Piramal Glass Pvt. Ltd vs State Of Gujarat
2021 Latest Caselaw 16972 Guj

     C/SCA/15774/2020                                ORDER DATED: 28/10/2021




            IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

             R/SPECIAL CIVIL APPLICATION NO. 15774 of 2020

                                 With
             R/SPECIAL CIVIL APPLICATION NO. 2139 of 2021
                                 With
             R/SPECIAL CIVIL APPLICATION NO. 3536 of 2021
                                 With
             R/SPECIAL CIVIL APPLICATION NO. 13100 of 2020
==========================================================
                        PIRAMAL GLASS PVT. LTD.
                                 Versus
                           STATE OF GUJARAT
==========================================================
Appearance:
UCHIT N SHETH(7336) for the Petitioner(s) No. 1,2
ADVANCE COPY SERVED TO GOVERNMENT PLEADER/PP(99) for the
Respondent(s) No. 1
NOTICE SERVED(4) for the Respondent(s) No. 1,2,3
==========================================================

 CORAM:HONOURABLE MS. JUSTICE SONIA GOKANI
       and
       HONOURABLE MR. JUSTICE HEMANT M.
       PRACHCHHAK

                              Date : 28/10/2021

                       COMMON ORAL ORDER

(PER : HONOURABLE MS. JUSTICE SONIA GOKANI)

1. By way of these petitions, the

petitioners are seeking following reliefs:

"26...

A. This Hon'ble Court may be pleased to issue a writ of mandamus or writ in the nature of mandamus or any other appropriate writ or order directing the Respondents to forthwith activate registration certificate of the Petitioners on the online portal

C/SCA/15774/2020 ORDER DATED: 28/10/2021

under the CST Act;

B. This Hon'ble Court may be pleased to issue a writ of mandamus or writ in the nature of mandamus or any other appropriate writ or order directing the Respondents to allow the Petitioners to file returns and generate C form declarations under the CST Act for purchase of natural gas for use in manufacture of finished products;

C. Pending notice, admission and final hearing of this petition, this Hon'ble Court may be pleased to direct the Respondents to forthwith the Respondents to forthwith activate registration certificate of the Petitioners on the online portal under the CST Act and allow the Petitioners to file returns and generate C form declarations under the CST Act for purchase of natural gas for use in manufacture of finished products;

D. Ex parte ad interim relief in terms of prayer C may kindly be granted;

E. Such further relief(s) as deemed fit in the facts and circumstances of the case may kindly be granted in the interest of justice for which act of kindness your petitioners shall forever pray."

2. The petitioners are before this Court

raising an identical question of law which

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now stands concluded with the decision of

the Apex Court rendered in case of The

Commissioner of Commercial taxes & ANR vs.

The Ramco Cements Ltd as well as with the

decision of this Court in case of Gaurav

Contracts Company vs. State of Gujarat

passed in Special Civil Application

Nos.6348 and 5353 of 2019.

2.1         Relevant findings and observations

of this Court in case of Gaurav Contracts

Company vs. State of Gujarat (supra) are as

follow:

           "8.The     petitioners   by   separate    letters     dated      17.12.2018

addressed to the Central Sales Tax Officer requested him to incorporate "High Speed Diesel" in the Central Sales Tax Registration Certificate for the purpose of mining. It is further stated therein that they have made on-line applications dated 13.12.2018 and that the original registration certificates have been given along with the application dated 6.12.2018. A perusal of the snapshot of the commodity amendment details shows that against commodity type goods in mining under the heading commodity name, High Speed Diesel has been inserted and the

C/SCA/15774/2020 ORDER DATED: 28/10/2021

effective date is 24.10.2018. By the impugned letters dated 27.2.2019, the second respondent informed the petitioners that they had made applications for incorporation of HSD and LDO as commodity in the CST for mining activity. Guidance is sought for from the Deputy Commissioner of Commercial Tax as to whether HSD and LDO can be incorporated in CST commodity. He has further stated that after guidance is received, action will be taken for amendment and that the petitioner's online applications has been approved through oversight, which is being kept in abeyance. After guidance is received, HSD and LDO shall be incorporated in CST Commodity.

