Star Cement Meghalaya Vs State Of Assam

In a recent legal proceeding, Dr. A. Saraf, a seasoned senior counsel representing the petitioners, presented arguments before the court. His expertise and experience were evident as he articulated the case on behalf of the petitioners with clarity and precision. Following Dr. Saraf, Mr. D. Saikia, a learned Senior Additional Advocate General representing the authorities of the State of Assam in the department of Finance and Taxation, provided counterarguments. Mr. Saikia presented the perspective of the state authorities with diligence, addressing the concerns raised by the petitioners. Additionally, Mr. S.C. Keyal, a knowledgeable ASGI representing the authorities of the Government of India, offered further insights from the federal standpoint. Each legal representative brought forth their respective viewpoints, contributing to a comprehensive understanding of the matter at hand. The courtroom atmosphere was charged with intellectual discourse as arguments and counterarguments were exchanged, highlighting the complexities surrounding the case. Through this process, the court gained valuable insights into the intricacies of the legal issues being debated.

In a recent court session, Dr. A. Saraf, a respected senior counsel representing the petitioners, was heard alongside Mr. D. Saikia, the learned Senior Additional Advocate General for the State of Assam’s authorities in the department of Finance and Taxation. Also present were Mr. S.C. Keyal, learned ASGI for the authorities of the Government of India in the Ministry of Finance and Revenue and Ministry of Law and Legal Affairs, and Mr. M.K. Choudury, senior counsel for the respondent Indian Oil Corporation Ltd (IOCL). Both petitions under consideration, namely WP(C) No.366/2018 and WP(C) 915/2018, are rooted in the same facts and legal issues, thus being addressed together.

The petitioners in both cases are involved in the manufacture and sale of clinker, utilizing diesel as a raw material. They procure diesel from IOCL’s establishments in Assam and employ it in clinker production at their industrial units in Meghalaya. As this transaction involves purchasing diesel in Assam for use in Meghalaya, it constitutes an inter-state sale. To facilitate this, petitioners utilize Form-C under the Central Sales Tax Act, 1956, subjecting themselves to Central Sales Tax (CST) as per Section 8(1) of the Act.

However, if petitioners are unable to utilize Form-C, they would be subject to local sales tax instead of CST at a rate of 2% under the CST Act, 1956.

The respondents from the State of Assam, through the Finance and Taxation Department, issued Circular No.7/2017-GST dated 05.09.2017. This circular provided clarification on various aspects of the CST Act of 1956 concerning liabilities, returns, registrations, and eligibility for inter-state sale/purchase of goods after the implementation of Goods and Services Tax Acts, 2017 (GST Acts) from 01.07.2017.

manufacture and sale of clinker, which involves the use of diesel as a raw material, they would have to abide by the conditions set forth in the Circular No.7/2017-GST dated 05.09.2017 issued by the respondents under the State of Assam in the Finance and Taxation Department. This circular clarifies certain aspects of the Central Sales Tax Act of 1956 (CST Act of 1956) in light of the implementation of the Goods and Services Tax Acts of 2017 (GST Acts of 2017).

The petitioners, engaged in the manufacture and sale of clinker, purchase diesel from Indian Oil Corporation Ltd (IOCL) located in the State of Assam for use in their industrial setup in the State of Meghalaya. These purchases are considered interstate sales, and the petitioners utilize Form-C under the CST Act of 1956 to facilitate these purchases and subject themselves to Central Sales Tax (CST) at a rate of 2%.

However, the Circular No.7/2017-GST dated 05.09.2017 introduces certain conditions and clarifications regarding the liability, returns, registrations, and eligibility for interstate sale/purchase of goods against Form-C after the implementation of the GST Acts of 2017. Notably, the circular specifies that certain dealers, previously registered under the CST Act of 1956 due to their liability under the Assam Value Added Tax Act of 2003 (AVAT Act of 2003), are no longer eligible for registration under Section 7(2) of the CST Act of 1956 following the repeal of the AVAT Act of 2003.

The circular further stipulates that dealers who continue to make interstate sales of the six specified goods, including high-speed diesel, will remain liable to pay tax under the CST Act of 1956 and can avail themselves of Form-C or Form-F for interstate purchases of these goods. However, dealers who were purchasing petroleum and high-speed diesel against Form-C for use in the manufacture or processing of goods other than the six specified goods are affected by the circular’s provisions. As per Clause-9 of the circular, such dealers’ registration under the CST Act of 1956 became invalid from 01.07.2017, and they are no longer eligible to make interstate purchases of the six specified goods against Form-C.

Therefore, the circular impacts dealers who purchase diesel for the manufacture of clinker and other goods, potentially subjecting them to local sales tax laws instead of the CST Act of 1956 if they are unable to use Form-C. This raises questions regarding the applicability and interpretation of the CST Act of 1956 in light of the changes brought about by the GST Acts of 2017 and the circular issued by the authorities in Assam. The court will need to consider the legality and implications of these provisions in determining the petitioners’ case.

The proceedings involved a hearing where Dr. A. Saraf, a respected senior counsel representing the petitioners, and other learned counsels presented arguments. The case involved two writ petitions, WP(C) No.366/2018 and WP(C) 915/2018, which shared common facts and legal questions and were thus considered together. Both petitioners were engaged in the manufacture and sale of clinker, using diesel as a raw material.

The petitioners purchased diesel from Indian Oil Corporation Ltd (IOCL) in Assam and used it for clinker manufacturing in Meghalaya, constituting an interstate sale. They benefited from Form-C under the Central Sales Tax Act, 1956, subjecting themselves to Central Sales Tax (CST) at 2%.

However, a circular issued by the Finance and Taxation Department of Assam on 05.09.2017 clarified certain aspects of the CST Act of 1956 post-Goods and Services Tax (GST) implementation. It stated that dealers purchasing specific goods, including diesel, for manufacturing purposes other than the specified six goods would lose their CST registration.

The petitioners contested the circular on several grounds. Firstly, they argued that the Assam Commissioner of Taxes lacked jurisdiction to issue the circular. Secondly, they contended that despite amendments, the six specified goods remained taxable under both the CST Act of 1956 and Assam Value Added Tax Act of 2003 (AVAT Act), and hence, registration under Section 7(2) of the CST Act should not be revoked. Thirdly, they cited Section 8(3) of the CST Act, arguing that the circular’s interpretation contradicted the Supreme Court’s understanding of the term “goods.”

Dr. A. Saraf, representing the petitioners, emphasized that the circular’s effect implied a narrow interpretation of “goods,” contrary to legal principles.

In summary, the case revolved around the legality and interpretation of a circular issued by the Assam Tax Department, impacting the CST registration of dealers purchasing specified goods for manufacturing purposes.

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