquors in respective excise laws enacted by the State the ambit of authority of taxation could not be enlarged by the State Legislature when in List II Item 51 the words used are Alcoholic liquors for human consumption. Entry 84 in List I reads:

"84. Duties of excise on tobacco and other goods manufactured or produced in India except--

(a) alcoholic liquors for human consumption.

(b) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in sub- paragraph (b) of this entry."

96. Entry 51 in List II reads:

"51. Duties of excise on the following goods manufactured or produced in the State and countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in

India:

(a) alcoholic liquors for human consumption;

(b) opium, Indian hemp and other narcotic drugs and narcotics;

but not including medicinal and toilet preparations containing alcohol or any substance included in sub- paragraph (b) of this entry."

97. A comparison of the language of these two entries clearly demonstrates that the powers of taxation on alcoholic liquors have been based on the way in which they are used as admittedly alcoholic liquor is a very wide term and may include variety of types of alcoholic liquors but our Constitution makers distributed them into two heads:

(a) for human consumption

(b) other than for human consumption

Alcoholic liquors which are for human consumption were put in Entry 51 List II authorizing the State Legislature to levy tax on them whereas alcoholic liquors other than for human consumption have been left to the Central Legislature under Entry 84 for levy of duty of excise. This scheme of these two entries in List I and II is clear enough to indicate the line of demarcation for purposes of taxation of alcoholic liquors. What has been excluded in Entry 84 has specifically been put within the authority of the State for purposes of taxation."

9. It is, thus evident, based upon the aforesaid principles, the ENA and

the Malt Spirit in its original form are not the alcoholic liquor fit for human

consumption and would therefore, not come within the amended definition

of clause(d) of Section 2 of the CST Act and the respondent authorities

have, therefore, rightly refused to issue the "C" Form, as claimed by the

petitioner herein.

10. As observed hereinabove, based upon the principles laid down by the

Constitutional Bench of the Supreme Court in the matter of Synthetics and

Chemicals Ltd and others vs. State of U.P. and others (supra), the ENA

and Malt Spirit are not the alcoholic liquor, which is fit for human

consumption in its original form. Therefore, the provision prescribed under

sub-section(1) & (2) of Section 9 of the GST Act as tried to be implemented

herein by learned counsel for the petitioner, would, however not be

applicable. It is necessary to be noted at this juncture, sub-sections (1) & (2)

of Section 9 of the said GST Act, which provide as under:-

Section 9 - LEVY AND COLLECTION: (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under on the value determined under section 15 and at such rates, not exceeding twenty per cent, as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person.

(2) The central tax on the supply of 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 the recommendations of the Council.

      (3)    ---- xxx ---- xxx ---

      (4)    ---- xxx ---- xxx ---

      (5)    ---- xxx ---- xxx ---

11. Sub-section(1) of the aforesaid provision states that subject to the

provisions of sub-section(2), there shall be levied a tax called the central

goods and services tax on all intra-State supplies of goods or services or

both, except on the supply of alcoholic liquor for human consumption. Since

the ENA and Malt Spirit in its original form are not found to be fit for human

consumption, as observed hereinabove, therefore, no reliance could be

placed on it. In so far as the applicability of sub-section(2) of the aforesaid

provision is concerned, the same is, however, also not applicable as the

notification required to be issued under it, is only with regard to the supply of

items mentioned in clauses (i to v) of the amended provision of clause(d) of

Section 2 of the CST Act and as the ENA and Malt Spirit are not found to be

alcoholic liquor fit for human consumption, therefore, it would not fall in any

of the said categories and, no notification as such, is therefore, required to

be issued.

12. As far as the principles laid down by the Coordinate Bench of this

Court in the matter of Shree Raipur Cement Plant vs. State of

Chhattisgarh and others (supra), is concerned, as relied upon by learned

counsel for the petitioner, the same is, however, noted to be distinguishable

from the facts involved herein. As in the said matter, the question, which

was taken into consideration was, as to whether the petitioner was entitled

for issuance of "C" Form under the CST Act with regard to the item

mentioned in clause(ii) of Section 2(d) of the amended Act of CST Act and

for which, notification bringing the said item i.e."High Speed Diesel" was

required to be issued, in strict compliance of sub-section(2) of Section 9 of

the GST Act, 2017 and in absence of issuance of such a notification, it was

held that the petitioner cannot be denied for issuance of "C" Form under the

CST Act with regard to the item contained in clause(ii) of the amended

provision of clause(d) of Section 2 of the CST Act. The principles laid down

in the said matter, therefore, clearly distinguishable from the facts involved

herein and as such, no reliance could be placed upon it.

13. In view of the aforesaid background, I do not find any substance in

this petition, so as to call for any interference in the alleged

communication/letter dated 26-07-2019 (Annexure P-1) declining the

petitioner for issuance of "C" Form under the CST Act for the procurement

of ENA and Malt Spirit utilized for manufacturing of IMFL.