9. In the aforesaid backdrop three questions arise for consideration:

(i) Whether the authority under section 7 of the CST Act has any power to review or keep in abeyance an order passed by it on the ground of seeking guidance from the superior authority?

(ii) Whether upon the coming into force of the Taxation Laws (Amendment) Act, 2017 whereby the definition of goods in the CST Act came to be amended, CST Registrations of dealers other than those dealing in the specified goods would automatically become inactive? and

(iii) Whether a dealer who is registered under the Goods and Services Tax Act cannot also be registered under the CST Act, when the CST Act requires a person who deals in or claims usage of the goods specified thereunder to be registered under that Act for getting the benefit of reduced rate of tax under section 8 thereof?

10. Dealing with the first question, it may be necessary to refer to the provisions of section 7 of the CST Act, which to the extent the same are relevant for the present purpose, read as under:-

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"7. Registration of dealers.--(1) Every dealer liable to pay tax under this Act shall, within such time as may be prescribed for the purpose, make an application for registration under this Act to such authority in the appropriate State as the Central Government may, by general or special order, specify, and every such application shall contain such particulars as may be prescribed.

(2) 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, may, notwithstanding that he is not liable to pay tax under this Act, apply for registration under this Act to the authority referred to in sub section (1), and every such application shall contain such particulars as may be prescribed. Explanation.-For the purposes of this sub-section, a dealer shall be deemed to be liable to pay tax under the sales tax law at the appropriate State notwithstanding that under such law a sale or purchase made by him is exempt from tax or a refund or rebate of tax is admissible in respect thereof,

(3) xxxx

(4) A certificate of registration granted under this action may -

(a) either on the application of the dealer to whom it has been granted, or, where no such application has been made, after due notice to the dealer, be amended by the authority granting it if he is satisfied that by reason of the registered dealer having changed the name, place or nature of his business or the class or classes of goods in which he carries on business or for any other reason the certificate of registration granted to him requires to be amended; or

C/SCA/15774/2020 ORDER DATED: 28/10/2021

(b) be cancelled by the authority granting it where he is satisfied, after due notice to the dealer to whom it has been granted, that he has ceased to carry on business or has ceased to exist, or has failed without sufficient cause, to comply with an order under sub- section (3-A) or with the provisions of sub-section (3-C) or sub- section (3-E) or has failed to pay any tax or penalty payable under this Act or in the case of a dealer registered under subsection (2) has ceased to be liable to pay tax under the sales tax law of the appropriate State or for any other sufficient reason."

10.1 Thus, sub-section (1) of section 7 of the Act requires a dealer seeking registration under the CST Act to make an application to such authority in the appropriate State as the Central Government may, by general or special order, specify. Sub-section (4) thereof enables the authority which has granted such registration to amend the certificate of registration.

10.2 Rule 3 of the Central Sales Tax (Registration and Turnover) Rules, 1957 (hereinafter referred to as "the rules") provides for a dealer to make an application under section 7 of the CST Act to the notified authority. It appears that the second respondent State Tax Officer is the notified authority specified by the Central Government to decide applications for registration under section 7 of the CST Act. Therefore, it is for that authority to decide whether or not a dealer is required to be registered under the CST Act or whether or not to make an amendment in an existing certificate as contemplated under clause (a) of sub-section (4) of section 7 of the CST Act. The officer who is notified as an authority by the Central Government, is required to act independently while exercising powers under section 7 of the CST Act, and cannot refuse to decide an application on the ground that he wants to seek the guidance of the higher authority. The authority in which powers are vested under section 7 of the

