2018 Taxo.online 315

WP(C) 366/2018 dated 04-09-2018

STAR CEMENT MEGHALAYA

THE STATE OF ASSAM AND 2 ORS

2018

Service Tax

Central Goods & Services Tax Act, 2017

Section 8 (1)

Achintya Malla Bujor Barua, Justice

In favour of assessee

High Court

Gauhati

Represented by: –

Petitioner: – DR. Ashok Saraf

Respondent: – D Saikia (SR. ADDL. AG)

Order: –

Heard Dr. A. Saraf, learned senior counsel for the petitioners. Also heard Mr. D. Saikia, learned

Senior Additional Advocate General for the authorities of the State of Assam in the department of

Finance and Taxation as well as Mr. S.C. Keyal, learned ASGI for the authorities of the Govt. of India in the Ministry of Finance and Revenue and Ministry of Law and Legal Affairs, who were arrayed as respondents as per the order dated 13.03.2018, and also Mr. M.K. Choudury, learned senior counsel for the respondent Indian Oil Corporation Ltd (IOCL).

2. Both the writ petitions are based upon the same set of facts and also involve the same question of law and as such are being taken up together for its consideration. Both the petitioners i.e., in WP(C) No.366/2018 and WP(C) 915/2018 are engaged in the manufacture and sale of clinker for which diesel is used as a raw material.
3. In furtherance of their activities, the petitioners purchased diesel from the respondent IOCL from its establishments located in the State of Assam and utilized the same for the purpose of manufacture of clinker in their industrial set up located in the State of Meghalaya. As the diesel purchased by the petitioners in the State of Assam, is used by them for manufacturing of clinker in the State of Meghalaya, such purchases constitute an inter-state sale. In order to facilitate the

purchase, the petitioners take the benefit of using the Form-C under the Central Sales Tax Act, 1956 (for short, CST Act of 1956) and subject themselves to the payment of Central Sales Tax (CST) under the provisions of Section 8 (1) of the Act of 1956.

4. On the contrary, if the petitioners are unable to or are prevented from taking the benefit of the Form-C, the CST @ 2% as provided under Section 8(1) of the CST Act, 1956 would not be applicable and rather they would be subjected to payment of sale tax under the local laws.
5. The respondents under the State of Assam in the Finance and Taxation Department through the Commissioner of Taxes, Assam had issued a Circular No.7/2017-GST dated 05.09.2017 by which, a clarification was given on certain aspects of the CST Act of 1956 as regards the liabilities returns, registrations to be made and also as regards the eligibility to make inter-state sale/purchase of goods against the Form-C and inter-state stock transfer/receipt of goods against the Form-F, after implementation of the provision of the Goods and Services Tax Acts, 2017 (in short GST Acts of 2017) from 01.07.2017.

 

6. The relevant provision of the circular dated 05.09.2017 are as follows: –
7. Clause-1 of the said circular refers that after the enactment of the GST Acts of 2017, the power of the State and the Union of India to levy tax on sale of six goods namely, 1) Alcoholic liquor for human consumption 2) Crude oil 3) Natural gas 4) High Speed Diesel 5) Petrol and 6) Aviation Turbine fuel have been retained under the CST Act of 1956, whereas all other goods are now subjected to a levy of Goods and Services Tax under the GST Acts of 2017

1. Clause-2 thereof provides that the provisions of the CST Act of 1956 as well as Assam Value Added Tax Act, 2003 (for short, AVAT Act of 2003) are now applicable in respect of the six goods.

• Clause-4 of the Circular of 05.09.2017 provides that although some dealers were registered under Section 7(2) of the CST Act of 1956 as because they were earlier liable to pay sales tax under the AVAT Act of 2003, but consequent upon the repeal of AVAT Act of 2003, w.e.f. 01.07.2017, the dealers not selling the aforesaid six goods are no more liable to pay tax under the Act of 2003 and, therefore, upon cessation of their liability under the AVAT Act of 2003, they are not eligible for registration under Section 7(2) of the CST Act of 1956 and the registration earlier granted to them under Section 7(2) became invalid.

1. Clause-5 thereof provides that such dealers who continue to make interstate sale of only the aforesaid six goods will continue to be liable to pay tax under the CST Act of 1956 and their registration under the Act continues to remain valid and they can also make their inter-state purchases of the aforesaid six goods against Form-C or Form-F, as the case may be.

