M/S.Sree Metaliks LTD. vs. Commissioner Of Commercial Taxes,Orissa

Held

The Court held that the circular dated August 17, 2017, issued by the State Government, was no longer enforceable. This decision was based on the reasoning that the Punjab and Haryana High Court's judgment in Carpo Power Limited, which partially quashed a similar circular and was subsequently approved by the Supreme Court, had settled the issue. The Court also took into consideration similar favorable decisions from other High Courts, including Chhattisgarh, Rajasthan, Madras, and Gauhati. The Court found it inappropriate to enforce the impugned circular when a clear judicial consensus, supported by the Central Government's clarification, favored the petitioner's stance. The ratio decidendi is that post-GST, the entitlement to 'C' Forms for inter-state purchases of goods like HSD for manufacturing, mining, or power generation, as per the provisions of the Central Sales Tax Act, 1956, remains valid and should be honored, aligning with the principles laid down in the cited High Court and Supreme Court judgments. The Court directed the State Government to follow and act in accordance with the ratio of these decisions.

Facts

The petitioner challenged a circular dated August 17, 2017, issued by the State Government, which directed persons dealing with High-Speed Diesel (HSD) to pay GST. The petitioner relied on a Punjab and Haryana High Court decision in Carpo Power Limited v. State of Haryana and Ors., which held that 'C' Forms should be issued for natural gas used in electricity generation, even after the implementation of GST. This decision was upheld by the Supreme Court. The Central Government subsequently issued a clarification letter on November 1, 2018, forwarding the High Court and Supreme Court judgments for compliance. The petitioner argued that the issue was settled and that the State Government's circular was contrary to multiple High Court decisions that allowed the issuance of 'C' Forms for inter-state purchases of HSD for manufacturing, mining, and power generation.

Key Issues

1. Whether the circular dated August 17, 2017, issued by the State Government, which directed persons dealing with HSD to pay GST, is valid in light of subsequent judicial pronouncements and clarifications, particularly concerning the issuance of 'C' Forms for inter-state purchases for specific industrial uses? (Question of law) Petitioner's arguments: The petitioner contended that the issue of 'C' Forms for inter-state purchases of goods like HSD, when used for manufacturing, mining, or power generation, was no longer res integra. They relied on the Punjab and Haryana High Court decision in Carpo Power Limited, upheld by the Supreme Court, and similar decisions from other High Courts (Chhattisgarh, Rajasthan, Madras, and Gauhati). These judgments, they argued, established the entitlement to 'C' Forms for such purchases, and the State Government's circular was contrary to this settled law. The petitioner also highlighted the Central Government's clarification letter dated November 1, 2018, which directed compliance with these judicial pronouncements. Revenue/State's arguments: The judgment does not record any specific arguments made by the revenue or State.