C/SCA/15774/2020 ORDER DATED: 28/10/2021

CST Act should be competent enough to exercise the powers vested in it on its own without having to seek guidance from anyone, otherwise it reflects on the lack of competence on the part of such authority in discharging the powers vested in it by the Central Government. Therefore, the submission advanced on behalf of the respondents that the whole objective behind keeping the order of approval in abeyance is to ensure that nothing contrary to the statute is permitted and if need arises, the higher authority may look into the whole issue and resolve the same in accordance with Iaw, flies in the face of the provisions of section 7 of the CST Act, and reflects lack of competence on the part of the concerned officer exercising powers vested in him under section 7 of the CST Act. In the opinion of this court, every officer who is notified as an authority under any enactment, while exercising powers specifically vested in him under such enactment, is required to act independently in the discharge of his duties and cannot refuse to exercise the powers vested in him on the ground of seeking guidance from a higher authority.

10.3 Another aspect of the matter is that on a plain reading of section 7 of the CST Act, there is nothing therein to show that any power is vested in the authority to review an order passed by it whereby it has granted registration or amended a registration certificate or to keep such order in abeyance. In the facts of the present case, it is an admitted position that the second respondent firstly granted amendment of the registration certificates of the petitioners by including High Speed Diesel as commodity; and thereafter has kept them in abeyance for the purpose of obtaining guidance of the higher authority. In the considered opinion of this court, there being no power vested in the authority to review its order under section 7 of the CST Act or to keep such order in abeyance, the stand of the second respondent in the impugned letters dated 27.2.2019 informing the petitioners that their on-line applications had been approved

C/SCA/15774/2020 ORDER DATED: 28/10/2021

through oversight and that High Speed Diesel would be included in CST commodity after obtaining guidance of the higher authority cannot be countenanced even for a moment. The impugned letters, therefore, cannot be sustained.

11. Adverting to the second question as to whether upon the coming into force of the Taxation Laws (Amendment) Act, 2017 whereby the definition of goods in the CST Act came to be amended, CST registrations of dealers other than those dealing in the specified goods would automatically become inactive; sub- section (4)(b) and sub-section (5) of section 7 of the CST Act provide for the manner in which a registration certificate granted under that Act can be cancelled. There is no provision in the CST Act which provides that if a dealer stops dealing in a particular commodity or if the commodity in which he is dealing ceases to be goods within the meaning of such expression as envisaged under section 2(d) of that Act, the registration certificate would automatically stand cancelled or would become inactive. In fact there is no concept of an inactive registration. Moreover, the Taxation Laws (Amendment) Act, 2017, whereby the definition of goods under section 2(d) of the CST Act came to be amended and came to be restricted to the commodities specified thereunder also does not provide for automatic cancellation of the registration certificates of dealers who were not dealing in the commodities specified in the amended section 2(d).

11.1 It may be noted that pursuant to the coming into force of the Goods and Services Tax Acts, the Gujarat Value Added Tax Act, 2003 (hereinafter referred to as the "GVAT ACT") came to be amended and by virtue of section 27A of that Act, it was provided that all registered dealers not dealing with goods defined in section 2(13) shall be deemed to be deregistered from the date of coming into force of the Gujarat Value Added Tax (Amendment) Act, 2017 and their registration certificates shall stand cancelled.

C/SCA/15774/2020 ORDER DATED: 28/10/2021

Thus, the GVAT Act provides for automatic deregistration of dealers not dealing with goods denied in section 2(13) thereof, whereas no such provision providing for automatic deregistration of dealers under the CST Act has been made in the Taxation Laws (Amendment) Act, 2017 whereby amendments were made in the Central Sales Tax Act. It is therefore clear that when the legislature wants to provide for automatic cancellation of the registration granted under an enactment, it is expressly provided in such enactment. Since no such provision has been made in the CST Act, no such intention can be read into it and consequently, upon the coming into force of the Taxation Laws (Amendment) Act, 2017 whereby the definition of goods in the CST Act came to be amended, CST registrations of dealers other than those dealing in the specified commodities would not become inactive automatically.