 

30. Clause-9 of the said Circular clarifies that the dealers who up to 30.06.2017 were making inter-state purchase of petroleum and high speed diesel (among the six retained goods) against Form-C for use in manufacture or processing of goods, other than the aforesaid six goods, having ceased to be dealers under the CST Act of 1956 w.e.f. 01.07.2017, as their liability to pay tax under the AVAT Act of 2003 has ceased w.e.f. 01.07.2017, the registration earlier granted in their favour became invalid w.e.f. 01.07.2017. It is further provided that consequently such dealers whose registration under the CST of 1956 became invalid cannot make interstate purchase of the six goods against Form-C w.e.f. 01.07.2017.

Clause-9 provides a further clarification that the six goods can be purchased or received on the strength of Form-C or Form-F, as the case may be for re-sale or for being used in a manufacture or processing of a goods which would also be within the six goods.

7. The implication of the clarification given in the Circular of 05.09.2017 would be that in the event a dealer purchases any of the aforesaid six goods, for the purpose of it being used in the manufacture of any goods, which is other than the aforesaid six goods, such dealers can no longer

avail the benefit of paying CST @ 2% by utilizing the benefit of Form-C.

8. In the present writ petition, the said Circular of 05.09.2017 has been assailed on the following grounds: –

Firstly, the Commissioner of Taxes, Assam had no jurisdiction to issue the Circular dated 05.09.2017, by which it was declared that the dealers making inter-state purchase of petrol and high-speed diesel against Form-C for use in the manufacture or processing of goods, other than the six goods ceased to be dealers under the CST Act of 1956, w.e.f. 01.07.2017.

 

Secondly, even after the amendment of the CST Act of 1956 and the AVAT Act of 2003, the six goods continue to remain taxable under the CST Act of 1956 and AVAT Act, 2003 and therefore, the grant of registration under Section 7(2) of the CST Act, 1956 to such dealers who purchases the aforesaid goods for use in manufacture and processing of goods resulting in a final goods, other than the aforesaid goods cannot be withdrawn or be declared to have ceased to have its effect.

Thirdly, Section 8(3) of the CST Act of 1956 having been interpreted by the Supreme Court to the effect that the word ‘good’ appearing for the fourth time cannot obviously refer to raw material and cannot be given the same meaning of goods as defined in Section 2(d) and the clarification/declaration given in the Circular dated 05.09.2017 is unsustainable inasmuch as by giving such clarification the said respondent authorities in the Finance and Taxation Department had restricted the meaning of the word ‘goods’ appearing for the fourth time in Section 8(3) to have the same meaning as defined in Section 2(d).

9. 1Dr. A. Saraf, learned senior counsel submits that even after the amendment of the CST Act of 1956 and the AVAT Act of 2003 six goods namely crude petroleum, high speed diesel, petrol, natural gas, aviation turbine fuel and alcoholic liquor for human consumption were retained for being taxable under the CST Act of 1956 and AVAT Act of 2003. As the said six goods are retained as taxable under the said two Acts, any dealer who intends to purchase any of the said six goods are entitled to be registered or to retain their registration under Section 7(2) of the CST Act of 1956. Dr. A. Saraf, learned senior counsel also submits that the effect of the Circular dated 05.09.2017 declaring and clarifying that a dealer who purchases any of the six goods for interstate sale, uses them for the manufacture of a good other than the six goods, would cease to be a dealer under the CST Act, 1956 would be that the authorities while issuing the Circular have the word goods appearing for the fourth time in section 8(3) of CST Act, 1956 to be a good as defined under Section 2(d) of the Act. According to Dr. Saraf, such effect of the declaration would be contrary to the principle laid down by the Supreme Court in paragraph-18 of Printers (Mysore) Ltd Vs. Asstt. Commercial Tax Officer reported in 1994 2 SCC 434 wherein, it has been provided that the word “good” occurring for the fourth time in the section cannot obviously refer to raw material. If any of the six goods defined under Section 2(d) of the CST Act of 1956 are used as raw material for manufacturing a final good, the final good cannot obviously retain its original characteristic as one of the six retained goods. But the provision in the Circular dated 05.09.2017 that the finished goods upon being manufactured also would have to be within the six goods defined under Section 2(h), the principle laid down by the Supreme Court in Printers (Mysore) Ltd (supra) had been violated.

