Ashahi India Glass Ltd vs State Of Gujarat
2022 Latest Caselaw 1452 Guj

      C/SCA/467/2022                                  ORDER DATED: 09/02/2022




            IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

              R/SPECIAL CIVIL APPLICATION NO. 467 of 2022

==========================================================
                         ASHAHI INDIA GLASS LTD.
                                  Versus
                           STATE OF GUJARAT
==========================================================
Appearance:
MR UCHIT N SHETH(7336) for the Petitioner(s) No. 1
MR UTKARSH SHARMA, AGP for the Respondents
NOTICE SERVED for the Respondent(s) No. 1,2
==========================================================

    CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALA
          and
          HONOURABLE MS. JUSTICE NISHA M. THAKORE

                              Date : 09/02/2022

                                ORAL ORDER

(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)

1 By this writ application under Article 226 of the Constitution of India, the writ applicant - a Public Limited Company has prayed for the following reliefs:

"A. This Hon'ble Court may be pleased to issue a writ of mandamus or a writ in nature of mandamus or any other appropriate to forthwith grant refund of tax amount of Rs.1,87,69,739 under the CST Act collected from the petitioner and deposited by the seller along with appropriate interest on such refund amount;

B. Pending notice, admission and final hearing of this petition, this Hon'ble Court may be pleased to direct the learned respondents to forthwith grant refund of tax amount of Rs.1,87,739 under the CST Act collected from the petitioner and deposited by the seller along with appropriate interest on such refund amount;

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

D. Such further relief(s) as deemed fit in the facts and circumstances of the case may kindly be granted in the interest of

C/SCA/467/2022 ORDER DATED: 09/02/2022

justice for which act of kindness your petitioner shall forever pray."

2 We have heard Mr. Uchit Sheth, the learned counsel appearing for the writ applicant and Mr. Utkarsh Sharma, the learned A.G.P. appearing for the respondents. The affidavit-in-reply filed on behalf of the respondents is ordered to be taken on record.

3 The principal argument of Mr. Sheth is that the respondents have wrongly declined to refund the amount of excess tax collected and deposited with them despite the fact that the High Court of Bombay in the case of the writ applicant itself in the Writ Petition No.2923 of 2019 decided on 17th December 2020 has directed the respondents to issue necessary "C" Forms to the writ applicant. The order passed by the Bombay High Court upon which strong reliance has been placed by the learned counsel appearing for the writ applicant reads thus:

"20.1. Thus, petitioner has been denied 'C' forms on the ground that natural gas purchased by it in the course of inter-state sale is used for manufacturing of float glass which is not covered by the definition of goods under section 2(d) of the CST Act.

21. In Carpo Power Limited Vs. State of Haryana, 2018 (12) GSTL 248 (P&H), Punjab & Haryana High Court dealt with the challenge made by the petitioner to refusal of the respondents to issue 'C' forms in respect of natural gas purchased by it in the course of inter-state sale and used by it for generation of electricity. After referring to the definition of 'goods' in section 2(d) as well as the provisions of sections 7 and 8, it was held as under:-

"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 tele-

communications network or mining or in generation or distribution of electricity or any other form of power would

C/SCA/467/2022 ORDER DATED: 09/02/2022

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."

21.1. While allowing the writ petition, it was held that the respondents were liable to issue 'C' forms in respect of the natural gas purchased by the petitioner from Gujarat and used in the generation or distribution of electricity at its power plants in Haryana.

22. As already noticed above, before the Jharkhand High Court similar question was raised following denial of 'C' forms. Some of the petitioners were engaged in manufacturing process, some in mining activities and some others in power generation. They had purchased high speed diesel by way of inter-state sale which is used in the manufacturing, mining and generation of end product goods. Admittedly, their end products do not come within the definition of 'goods' under section 2(d) of the CST Act. In that context, Jharkhand High Court referred to the case of Printers (Mysore) Limited (supra) and held that the reasonings given therein were fully applicable. 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. Further, registration of a dealer under section 7(2) of the CST Act is not subject to any liability of the dealer to pay tax. Jharkhand High Court approved the view taken by the Punjab & Haryana High Court in Carpo Power Limited (supra). Jharkhand High Court, therefore, affirmed the interim orders whereby directions were issued for issuance of 'C' forms to the petitioners.