12. Proceeding to the third question, namely, whether a dealer who is registered under the Goods and Services Tax Act cannot be registered under the CST Act, though the CST Act requires the person who deals in or claims usage of the goods specified thereunder to be registered under that Act for getting the benefit of reduced rate of tax under section 8 thereof, upon the coming into force of the Goods and Services enactments, dealers were required to obtain registration under the respective Goods and Services Tax Act for dealing in the goods covered under those Acts. Since for the present, goods other than the goods mentioned in section 2(d) of the CST Act as amended by section 13 of the Taxation Laws (Amendment) Act, 2017 are not covered by the GST Act, the CST Act has been amended to restrict the definition of goods to those commodities which for the present are not covered by the GST Act. Evidently therefore, dealers dealing in or claiming usage of commodities falling within the ambit of the definition of "goods" as per the amended section 2(d) of CST Act were required to be registered under the CST Act to

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get the benefit of reduced rate of tax under section 8 thereof. Such dealers may also be dealing in commodities other than those falling within the ambit of the amended section 2(d) of the CST Act and would, therefore, be required to be registered under the respective GST Act also. Therefore, the contention that as the petitioners are dealers who are registered under the GST Act, they cannot be registered under the CST Act, does not merit acceptance. If a dealer is dealing in goods falling within the ambit of the GST Act as well as the CST Act, it is always permissible for him to hold separate registrations under both the Acts in respect of such goods. Therefore, a dealer who is registered under the GST Act can also be registered under the CST Act in respect of commodities which fall within the ambit of the expression "goods" as defined under section 2(d) thereof for getting the benefit of reduced rate of tax under section 8 of the CST Act.

13. In the light of the above discussion, the petitions succeed and are accordingly, allowed. The impugned letters dated 27.2.2019 issued by the second respondent are hereby quashed and set aside. Rule is made absolute accordingly, with costs."

2.2 The Apex Court in case of Commissioner

of Commercial taxes & ANR vs. The Ramco

Cements Ltd (supra) passed the following

order:

"Heard learned counsel for the parties. at length.

We are in agreement with the view taken by the Punjab and Haryana High Court in 'Carpo Power Limited vs. State of Haryana & Ors.', which has already been upheld by this Court by

C/SCA/15774/2020 ORDER DATED: 28/10/2021

dismissing Special Leave Petition (C) No. 20572 of 2018 vide order dated 13th August, 2018.

The High Court of Jharkhand at Ranchi has also dealt with the same issue in Tata Steel Limited vs. State of Jharkhand' reported in 2019 SCC online Jharkhand 1255. This judgment, in our opinion, is exhaustive and answers all the points urged before us by the petitioner (s) in the instant special leave petitions.

It is brought to our notice that nine High. Courts have taken the same view. Even the decision of the High Court of Rajasthan has been affirmed by this Court by dismissal of Special Leave Petition (C) No.27529 of 2019 and connected cases vide order dated 3rd February, 2020.

Considering the consistent view of nine High including dismissal of special leave and Courts, petitions by different Bench of this Court, being satisfied about the exposition on the matters in issue by the High Court of Madras vide impugned judgment and decline to petitions. order being interfere in a possible view, these special we leave

Notably, after the decision of Punjab and Haryana High Court even the Union of India has chosen to act upon the said decision by issuing office Memorandum directing all the dated 1st November, States/Union 2018 Territories and to follow the view taken by the Punjab and Haryana High Court.

Hence, we see no reason to reopen the entire matter. The special leave petitions are accordingly dismissed.

Consequently, all pending applications shall also stand disposed of."

      C/SCA/15774/2020                                   ORDER DATED: 28/10/2021




3.     According             to    the            learned        advocate,

Mr.Uchit                Sheth         appearing                for              the

petitioners, the issue does not survive so

far as these petitioners are concerned and

therefore,              he   seeks        withdrawal              of       these

petitions.



4.     These petitions are disposed of in wake

of the decision of the Apex Court. In the

event of any difficulties, the petitioners

shall be at liberty to approach this Court.

Sd/-

(SONIA GOKANI, J)

Sd/-

(HEMANT M. PRACHCHHAK,J) M.M.MIRZA