 

10. Mr. D. Saikia, learned Senior Additional Advocate General appearing for the State of Assam took the plea that the appropriate authorities in the Central Government would also be a necessary party in the proceeding, inasmuch as, what the Commissioner of Taxes, Assam had provided in the Circular dated 05.09.2017 was in fact, a requirement of the Central Government in the Finance Department and therefore, any adverse orders against the State of Assam would in fact have the implication of being an adverse order against the Central Government.

 

11. As regards the submission of Dr. Saraf that the Commissioner of Taxes, Assam did not have the jurisdiction to issue the Circular, Mr. D. Saikia by referring to section 9(2) of the CST Act of 1956 contends that the appropriate authorities in the State of Assam assesses, re-assesses, collects and enforces the payment of the tax under the Act on behalf of the Govt. of India and therefore, in order to do the needful, they may exercise all or any of the powers that may be available both under the central laws as well as under the tax laws of the State and therefore, all such powers available to the state authority under the AVAT Act, 2003 are also available for issuing the Circular dated 05.09.017. Accordingly, Mr. D. Saikia, learned senior counsel by referring to Section 3(5)(b) of the AVAT Act of 2003 contends that the Commissioner of Taxes, Assam had the jurisdiction to issue the Circular. Mr. D. Saikia also refers to the provisions of section 105 of the AVAT Act of 2003 which provides that if any question arises other than in a proceeding pending before the appellate authority or an appellate tribunal or a court, as to whether or not any particular dealer is required to obtain registration, the Commissioner for reasons to be recorded in writing pass such order thereon, as he thinks just and proper. According to Mr. D. Saikia the Circular dated 05.09.2017 was also issued by the Commissioner in exercise of his powers under Section 105(1) of the AVAT Act of 2003, on the question as to whether a dealer in the aforesaid circumstance is required to have a registration. Mr. D. Saikia submits that upon the registration of the petitioners as dealers under the CST Act of 1956 having ceased to have its effect as provided in the Circular dated 05.09.2017, they would now be liable to pay tax under the AVAT of Act 2003 in respect of any purchase of the six aforesaid goods, even if such purchases were made in course of interstate sale, but resulted in being used as a raw material for manufacturing of a good other than the six goods.
12. Mr. Saikia, also submits that the provisions laid down by the Supreme Court in Printers (Mysore) Ltd, (supra) would be inapplicable in the present case, inasmuch as, in Printers (Mysore) Ltd (supra) the factual background was that on the newspaper having been excluded from the purview of the word goods by the amendment of 1958 of the CST Act, whether it can be construed as a good as appearing for the fourth time under Section 8(3)(b) of the CST Act of 1958. But in the instant case, the issue for consideration would be entirely different and, therefore, the provisions laid down by the Supreme Court in paragraph 18 of Printers (Mysore) Ltd. (supra) would not be applicable.
13. Mr. Saikia also relies upon the office memorandum dated 07.11.2017 of the Ministry of Finance Department of Revenue, Govt. of India, which contains a legal opinion that the Department of Legal Affairs, Ministry of Law, Govt. of India has confirmed that the terms goods referred in section 8(3)(b) of the CST Act of 1956 will have the same meaning as defined after amendment under Section 2(d) of the CST Act of 1956, to substantiate that the Circular dated 05.09.2017 depicts the correct legal interpretation.

 

14. 1Mr. SC Keyal, learned Assistant SGI, appearing for the authorities of Ministry of Finance and Department of Legal Affairs, Ministry of Law, Government of India reiterates the stand of the Central Government as depicted in the Office Memorandum dated 07.11.2017 and contends that the word goods appearing in Section 8(3)(b) of the CST Act of 1956 on all four occasions would have the same meaning as defined under the amended Section 2(d) of the Act.

 

15. 1Heard the learned counsel for the parties.

From a bare perusal of the Circular dated 05.09.2017, it is discernible from Clause 9 thereof that a dealer who purchased one of the six retained goods for the purpose of inter-state sale and used it for manufacturing of a finished goods, which would be a good, other than the six retained goods, is not liable to pay sales tax under the CST Act of 1956 and also under the AVAT Act of 2003 and to that extent his registration under Section 7(2) of the CST, Act of 1956 ceases to exist.

