Jud Cements LTD. vs. The State Of Assam And 2 Ors.

Held

The Court held that the Commissioner of Taxes, Assam, did not have the jurisdiction to issue Circular No. 7/2017-GST dated September 5, 2017. The Court reasoned that the circular's purport was to declare that dealers purchasing the six specified goods would not be leviable for tax under the AVAT Act if they used such goods for manufacturing a product other than the six specified goods. This declaration could not be made under Sections 3(5)(b) and 105 of the AVAT Act, as these provisions empower the Commissioner to decide questions for proper administration or tax liability, not to declare categories of dealers not leviable or to declare their registrations ceased. The Court also found that the six goods were retained under the AVAT Act, so it could not be said they were not subject to levy under that Act. Therefore, the withdrawal of registration under Section 7(2) of the CST Act was not justified. The Court explicitly stated that the question of whether the finished goods must also be among the six retained goods for Section 8(3) of the CST Act to apply need not be answered for the present, as the withdrawal of registration was improper regardless of that interpretation. The circular was set aside.

Facts

The petitioners, Star Cement Meghalaya and Jud Cements Ltd., are manufacturers of clinker using diesel as a raw material. They purchased diesel from Indian Oil Corporation Ltd. (IOCL) in Assam and used it for manufacturing in Meghalaya, constituting inter-state sales. They availed the benefit of Form-C under the Central Sales Tax Act, 1956 (CST Act) to pay Central Sales Tax (CST) at 2%. The Commissioner of Taxes, Assam, issued a Circular No. 7/2017-GST on September 5, 2017, clarifying that dealers purchasing specified goods, including high-speed diesel, against Form-C for use in manufacturing goods other than the specified six goods (including diesel), would cease to be dealers under the CST Act from July 1, 2017, as their liability under the Assam Value Added Tax Act, 2003 (AVAT Act) ceased. The petitioners challenged this circular.

Key Issues

1. Whether the Commissioner of Taxes, Assam, had the jurisdiction to issue Circular No. 7/2017-GST dated September 5, 2017, which declared that dealers making inter-state purchases of high-speed diesel against Form-C for use in manufacturing goods other than the six specified goods ceased to be dealers under the CST Act, 1956, effective July 1, 2017? Petitioner's arguments: The Commissioner lacked jurisdiction to issue the circular. The circular wrongly declared that dealers making such purchases ceased to be dealers under the CST Act. Even after the GST implementation, the six specified goods remained taxable under the CST Act and AVAT Act, and therefore, registrations under Section 7(2) of the CST Act should not be withdrawn. The interpretation of Section 8(3) of the CST Act by the Supreme Court does not necessitate that the manufactured goods must also be among the six specified goods for a dealer to be eligible for CST at 2% under Section 8(1). Revenue's arguments: The judgment records no specific arguments from the revenue regarding the Commissioner's jurisdiction or the interpretation of the relevant sections, other than implicitly supporting the circular's content.