Gujarat High Court

Tetra Pak India Pvt Ltd vs State Of Gujarat on 14 June, 2024

Author: Bhargav D. Karia

Bench: Bhargav D. Karia

                                                                                 NEUTRAL CITATION




     C/SCA/20272/2023                           JUDGMENT DATED: 14/06/2024

                                                                                  undefined




             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

               R/SPECIAL CIVIL APPLICATION NO. 20272 of 2023


FOR APPROVAL AND SIGNATURE:


HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE NIRAL R. MEHTA

===============================================================

1     Whether Reporters of Local Papers may be allowed
      to see the judgment ?

2     To be referred to the Reporter or not ?

3     Whether their Lordships wish to see the fair copy
      of the judgment ?

4     Whether this case involves a substantial question
      of law as to the interpretation of the Constitution
      of India or any order made thereunder ?

================================================================
                         TETRA PAK INDIA PVT LTD
                                  Versus
                         STATE OF GUJARAT & ANR.
================================================================
Appearance:
UCHIT N SHETH(7336) for the Petitioner(s) No. 1
MS MAITHILI MEHTA, AGP for the Respondent(s) No. 1
NOTICE SERVED BY DS for the Respondent(s) No. 1,2
================================================================

    CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
          and
          HONOURABLE MR. JUSTICE NIRAL R. MEHTA

                          Date : 14/06/2024
                          ORAL JUDGMENT

(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)

1. Heard learned advocate Mr.Uchit N. Sheth

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

for the petitioner and learned Assistant

Ms.Maithili Mehta for the respondent-State.

2. Rule, returnable forthwith. Learned

Assistant Government Pleader Ms.Maithili Mehta

waives service of notice of rule for and on

behalf of the respondent No.1.

3. Having regard to the controversy involved

in narrow compass, with the consent of the

learned advocates for the parties, the

petition is taken up for hearing.

4. Brief facts of the case are as under :

4.1. The petitioner is a multinational

company engaged in providing, processing and

packaging the solutions. The petitioner is

purchasing natural gas from the Bharat

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

Petroleum Corporation Limited during the

course of its business. After inception of GST

regime with effect from 01.07.2017, there was

confusion in the trade as well as the

Department as regards continuity of

registration of dealers under the CST Act and

allowability of interstate supply of petroleum

products at concessional rate under the CST

Act when they were to be used in manufacture

of goods Covered under GST regime. C-Form

declaration were not being issued by the

sales-tax department across the country on the

ground that the petroleum products were not to

be used for manufacture of goods. The Hon'ble

Supreme Court dismissed the Special Leave

Petition filed by the State on 13.08.2018

confirming the order passed by the Punjab and

Haryana High Court in case of Carpo Power

Limited versus State of Haryana reported in

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

(2018) 53 GSTR 24 (P&H) wherein, it is held

that purchase against C-Form declaration was

permissible even after introduction of the GST

regime.

4.2. A circular/office memorandum dated

01.11.2018 was issued by the Central

Government to Commissioner of Commercial Taxes

of all state and union territories on the

basis of the aforesaid decision clarifying

that the issue relating to issuance of C-Form

declaration has been set at rest. The Hon'ble

Supreme Court by order dated 24.03.2021 in

case of Commissioner of Commercial Taxes and

Another versus Ramco Cement Limited has held

as under :

"2. 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 dismissing Special Leave Petition (C) No.20572 of

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

2018 vide order dated 13th August, 2018.

3. 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.

4. 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.

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

6. 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

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

Memorandum dated 1st November, 2018 and directing all the States/Union Territories to follow the view taken by the Punjab and Haryana High Court."

4.3. During the initial period after

01.07.2017 till 15.03.2018, the seller issues

invoice charging full rate of tax at the rate

of 15% under the CST Act from the Petitioner

under the belief that sale against 'C' form

declarations was not permissible after the

implementation of GST regime.

4.4. Thereafter, seller charged

concessional tax at the rate of 2% under the

CST Act from the petitioner from 16.03.2018

till 31.03.2019, in anticipation of C form

declarations being furnished by the

petitioner.

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

4.5. Because of the legal ambiguity during

the relevant period, the commercial tax

department of the State of Maharashtra

cancelled the registration of the petitioner

under the CST Act without giving any

intimation or opportunity to the petitioner to

clarify its stand, Due to this, the petitioner

was unable to obtain C-Form declarations in

time from the commercial tax department of the

State of Maharashtra.

4.6. As the petitioner was not able to

immediately provide C-Form declarations to the

seller, the seller encashed bank guarantee

provided by the petitioner for differential

tax under the CST Act for the period from

16.03.2018 to 31.03.2019.

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

4.7. In so far as the period from

01.07.2017 till 15.03.2018 is concerned, the

seller had charged full rate of tax in the

invoice itself which the petitioner was made

to pay to the seller which was further

deposited in the Government treasury.

4.8. Thereafter the registration of the

petitioner under the CST Act was restored by

the Maharashtra commercial tax department in

the year 2022 pursuant to order passed in this

regard by the appellate authority which was

based on the order of Hon'ble Supreme Court in

the case of Ramco Cements Ltd. (supra).

4.9. The C-Form declarations were thereafter

belatedly issued by TARY the Maharashtra

commercial tax department to the petitioner

for the years 2017-18 and 2018-19. The C-Form

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

declarations were forwarded by the petitioner

to the seller.

4.10. The issue of belated issuance of C-

Form declarations, which was faced by the

petitioner, was also faced by number of other

dealers. In many of such cases refund was

denied to the seller on the basis of such C-

Form declarations on the ground that such tax

had been borne by the buyers and therefore

refund could be claimed by the buyers such as

the petitioner and not by the seller. Apart

from tax, the seller had also paid interest

under the CST Act which is also required to be

refunded.