 

16. 1Section 7(2) of the CST Act of 1956 entitles a dealer to get himself registered under the Act, even if, he is not liable to pay sales tax under the CST Act of 1956, but on the other hand, is liable to pay sales tax under the AVAT Act of 2003. If the analogy projected in Clause-9 of the circular dated 05.09.2017 that the registration under Section 7(2) of the CST Act of 1956 ceases to exist as the dealer is no longer liable to tax under the AVAT Act of 2003 is correct,, the withdrawal of the registration under Section 7(2) of the CST Act of 1956 would be acceptable. In other words, if it is the conclusion of the authorities in the Govt. of Assam in the Taxation and Finance Department that from 01.07.2017, the petitioners are not liable to pay taxes under the AVAT Act of 2003, in such event, their registration under Section 7(2) of the CST Act of 1956 would also not be sustainable inasmuch as, under Section 7(2) of the Act any dealer liable to pay tax under the Sales Tax Law of the State, may, notwithstanding that he is not liable to pay tax under the Act, apply for registration. The pre-requisite of being entitled for a registration under Section 7(2) of the CST Act of 1956 is that the dealer so registered is liable to pay tax under the sales tax law of the State, which in the present case would be AVAT Act of 2003. Therefore, if according to the authorities in the State of Assam in the Taxation and Finance Department the petitioners are not liable to pay any tax under the AVAT Act of 2003, from 01.07.2017 onwards, the authorities may withdraw the registration under Section 7(2) of the CST Act of 1956, inasmuch as, the pre-requisite of Section 7(2) of being liable to pay tax under the state sales tax law ceases to exist.

 

17. But to a query raised as to under what provisions the petitioners would now be liable for payment of sales tax, upon withdrawal of their registration under Section 7(2) of CST Act of 1956, where the petitioners were entitled to pay a tax of 2% under Section 8(1) of the Act for the interstate purchase of diesel made by them for producing the clinker in the State of Meghalaya, it is replied by Mr. D. Saikia, learned Senior Additional Advocate General that the petitioners would now be liable to pay the tax under the GST Acts of 2017 or in the alternative, they would now liable to pay the tax at the appropriate rate under the AVAT Act of 2003 and they would not retain the earlier benefit of paying CST @ 2%.

 

18. On the submission of Mr. D. Saikia that upon withdrawal of the registration under Section 7(2) of the CST Act of 1956, the petitioners would now be liable to pay tax under the GST Act of 2017, it is taken note of that under Section 13 of the Constitution (One Hundred and First Amendment) Act, 2016 it had been provided that in the CST Act of 1956, Section 2(d) thereof shall now be substituted in the manner as follows: –

“(d) goods” means-

• petroleum crude;
• high speed diesel;
• motor spirit (commonly known as petrol)
• aviation turbine fuel; and
• alocoholic liquor for human consumption;

19. The implication of the provision of Section 13 of the Constitution (One Hundred And First Amendment) Act, 2016 is that the aforesaid six goods would now be retained under the CST Act of 1956 and all other goods which were earlier included under Section 2(d) stands excluded.

 

20. Section 2(52) of the Central and Goods Services Tax Act, 2017 (in short CSGT Act of 2017) defines ‘goods’ as follows:-

“goods” means every kind of movable property other than money and securities but

includes actionable claim, growing crops, grass and things attached to or forming part

of the land which are agreed to be severed before supply or under a contract of supply

 

21. From a bare reading of the definition of ‘goods’ under Section 2(52) of the CGST Act of 2017 it is apparent that all kinds of movable property other than money and securities are taxable under the said Act, which apparently, going only by the definition of Section 2(52) would also include the six goods that have been retained under Section 2(h) of the CST Act of 1956.

 

22. But again Sections 9(2) of the CSGT Act of 2017 and the Assam Goods and Services Act, 2017 (In short AGST Act, 2017) provides as follows: –

 

“Section 9(2) of the CGST Act of 2017: –

(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 recommendation of the Council.”

 

Section 9(2) of AGST Act of 2017: –

(2) The State 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.”

23. The provisions of the AGST Act of 2017 in respect of the definition of the word ‘goods’ and Section 9(2) thereof, are pari materia with that of the definition of the word ‘goods’ under Section 2(52) and Section 9(2) of the CGST Act of 2017, respectively.