23. It may be mentioned that against the decision of Punjab & Haryana High Court in Carpo Power Limited (supra), State had filed S.L.P. before the Supreme Court but the S.L.P. was dismissed by the Supreme Court by holding that there was no legal and valid ground for interference.

24. In an identical case before us i.e., Writ Petition (St.) No.93160 of 2020 (M/s. Tata Steel BSL Limited Vs. Union of India), we had passed an interim order on 01.10.2020 by following the decision of the Punjab & Haryana High Court in Carpo Power Limited (supra). We have held as under:-

" Heard Mr. Nankani, learned senior counsel for the petitioners

C/SCA/467/2022 ORDER DATED: 09/02/2022

and Ms. Vyas, learned AGP for respondent Nos.2, 3 and 4. We have also heard Mr. Mishra, learned counsel for respondent Nos.5.

2. On 25.09.2020, Ms. Vyas, learned AGP for the State sought time to obtain instructions on the prayer of the petitioner for stay of impugned order dated 05.03.2020.

3. Today when the matter is called upon, she submits that State would like to file a detailed affidavit. However, she opposes the prayer for stay and submits that she has a preliminary objection as to maintainability of the writ petition as petitioner has statutory remedy of appeal. When the decision of the Punjab and Haryana High Court in the case Capro Power Limited Vs. State of Haryana, CWP No.29437 of 2017, decided on 28.03.2018, was brought to her notice, she submits that the said case may not be applicable to the facts of the present case. She has drawn our attention to paragraph 27 of the said judgment to contend that in that case the registration certificate of the petitioner was not cancelled.

4. Issue notice, returnable four weeks.

5. Parties may file affidavit by the returnable date.

6. Petitioner was granted certificate of registration by the State of Maharashtra under the Central Sales Tax (Registration and Turnover) Rules, 1957 whereby petitioner was registered as a dealer under section 7(1) / 7(2) of the Central Sales Tax Act, 1956. By the impugned order dated 05.03.2020, the said registration certificate has been cancelled. Ground for cancellation of registration certificate is that petitioner had not sold any of the products covered by the Maharashtra Value Added Tax Act, 2002 during the relevant period. Consequently, the certificate was cancelled with effect from 01.07.2017. Consequence of such cancellation is that the dealer i.e., the petitioner would not be entitled to use any 'C' forms for transactions after 01.07.2017.

7. Mr. Nankani had elaborately taken us to the provisions of the Central Sales Tax Act, 1956 as well as the provisions of the Maharashtra Value Added Tax Act, 2002. He has also taken us to the judgment of Punjab and Haryana High Court in Carpo Power Limited (supra).

8. After examining the case of the petitioner vis-a-vis the judgment in Carpo Power Limited (supra), we are of the prima facie view that the aforesaid decision may be applicable to the

C/SCA/467/2022 ORDER DATED: 09/02/2022

case of the petitioner. That apart, Special Leave Petition filed by the State of Haryana against the aforesaid decision was dismissed by the Supreme Court holding that there was no legal and valid ground for interference.

9. In view of the above, there shall be stay of the impugned order dated 05.03.2020 till the returnable date and as a consequence respondents are directed to issue the necessary 'C' forms on the basis of the registration certificate.

10. Stand over to 27.10.2020."

25. Thus having regard to the above and upon due consideration, we feel that a case for interim relief has been made out. Further, we are of the view that there should be uniformity in orders in similar matters.

26. Accordingly, as an interim measure, we stay operation of the letter / order dated 22.08.2019 issued by respondent No.2 and direct the respondents to issue necessary 'C' forms to the petitioner.

27. It goes without saying that being an interim order, the same would be subject to such final order that may be passed in the writ petition.

28. Stand over to 06.01.2021."

4 Pursuant to the directions issued by the Bombay High Court as above, the Maharashtra Sales Tax Department issued the "C" Forms to the writ applicant.

5 When the "C" Forms issued by the Maharashtra Sales Tax Department came to be produced before the respondents herein for the purpose of seeking refund of tax amount of Rs.1,87,69,739/- under the C.S.T. Act, two fold objections were raised by the respondent: first, the writ applicant is not registered within the State of Gujarat and secondly, the order passed by the Bombay High Court is an interim order.

