SC upholds HC decision on ‘Form C’ availability after GST : 16-08-2018

The Supreme Court has upheld the decision of the Punjab and Haryana High Court that Form – ‘C’ should be made available to an assessee even after implementation of the goods and services tax (GST).

A Bench led by justice Ranjan Gogoi, while dismissing a Haryana government’s appeal, observed that “if you (Haryana government) poke industries like this, they will run away”.

The issue before the court was whether after the amendment to the Central Sales Tax Act, 1956, power company Caparo Power was entitled to be issued ‘C’ Forms in respect of natural gas purchased from Gujarat-based BPCL and IOC in the course of inter-state sales for generation of electricity.

The HC held that the sale tax law as defined in Section 2(i) of CST Act will mean the law for the time being in force in any state for levy of taxes on sale and purchase of goods. It further ruled that the definition is inclusive, and not restrictive, hence will include the HGST Act 2017 as well.

Form C is issued by a purchasing dealer to a selling dealer to avail of the benefit of the concessional rate of CST. The objectives of providing benefit vide C Form are to negate effect of high rate of taxation and to safeguard the consumers’ interest.

The Haryana government in its appeal said Caparo was not engaged in re-selling of these goods and its registration under the CST Act lapsed on the commencement of the HGST Act. So, the company was not entitled for Form C. It further said the provisions of the CST Act would apply only if it sold the same goods that it had purchased (natural gas).

However, the HC said the CST Act does not restrict the usage of Form C only for the purpose of resale, but can be used for resale, manufacture, processing or generation/distribution of electricity.

Caparo had challenged the Haryana government’s refusal to issue ‘C’ Forms on the grounds that there had been no change of law with regard to inter-state sale of natural gas in pre-GST or post-GST.

Stating that inter-state sales are outside the domain and control of any state, counsel Ankur Saigal, who appeared for Caparo, argued that the issuance of Form C is under CST Act and not under HVAT Act and the state government is only the implementing agency and has no discretion to refuse the Form C if all the conditions are satisfied, as the issuance of Form C does not impact purchasing dealer state’s revenue.

Source : Financial Express

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