 

Further Section 174(1) of the CGST Act of 2017 does not provide that the provisions of the CST Act of 1956 stood repealed. In other words, the provisions of CST Act of 1956 as regards the six retained goods as indicated above continues to have its force and had not been repealed by the GST Act of 2017.

 

24. It is also taken note of that Section 12(5) of the Constitution (One Hundred and First Amendment) Act, 2016 provides as follows:-

 

(5) The Goods and Services Tax Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel.

 

25. From the provisions of Section 9(2) of the CGST Act of 2017 and AGST Act of 2017, respectively and Section 12(5) of the Constitution (One Hundred And First Amendment) Act, 2016 it is discernible that the levy of tax on the five goods namely, petroleum crude, high speed diesel, that motor spirit (commonly known as petrol), natural gas and aviation turbine fuel, which are amongst the six goods retained under the CST Act of 1956, are leviable only with effect from such date as may be notified by the Government on the recommendation of the Goods and Services Tax Council. It has been informed by the authorities in the Finance and Taxation Department of both the Central Govt. and the State Govt. that till date no such date has been notified by the Govt., nor any date has been recommended by the Goods and Services Tax Council for bringing the aforesaid five goods under the GST Acts of 2017.

 

26. In view of the aforesaid provisions of Section 12(5) of the Constitution (One Hundred And First Amendment) Act, 2016 and 9(2) of the CGST Act of 2017, read with Section 9(2) of the AGST Act of 2017 and the admitted position of the respondent authorities in the Central Govt and the State Govt that neither the date for levy of tax under the GST Acts of 2017 had been notified in respect of the five aforementioned goods, including high speed diesel oil and nor there is any recommendation by the Goods and Services Tax Council as regards the date to make the GST Acts applicable in respect of the said goods, we are unable to accept with the contention of the learned Senior Additional Adovate General that upon withdrawal of the registration of the petitioners under Section 7(2) of the CST Act of 1956, they would now be subjected to a levy of tax under the GST Acts of 2017.

 

27. As regards the other alternative contention of learned Senior Additional Advocate General that upon withdrawal of such registration under Section 7(2) of the CST Act of 1956 the petitioners would now be liable to pay tax under the AVAT Act of 2003, it is taken note of that under Section 174(1) of the AGST Act of 2017, the provisions of AVAT Act of 2003 in respect of the six aforementioned goods are retained. In other words, in respect of the six aforementioned goods retained under Section 2(d) of the CST Act of 1956 and also included under Entry 54 of the State List of the Seven Schedule of the Constitution of India , the provisions of the AVAT Act of 2003 still continues to have its force and the concerned goods are leviable to a tax under the Act.

 

Further upon perusal of the provision of the AVAT Act of 2003, no such provision in discernable, which provides that upon the six retained goods being used as a raw material, if the good so manufactured is not amongst the six goods, the purchase of any of the six goods will not be leviable under the AVAT Act of 2003.

 

28. From the said point of view the submission of Mr. D. Saikia, learned Senior Additional Advocate General that even upon the withdrawal of their registration under Section 7(2) of the CSGT Act of 1956, the petitioners would continue to be leviable for a tax under the AVAT Act of 2003, would be acceptable.

 

29. But the question that would arise would be if the petitioners continue to remain leviable for a tax under AVAT Act of 2003, which admittedly is a State law, they would also continue to remain entitled to have their registration under Section 7(2) of the CST Act of 1956 inasmuch as, if a dealer is leviable under the State law, he would also be entitled to be registered as a dealer under Section 7(2) of the Act. From the said point of view the cessation of their registration under Section 7(2) of the Act as provided in the circular dated 05.09.2017 would be unsustainable.
30. For a clarification we have to refer to the provisions of Clause-9 of the circular dated 05.09.2017 which inter alia provides that a dealer who is making interstate purchase of high speed diesel against Form-C for use in the manufacture or processing of a good, other than the aforesaid six goods retained under section 2(d) CST Act of 1956 would cease to be a dealer under section 7(2) of the Act with effect from 01.07.2017 as their liability to pay tax under the AVAT Act of 2003 had ceased to exist from 01.07.2017.

