Ramco Cements Ltd. Vs Commissioner Of commercial Taxes Case

The writ petitions before the Court collectively address concerns stemming from a communication issued by the Commissioner of Commercial Taxes, Chepauk, Chennai-5, dated 31st May 2018, along with individual communications and notices dated 17th July 2018. These communications pertained to the eligibility criteria for availing concessional rates of tax, particularly focusing on dealers involved in the trade of petroleum crude, high-speed diesel, motor spirit (petrol), Aviation Turbine Fuel, Natural gas, and Liquor.

The core contention presented by the petitioners revolves around the Commissioner’s directive outlined in the letter of 31st May 2018. According to this directive, only dealers engaged in the specified goods mentioned above are entitled to purchase goods from other states at a concessional rate of tax. In essence, those not involved in trading these particular goods would be ineligible for the concessional rate, as they are perceived to be trading or manufacturing goods governed by the GST Act, 2017.

Consequently, the Commissioner instructed all Joint Commissioners to ensure that Assessing Officers scrutinize and approve the issuance of ‘C’ Forms, which facilitate the concessional rate, only after verifying the eligibility criteria for such approval. This directive has triggered concerns among the petitioners, as it potentially excludes a significant portion of dealers from accessing the concessional tax rates, thereby impacting their businesses and operations.

The petitioners, being aggrieved by this directive, have approached the Court seeking redressal. Their primary argument revolves around the perceived arbitrariness and unfairness of the Commissioner’s directive, which they argue unfairly discriminates against dealers not involved in the specified goods. They contend that such a directive goes against the principles of equality and fair treatment under the law, as it creates an arbitrary classification among dealers based on the nature of goods they trade in.

Furthermore, the petitioners argue that this directive imposes undue hardships on dealers engaged in goods not covered by the concessional rate, impeding their ability to conduct interstate trade competitively. They assert that such restrictions hinder free trade and undermine the objectives of promoting commerce and economic growth.

In response to the petitions, the Court is tasked with adjudicating the legality and constitutionality of the Commissioner’s directive. The Court must assess whether the directive violates fundamental rights, including the right to equality and the right to trade freely. Additionally, the Court may scrutinize the rationale behind the directive and evaluate whether it aligns with the overarching principles of tax administration and economic policy.

Ultimately, the resolution of these writ petitions holds significant implications for the affected dealers and the broader tax regime’s fairness and effectiveness. The Court’s decision will not only determine the immediate fate of the Commissioner’s directive but also establish precedents guiding tax administration and the protection of individual rights in similar contexts.

In a recent communication, the Commissioner of Commercial Taxes outlined specific criteria for dealers eligible to purchase petroleum products and alcoholic liquors. The letter delineated four categories entitled to this privilege:

1.Major Oil Companies: This category encompasses prominent entities such as Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL), Shell, Reliance Industries, and Oil and Natural Gas Corporation (ONGC).

2.Major Distilleries: Included in this category are notable distilleries like Golden Vats, SNJ Distilleries, and TASMAC.

3.Major Hotels: A range of distinguished hotels falls under this category, including ITC, Oriental Hotels, Crown Plaza, GRT Hotels, SAS Hotels Enterprises, TAJ GVK Hotels, Hablis Hotels, among others.

4.Major Clubs, Resorts, Cultural Associations: This category encompasses esteemed establishments like Presidency Club, Madras Boat Club, Madras Gymkhana Club, Ootacamund Club, Andhra Social Cultural Association, Ideal Beach Resorts, and others.

However, the Commissioner clarified that certain dealers are excluded from this entitlement due to their goods being taxed under the Goods and Services Tax (GST). This category comprises:

Other Dealers: This includes entities such as Spinning Mills, Blue Metal Crusher Units, ILFS Tamil Nadu Power Company, Housing Promoters, Cement Companies (such as Ramco Cement), Mines, Nuclear Power Corporation, and similar entities.

This declaration aims to provide clarity on which dealers are eligible to purchase petroleum products and alcoholic liquors, while also ensuring compliance with taxation regulations.

In a recent communication, the Commissioner of Commercial Taxes outlined the eligibility criteria for dealers to purchase petroleum products and alcoholic beverages. The specified categories included major oil companies such as IOC, BPCL, HPCL, Shell, Reliance Industries, and ONGC, as well as major distilleries like Golden Vats, SNJ Distilleries, and TASMAC. Additionally, major hotels such as ITC, Oriental Hotels, Crown Plaza, and GRT Hotels, among others, were listed, along with major clubs, resorts, and cultural associations such as Presidency Club, Madras Boat Club, and Ootacamund Club.

However, dealers falling outside these categories, such as spinning mills, blue metal crusher units, ILFS Tamil Nadu Power Company, housing promoters, cement companies like Ramco Cement, mines, and the Nuclear Power Corporation, were deemed ineligible due to the taxation of goods manufactured by them falling under the GST.

The impugned communication dated 17.07.2018 informed individual writ petitioners that they could no longer generate online ‘C’ Forms from 01.07.2017 for commodities not covered under the GST Act, 2017. The government justified its decision by stating that Section 8(3)(b) of the CST Act, 1956 had not been amended, and only goods defined under Section 2(d) of the CST Act could be purchased using ‘C’ Forms.

Subsequently, notices dated 17.07.2018 were issued to petitioners, calling for objections as to why penalties should not be imposed for generating ‘C’ Forms for ineligible purchases, such as HSD.

Given the common grievances against these proceedings, the leading case of W.P.Nos.19458 of 2018 to 19460 of 2018 was taken as a reference point to discuss the circumstances leading to the filing of the writ petitions.

In summary, the petitioners argue that they have been unfairly penalized for purchasing certain commodities and seek redress against the actions of the Revenue.

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