4.11. While observing that refund claim can

be filed by the buyers, the assessing

authority relied upon the judgment of this

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

Court in the case of J.K. Cement Ltd. v/s

State of Gujarat reported in (2022) 99 GSTR

328 (Guj.) which has been subsequently

affirmed by Hon'ble Supreme Court.

4.12. In the meantime the seller raised

debit notes on the petitioner for recovering

interest paid on differential tax due to

belated issuance of C-Form declarations.

4.13. The petitioner invoked arbitration

clause in the agreement with the seller for

disputing the invocation of bank guarantee for

recovery of tax under the CST Act. The seller

made counter claim for interest paid to the

Gujarat VAT Department on differential tax

amount. The arbitrator passed award holding

that the petitioner could claim refund of tax

from the Vat Department of Gujarat and further

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

that the petitioner is liable to reimburse the

interest amount paid by the seller.

4.14. The petitioner therefore approached

the 2nd respondent authority for putting forth

its refund claim in respect of the principal

tax as well as the interest amount. The

petitioner relied upon the judgment of this

Court in case of J. K. Cement Ltd. (Supra)

wherein under similar circumstances this Court

ordered granting of refund under the CST Act

to the purchaser of goods. The petitioner

produced copies of invoices as well as C-Form

declarations in support of the refund claim.

Reminder for processing of refund was given by

letter dated 02.10.2023.

4.15. Corrigendum to the refund application

was submitted for rectifying the refund amount

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

to be granted for the years 2017-18 and 2018-

19.

5.1. Learned Advocate Mr.Uchit Sheth for

the petitioner submitted that in spite of

repeated request made by the petitioner before

the second respondent authority-Deputy

Commissioner of State Tax, refund in favour of

the petitioner was not granted though the

facts of the petitioner are covered by the

decision of this Court in case of J.K.Cement

Limited (Supra) which has been confirmed by

the Hon'ble Supreme Court. It was therefore

submitted that refusing to refund the amount

of excess tax collected and deposited by the

petitioner even though the C-Form declaration

have been duly furnished, is contrary to the

above decisions.

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

5.2. It was submitted that though the

petitioner was legally entitled to purchase

goods as concessional rate of tax against C-

Form declarations, the petitioner was forced

to make purchases by paying CST at the rate of

15% instead of 2% in view of the legal

ambiguity during the interregnum period and as

result of charging of such tax in invoices for

the period till 16.03.2018 and thereafter,

invocation of Bank Guarantee for the period

from 16.03.2018 to 31.03.2019, the tax

deposited by the seller with the respondents

WET authorities, is now settled and therefore,

the respondent authorities are liable to pay

the refund of the excess payment of tax and

retention of tax deposited at the rate of 15%

in spite of the fact that the applicable rate

of tax is 2% under the CST Act is without

authority of law.

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

5.3. It was submitted that the petitioner

has therefore approached to this Court for

direction to the respondent to forthwith grant

the refund of excess tax amount of

Rs.3,94,46,741 collected from the petitioner

and deposited by the seller with respondents

from the years 2017-18 to 2018-19 along with

appropriate interest on such refund amount.

The petitioner has also prayed for refund of

the interest amount of Rs.1,13,86,862/- paid

by the seller and charged from the petitioner

by way of debit note along with appropriate

interest on such refund amount.

6. On the other hand, learned Assistant

Government Pleader Ms.Maithili Mehta for the

respondent No.1 could not controvert the

submissions made on behalf of the petitioner

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

that the petitioner is entitled to the excess

amount of tax paid by the petitioner as per

the decision of this Court in case of

J.K.Cement Limited (Supra).

7. Having heard the learned advocates for the

respective parties, this Court in case of

J.K.Cement Limited (Supra) has held as under :

"14. In the backdrop of the facts and contentions noted hereinabove, it is an undisputed position that the petitioners have borne the burden of tax as the CST authorities at Rajasthan had refused to issue C forms after the coming into force of the GST regime. On account of non-issuance of C forms, the petitioners were not in a position to submit C form declarations in respect of the diesel purchased by them for their mining activity, as a result whereof, the petitioners could not purchase diesel at concessional rate of tax from the seller - Reliance Industries Limited, which collected tax at the rate of 20 % from the petitioners and deposited the same with the respondent authorities. Now, on account of the directions issued by the Rajasthan High Court in the decisions

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

referred to hereinabove, the CST authorities at Rajasthan have issued C form declarations in respect of the transactions in question. The respondent authorities do not dispute that against the C form declarations, the tax collected from the petitioners and deposited by Reliance Industries Limited is required to be refunded. The sole refrain of the respondent authorities is that such refund can be made to the seller - Reliance Industries Limited after its assessment for the period in question is concluded and not to the petitioners who are not registered as dealers in Gujarat.

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.

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

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

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

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 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

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

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

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

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 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

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

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.

8. The aforesaid decision of this Court was

upheld by the Hon'ble Supreme Court by

dismissing the SLP vide order dated 10.02.2021

as under :

"1. The order of the High Court which is impugned in the Special Leave

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

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 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

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

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."

9. Moreover, in the Arbitration Award between

the petitioner and Bharat Petroleum

Corporation Limited dated 17th October, 2023,

it was also held that the petitioner was not

entitled to interest amount of

NEUTRAL CITATION

C/SCA/20272/2023 JUDGMENT DATED: 14/06/2024

undefined

Rs.1,13,86,862/- paid by the Bharat Petroleum

Corporation Limited.

10. Therefore, in view of the above, it is

held that the petitioner is entitled to the