 

31. The circular dated 05.09.2017 providing for the withdrawal of the registration under section 7(2) of the CST Act of 1956 is based on the reason that such dealers involved in interstate purchase of the six goods and using them for a manufacturing of a good other than the six goods, are no longer leviable to a tax under the AVAT Act of 2003 from 01.07.2017. But as already discussed hereinabove section 174(1) of the AGST Act of 2017 clearly provides that the AVAT Act of 2003 continues to remain in force in respect of the six goods retained under Section 2(d) of the CST Act of 1956 and also included in the entry-54 of the State list of the Seventh Schedule of the Constitution of India.

 

32. From the aforesaid provisions of Section 174(1) of the AGST Act of 2017 and also in view of there being no date notified either by the Central Government and the State Government under Section 9(2) of the CGST Act of 2017 and AGST Act of 2017, respectively and there being no date recommended by the Goods and Services Tax Council, as required under Section 12(5) of the Constitution (One Hundred and First Amendment) Act, 2016 and also there being no such provision in the AVAT Act of 2003 that in the event any of the six retained goods are used for manufacture of a good other than the six goods, then no tax is leviable under the AVAT Act of 2003, the provisions in the circular dated 05.09.2017 that from 01.07.2017 onwards, the dealers dealing interstate purchase of high speed diesel and using it for manufacture of a good other than the six good are no longer liable to pay a tax under the AVAT Act of 2003 is incorrect and unacceptable.

 

33. As the very basis for withdrawing the registration under section 7(2) of the CST Act of 1956 is that from 01.07.2017 onwards the dealers dealing in interstate purchase of high speed diesel oil and using in for manufacture of good other than the six goods are not liable to pay a tax under the AVAT Act of 2003 and as discussed hereinabove, the very basis of not being liable to pay tax under the AVAT Act of 2003 being incorrect and unacceptable, the provision for withdrawing or enforcing a cession of the registration of such dealers under section 7(2) of the CST Act of 1956 as provided in Clause-9 of notification dated 05.09.2017 is also found to be unacceptable and unsustainable.

 

34. In the alternative, if the provision of the circular dated 05.09.2017 that such dealers involving in interstate purchase of high speed diesel and using it as a raw material for the manufacture of a good other than the six goods, are not liable to be leviable under the AVAT Act of 2003 from 01.07.2017 and at the same time as already concluded they are also not liable to be leviable under the GST Acts, the resultant situation would be that for indulging in such kind of activity the dealers would not be liable to pay a sales tax in any form i.e., either under the AVAT Act of 2003 or under GST Acts of 2017. Such a situation would also be incongruous to the extent that such dealers either not be liable for payment of sales tax at all or for not being so liable, they would be prevented from carrying out their intestate state trade which again would be inconsistent with the provision of Article 301 of the Constitution of India.

 

35. As regards the submission of Mr. D Saikia, learned Senior counsel that the respondent authorities have the jurisdiction and authority to issue the Circular dated 05.09.2017 in exercise of its power under Section 3(5)(b) of the AVAT Act of 2003 or in the alternative under Section 105 of the Act, it would be apposite to examine the aforesaid provisions.

 

36. Section 3(5)(b) of the AVAT Act of 2003 is as follows:

“3. (5)(b) issue such orders, instructions and directions to such officers and persons as it may deem fit, for the proper administration of this Act.”

37. On the other hand, Section 105 of the AVAT Act of 2003 is as follows:

“105. Determination of disputed questions. – (1) If any question arises, otherwise than in a proceeding pending before an Appellate Authority or an Appellate Tribunal or a Court, where or not, –

1. any person or association of persons, society, club, firm, company, corporation, undertaking or Government Department is a dealer; or
2. any transaction is a sale or purchase and, if so, the sale or purchase price, as the case may be, therefore; or
3. any particular dealer is required to obtain registration; or
4. any particular goods purchased or sold by a registered dealer are covered by his certificate of registration; or
5. any tax is payable in respect of any particular sale or purchase and, if so, the point at which tax is leviable and the rate thereof; or
6. any goods is taxable and, if taxable, the point at which and the schedule under which it is taxable and the rate thereof; or
7. any goods or classes of goods should be specified in the certificate of registration issued under this Act; or
8. any transaction, contract or agreement or arrangement is works contract or an operating lease; or
9. any particular thing done to any goods amounts to or results in the manufacture of goods within the meaning of that term; or
10. any set-off can be claimed on any particular transaction of purchase and if it can be claimed, what are the conditions and restrictions subject to which such set-off can be claimed, the Commissioner shall make an order determining such question:

Provided that, before giving such decision, the Commissioner may, in his

discretion, ask an officer appointed to assist him to make such inquiries as he

considers necessary for the decision of the question.