6 We are of the view that both the objections raised on behalf of the respondents are not tenable in law. The issue whether the writ applicant is registered with the State of Gujarat or not is no longer res integra in

C/SCA/467/2022 ORDER DATED: 09/02/2022

view of the pronouncement of this very High Court in the case of J. K. Cement Ltd vs. State of Gujarat decided on 18th December 2019, wherein this Court held as under:

"15. In the opinion of this court, while adopting the above stand, the respondents have failed to take into consideration the fact that insofar as Reliance Industries Limited is concerned, it has already collected the tax from the petitioners, and hence, if Reliance Industries Limited seeks refund of the amount against the C form declarations, it would not be entitled to such refund as such claim would be hit by the principles of unjust enrichment. As held by the Supreme Court in State of Madhya Pradesh v. Vyankatlal (supra), only the persons on whom lay the ultimate burden to pay the amount would be entitled to get a refund of the same. The petitioners having borne the ultimate burden in this case, it is only they who would be entitled to refund of the same.

16.Besides the Rajasthan High Court in the petitioners' own case has held that the authorities at Rajasthan were liable to issue 'C' forms in respect of high speed diesel procured for mining purpose through interstate trade. The court has further held that in the event of the petitioners having had to pay any amount on account of the respondents' wrongful refusal to issue 'C' forms, the petitioners shall be entitled to refund and/or adjustment from the concerned authorities who had collected excess tax. The court further directed the concerned authorities to process such claim within twelve weeks of the same being made by the petitioners in writing and the petitioners furnishing the requisite documents/forms.

17. In the present case, in the absence of 'C' forms having been issued by the Rajasthan authorities, the respondent authorities have collected excess tax from the seller - Reliance Industries Limited, who in turn has collected the same from the petitioners. Therefore, in terms of the above order passed by the Rajasthan High Court, once the Rajasthan authorities issue C forms against the sales made by Reliance Industries Limited to the petitioners and the petitioners produce the requisite documents/forms before the respondent authorities, the respondent authorities are required to process such claim within twelve weeks of the same being made in writing by the petitioners.

18. Pursuant to the above order passed by the Rajasthan High Court, the petitioner in Special Civil Application No.15333 of 2019 has made an application dated 19.4.2019 to the second respondent for refund of Rs.2,12,09,162/- charged by Reliance Industries Limited. Along with the application, the petitioner has furnished a copy of the order of the Rajasthan High Court, a statement showing the details of high speed diesel purchases, Form 'C' Quarter IIIrd and IVth (F.Y. 2017-18), copy

C/SCA/467/2022 ORDER DATED: 09/02/2022

of the letter from Reliance Industries Limited to the Deputy Commissioner of Gujarat Sales Tax and copy of sample invoice. The petitioner in Special Civil Application No.16288 of 2019 has made an application dated 31.8.2019 to the second respondent seeking refund of Rs.1,97,32,644/-. Along with such application, the said petitioner has furnished a statement showing details of purchases, tax charged and submission of 'C' forms against such purchases as well as copy of sample invoice, etc. Thus, the petitioners had duly complied with the direction issued by the Rajasthan High Court and in case the respondents required the petitioners to furnish any other details, it was always open for them to call upon the petitioners to furnish the same. However, the respondent authorities have taken a stand that since it is Reliance Industries Limited which has deposited the tax, such refund application has to be made by it and upon refund being made to Reliance Industries Limited, it can pay the same to the petitioner. However, as noted earlier, Reliance Industries Limited cannot make an application for refund inasmuch as such claim would be barred by the principle of unjust enrichment. Moreover, as stated by the respondents, in the case of Reliance Industries Limited, the refund claim would be processed during the course of its assessment for the period in question, which may take years together and in the meanwhile the petitioners would be deprived of such amount. Moreover, it may be that while processing the refund claim during the course of Reliance Industries Limited's assessment, the respondents may even adjust the refund amount against its dues. Thus, the stand of the respondents that Reliance Industries Limited should file the refund claim and then pay the amount so refunded to the petitioners is neither legally tenable nor is it practically workable.