 

(2) Any registered dealer or any association of trade, commerce, industry may apply in the prescribed form and manner to the Commissioner for determination of such question and the Commissioner shall, after giving the applicant a reasonable opportunity of being heard, make an order determining such question.

 

(3) No question which arises from an order already passed, in the case of an applicant, by any authority under this Act or the Tribunal, shall be entertained for determination under this section.

(4) No decision of the Commissioner under this section shall affect the validity or operation of any order passed earlier by any Prescribed Authority, Appellate Authority, Appellate Tribunal or any Court.

 

(5) Subject to other provision of this Act, a decision given by the Commissioner under this section shall be final and binding on the applicant, and the Prescribed Authority.

 

(6) The Commissioner, for reasons to be recorded in writing may, on his own motion review an order passed by him under this section and pass such order thereon as he thinks just and proper. The Commissioner may direct that the order of review shall not affect the liability of the person in whose case the review is made in respect of any sale or purchase effected prior to the review and may likewise if the circumstances so warrant direct accordingly in respect of any other person similarly situated:

Provided that no order shall be passed under this Sub-section unless the dealer or the person in whose case the order is proposed to be passed has been given a reasonable opportunity of being heard:

Provided further that, before initiating any action under this sub-section, the Commissioner shall obtain prior permission of the Government.

 

38. Section 3(5)(b) of the AVAT Act clearly postulates a situation where it is deemed expedient that for the proper administration of the Act, the Commissioner may issue such orders, instructions and directions to the Officers and persons concerned, as it may deem fit. A reading of the Circular dated 05.09.2017 would indicate that the said Circular is not for the purpose of any proper administration of the Act, but was made for the purpose of making the levy of tax under the Act of 2003 to be inapplicable in respect of those dealers who purchases the six goods included in Entry 54 of the State list of the 7th Schedule to the Constitution of India and retained under Section 2(h) of the CST Act of 1956 and uses it for manufacturing a good other than the six goods.

 

39. By virtue of Section 174(1) of the AGST Act of 2017, the applicability of the AVAT Act of 2003 in respect of the six goods mentioned in Entry 54 of the State list under the 7th Schedule of the Constitution of India had been retained. In other words, it is a statutory provision that for purchase of any of the six goods, taxes leviable under the AVAT Act of 2003 would be applicable.

 

40. In the circumstance, the Commissioner by exercising his jurisdiction under Section 3(5)(b) of the AVAT Act of 2003 seeks to take away the aforesaid six goods from being subjected to a levy of taxes under the AVAT Act of 2003. In other words, the Commissioner by exercising a power to issue orders, instructions, directions for proper administration of the Act, had withdrawn a statutory provision, providing for a particular kind of dealer to be leviable under the AVAT Act of 2003, which accordingly would be impermissible under the law. Therefore, it cannot be accepted that the Circular dated 05.09.2017 was issued in exercise of its power under Section 3(5)(b) of the AVAT Act of 2003.

 

41. Similarly, under Section 105 of the AVAT Act of 2003, the Commissioner can pass an order if any question arises as provided in Sub Clause (a) to Sub Clause (j) of Section 105 (1). But none of the provisions of Sub Clause (a) to Sub Clause (j) empowers the Commissioner to take away the statutory requirement of being leviable to a tax under the AVAT Act of 2003, if a dealer purchase any of the six goods mentioned in Entry 54 of the State list of the 7th Schedule to the Constitution of India and uses it for manufacture of a good which would be other than the said six goods.

 

42. From the said point of view also it cannot be said that the Circular dated 05.09.2017 was issued in exercise of power under Section 105 of the AVAT Act of 2003.

 

43. Both Section 3(5)(b) and Section 105 of the AVAT Act of 2003 confers jurisdiction on the Commissioner to decide any question for proper administration of the Act or to decide as to whether any dealer is liable to pay the taxes in a given circumstances. But the said power cannot be exercised to the extent to declare that the category of dealer, who are otherwise leviable to taxes under the Act be declared to be not leviable and declare their registration to have ceased.
44. The purport of the Circular dated 05.09.2017 is to declare that the dealer who purchases the six goods included under Section 2(d) of the CST Act of 1956 would not be leviable for a tax under the AVAT Act of 2003, in the event, such dealers purchases the six goods for inter-state sale and manufacture a good other than the six goods. Therefore, the Circular dated 05.09.2017 could not have been issued in exercise of the power under Section 3(5)(b) and Section 105 of the AVAT Act of 2003.

 

45. It is taken note of that the six goods included under Entry 54 of the State list of the 7^th Schedule of the Constitution of India, which are made leviable under the AVAT Act of 2003 are the same six goods which are retained under Section 2(d) of the CST Act of 1956.

 

46. Apart from Section 3(5)(b) and Section 105 of AVAT Act of 2003, no other source of authority have been indicated by the learned counsel for the respondents under which the Commissioner of Taxes could have issued the Circular dated 05.09.2017.
47. Accordingly, the contention raised that the Commissioner of Taxes, Assam did not have the jurisdiction to issue the Circular dated 05.09.2017 is answered in favour of the petitioner.

 

48. Clause 9 of the Circular dated 05.09.2017 also provides a clarification that the dealers making inter-state purchase, amongst others, of high-speed diesel against Form C and using it for manufacture or processing of goods other than the six aforementioned goods would cease to be dealers under the CST Act of 1956 w.e.f. 01.07.2017 as their liability to pay taxes under the repealed Act of AVAT Act of 2003 had ceased w.e.f. 01.07.2017. The said clarification perhaps is an indication that such category of dealers who makes purchase of any of the six goods and uses it for manufacture of a good other than the six goods would not be covered by Section 8(3)(b) of the CST Act of 1956 and, therefore, would not be entitled to the benefit of paying CST @ 2% as provided under Section 8(1). If that is the purport of the provisions of the Circular dated 05.09.2017, the same cannot be a reason to provide that such dealers who purchases the six goods for inter-state sale and uses it for manufacture of good other than the six goods would not be liable for tax under the AVAT Act of 2003, and, therefore, their registration ceases to exist under Section 7(2) of the CST Act of 1956.

 

49. As already alluded hereinabove, the entitlement of a registration under Section 7(2) of the CST Act of 1956 is subject to the pre-condition that the dealer is leviable to a tax under the State law i.e, in the instant case, the AVAT Act of 2003. Such registration is not relatable as to whether upon being registered; the dealer would be entitled to a levy of CST @ 2% under Section 8(1), upon being covered by the provision of Section 8(3).

 

50. As the six goods in question had been retained under the AVAT Act of 2003, therefore, it cannot be said that it would not be subjected to a levy under the AVAT Act of 2003, merely because an interpretation is sought to be given that they would not be entitled to a levy of 2% of CST under Section 8(1) of the CST Act of 1956, as they do not satisfy the requirements of Section 8(3).

 

51. As it has been concluded that the registration of the petitioners u/s 7(2) of the CST Act of 1956 could not have been withdrawn for an underlying reason that the manufactured good referred in Section 8(3) of the CST Act of 1956 would also have to be amongst the six retained goods, this Court is of the view that the question whether the finished goods would also have to be amongst the six retained goods for the purpose of applying the provisions of Section 8(3) of the Act, need not be answered for the present.

It is so, inasmuch as, irrespective of a decision either in favour of the petitioner that the manufactured good need not be amongst the six retained goods, or in favour of the respondents that the manufactured good also have to be amongst the six retained goods, which in fact, is also the legal opinion of the Legal Affairs Department of the Ministry of Law, Govt. of India, the same cannot be a basis to withdraw the registration under Section 7(2) of the CST Act of 1956. Even if the decision on the question is in favour of the respondents, the same may have some other implication, but cannot result in a withdrawal of the registration.

 

52. In the event, if the respondent authorities are of the view that the manufactured goods would also have to be amongst the six retained goods for availing the benefits of Section 8(3) of the CST Act of 1956, the appropriate remedy for implementing the same cannot be an withdrawal of the registration of the dealer u/s 7(2) of the Act by providing that in the circumstance, the dealer is no longer leviable under the AVAT Act of 2003.
53. For the reasons stated herein above, the circular dated 05.09.2017 is accordingly set aside

Both the writ petitions stand disposed of in the above manner.