19. In the opinion of this court, in the light of the clear directions issued by the Rajasthan High Court in the judgment and order referred to hereinabove, which the respondent authorities are bound to comply with, upon the petitioners making applications for refund along with the requisite documents, the respondents were duty bound to process such claim within a period of twelve weeks from the date of such application. The stand adopted by the respondents that the refund can be made to only to Reliance Industries Limited flies in the face of the order passed by the Rajasthan High Court as well as the above-referred decisions on which reliance has been placed by the learned advocate for the petitioners and is nothing but a purely hyper technical stand adopted by them. Once Reliance Industries Limited has, in clear terms, written to the authorities that various buyers who have purchased HSD in the course of inter-state trade for use in mining activities will be approaching their office for refund of the differential tax amount and has enclosed therewith Customer-wise details of inter-state sales made to buyers in Rajasthan at full rate, it is evident that Reliance Industries Limited is not disputing the fact that it is the petitioners who are entitled to claim the refund. Under the circumstances, the respondent

C/SCA/467/2022 ORDER DATED: 09/02/2022

authorities are not justified in not processing the refund claims of the petitioners.

20. In case of the petitioners, it is an admitted position that the HSD has been purchased by them from Reliance Industries Limited in the course of inter-State trade for use in mining activities and they are, therefore, the ultimate consumers thereof and hence, the question of passing on the tax burden to anyone would not arise. Consequently, the question of unjust enrichment would also not arise.

21. For the foregoing reasons, the petitions succeed and are accordingly allowed. The respondents are directed to forthwith process the refund claims of the respective petitioners and grant refund of the tax amount collected from the petitioners and deposited by the seller in accordance with law within a period of twelve weeks of the receipt of a copy of this judgment. It is, however, clarified that once the refund claim of the petitioners is processed, Reliance Industries Limited would not be entitled to claim any such refund. Rule is made absolute accordingly, with no order as to costs."

7 The aforesaid judgement of this High Court was challenged by the State of Gujarat before the Supreme Court by filing the Special Leave to Appeal (C) No.2279 - 2280 of 2021. The Special Leave to Appeal came to be dismissed by the Supreme Court vide order dated 10 th February 2021 in the following terms:

"1 The order of the High Court which is impugned in the Special Leave Petitions indicates the factual position that:

(i) The respondent was denied a C form in respect of an inter- State sale as a result of which a higher rate of tax was charged;

(ii) The respondent moved the Rajasthan High Court in a writ petition in which interim directions were initially issued on 20 February 2018 and subsequently on 18 May 2018 it was held that the refusal to issue a C form was contrary to law;

(iii) The High Court upheld the entitlement of the respondent, in consequence, to seek a refund; and

(iv) The State, as a matter of fact, has not disputed the refund which is due and payable.

2 Ms Aastha Mehta, learned counsel appearing on behalf of the

C/SCA/467/2022 ORDER DATED: 09/02/2022

petitioners submits that the High Court has not considered the provisions of Section 36 of the Gujarat VAT Act 2003. Learned counsel sought to persuade the Court to take a fresh look at the correctness of the view of the High Court, urging that under Section 36, a refund can be granted to a dealer registered in the State and that assessment proceedings are pending against the registered dealer. It was urged that the respondent is not registered as a dealer in Gujarat and that a refund can be granted only to the registered dealer.

3 The High Court has met this submission of the State of Gujarat by ruling that the dealer has passed on the burden to the respondent and hence, to deny the claim of refund to the respondent despite the State not contesting in principle the liability to refund would be "hyper- technical".

4 In view of the specific facts noted in paragraph 1 above, we decline to entertain the Special Leave Petitions. Having regard to the above facts and circumstances, we expressly keep open the interpretation of Section 36 to be urged by the State of Gujarat and decided by the competent forum in an appropriate case. Subject to the above clarification, the Special Leave Petitions are dismissed.

5 Since contempt proceedings are stated to have been filed against the authorities of the State, we extend time for complying with the order for refunding the amount due to the respondent by a period of four weeks from today."

8 In view of the aforesaid, we are left with no other option, but to allow this writ application. The respondents are directed to forthwith refund the tax amount of Rs.1,87,69,739/- under the C.S.T. Act collected from the writ applicant. Let this entire exercise be undertaken and completed within a period of four weeks from the date of receipt of the writ of this order.

(J. B. PARDIWALA, J)

(NISHA M. THAKORE,J) CHANDRESH