Jsw Steel Limited vs. The Union Of INDIA - Karnataka High Court, 02 September 2022

Cause title — parties, addresses and appearances

1 IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 2ND DAY OF SEPTEMBER, 2022 BEFORE THE HON’BLE MR.JUSTICE S.R.KRISHNA KUMAR WRIT PETITION No.3418 OF 2020(T-RES) BETWEEN: JSW STEEL LIMITED UTILITY BUILDING, P O VIDYANAGAR, TALUK SANDUR, BALLARI 583275, REP HEREIN BY ITS ASSOCIATE VICE PRESIDENT (F AND A) MR ANJANEYA.. RAMACHANDRA CHITTOOR …PETITIONER (BY SRI. T. SURYANARAYANA, SENIOR COUNSEL APPEARING FOR SMT. TANMAYEE RAJKUMAR., ADVOCATE) AND: 1 . THE UNION OF INDIA REP HEREIN BY THE SECRETARY MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, STATE TAX DIVISION, GOVERNMENT OF INDIA, NORTH BLOCK, NEW DELHI 110001. 2 . THE COMMISSIONER OF COMMERCIAL TAXES, KARNATAKA VINIJYA TERIGE KARYALAYA, GANDHINAGAR, KALIDAS ROAD, BENGALURU 560009 3 . THE ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES, KARNATAKA VINIJYA TERIGE KARYALAYA, GANDHINAGAR, KALIDAS ROAD, BENGALURU 560009. 4 . THE STATE OF KARNATAKA REP HEREIN BY THE PRINCIPAL SECRETARY FINANCE DEPARTMENT, MINISTRY OF FINANCE, GOVERNMENT OF KARNATAKA, VIDHANA SOUDHA, BENGALURU 560001 …RESPONDENTS (BY SRI. B.S. VENKATANARAYANA., ADVOCATE FOR R-1 SRI. HEMA KUMAR., AGA FOR R-2 & R-4) 2 THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT THE PETITIONER IS ENTITLED TO CONCESSIONAL RATE OF 2 PER CENT ON THE INTERSTATE PURCHASE OF HSD USED BY THE PETITIONER IN MANUFACTURE OF STEEL, U/S 8(3)(b) OF THE CST ACT AND CONSEQUENTLY DIRECTING THE RESPONDENTS TO ISSUE C FORMS FOR PURCHASE OF HSD. & ETC., THIS W.P. COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING:-

ORDER

In this petition, petitioner has sought for the following reliefs:- a. Declaring that the Petitioner is entitled to concessional rate of 2% on the interstate purchase of H used by the Petitioner in manufacture of steel, under Section 8(3)(b) of the CST Act and consequently directing the Respondents to issue C Forms for purchase of H . b. Quashing the office memorandum bearing F.No.28011/03/2014-ST-II dated 07.11.2017 issued by the 1st Respondent (Annexure-‘B’) to the extent it holds that the term “goods” referred to in the phrase “for use by him in the manufacture or processing of goods for sale” in Section 8(3)(b) of the CST Act will have the same meaning as defined in Section 2(d) of the CST Act, as amended by the Taxation Laws Amendment Act, 2017;

3 c. Quashing the Circular bearing No.KSA.GST.CR- 16/2017-18 dated 02.03.2018 issued by the 2nd Respondent (Annexure-‘C’); d. Quashing the Circular bearing No.KSA.GST.CR- 16/2-2017-18 dated 02.03.2018 issued by the 2nd Respondent (Annexure-‘C’); e. In the alternative, declaring that Section 13 of the Taxation Laws Amendment Act, 2017 amending Section 2(d) of the CST Act is discriminatory, arbitrary, illegal, contrary to the parent Act and ultra vires the Constitution of India. f. Pass such other or further order/s as this Hon’ble Court may deem fit in the facts and circumstances of the case, in the interests of justice and equity.

Heard learned Senior counsel for the petitioner, learned CGC for respondent No.1 and learned AGA for respondent Nos.2 to 4 and perused the material on record.

In addition to reiterating the various contentions urged in the Memorandum of Petition and referring to the documents produced, learned counsel for the petitioner submits that the petitioner is a company engaged in manufacture of sale of high grade steel etc., and in this regard, petitioner procures petroleum products

4 such as High Speed Diesel (H ) mainly from dealers located in other States. Until 01.07.2017, petitioner was purchasing H at concessional rate of 2% under the Central Sales Tax (CST) by issuance of C Forms received by it to its vendors. Pursuant to the GST Act coming into force w.e.f. 01.07.2017, the respondents not only amended the definition of ‘goods’ under the CST Act but also issued a Office Memorandum dated 07.11.2017 to the effect that the term ‘goods’ referred to under Section 8(3)(b) of the CST Act would have the same meaning as amended in Section 2(d) of the CST Act. Subsequently, the respondent – State of Karnataka issued a clarificatory Circular dated 02.03.2018 restricting issuance of C Forms in respect of inter State purchasers of H and other petroleum products only for certain purposes. Similar circulars were issued by other States including Punjab & Haryana.

1 The circular issued by Punjab and Haryana was challenged before the Punjab and Haryana High Court in the case of Carpo Cover Ltd., vs. State of Haryana – CWP 29437 / 2017 dated 28.03.2018, wherein the said petition was allowed and the respondents – revenue were

5 directed to issue C Forms in favour of the writ petitioners. The said judgment of the Punjab and Haryana High Court was challenged by the revenue and affirmed by the Apex Court in SLP No.20572 of 2018 Dated 13.08.2018. Pursuant thereto, the respondents issued a communication / Notification dated 01.11.2018 directing the revenue department to comply with the aforesaid judgments in all States. It is also pointed out that the aforesaid judgment in Carpo’s case supra, has been followed subsequently by other High Courts also in various decisions.

2 Under these circumstances, the petitioner submitted representations dated 20.08.2019 and 05.09.2019 to the respondents 2 to 4 – State of Karnataka bringing to their notice all the aforesaid facts and circumstances and called upon them for permission to issue Form – C for interstate procurement of H for consumption in manufacturing process of steel items. It is the grievance of the petitioner that despite the aforesaid Notification / Communication dated 01.11.2018 issued by 1st respondent t- Union of India and the decision in Carpo’s case supra, being upheld by the Apex Court, the Circular

6 dated 02.03.2018 has not been withdrawn by the respondents 2 to 4, thereby preventing the petitioner from issuing ‘C’ Forms and as such, the petitioner is before this Court by way of the present petition.

Per contra, learned CGC for the respondent No.1 and learned AGA for respondents 2 to 4 submit that apart from the fact that there is no merit in the petition, during the pendency of the petition, Section 8(3)(b) of the CST Act has been amended w.e.f 01.04.2021, the petition is liable to be dismissed.

As rightly contended by the learned Senior counsel for the petitioner, in the light of the Notification / Communication dated 01.11.2018 issued by the 1st respondent – Union of India directing implementation of the judgment of the Punjab and Haryana High Court in Carpo’s case supra, which has been confirmed by the Apex Court and the decisions of other High Courts following the same, I am of the considered opinion that the impugned Circular at Annexure-C dated 02.03.2018 issued by respondents 2 to 4 – State of Karnataka deserves to be quashed and

7 necessary directions are to be issued to them to issue C Forms in favour of the petitioner for purchase of H for the period from 01.07.2017 from 31.03.2021 when Section 8(3)(b) of the CST Act was amended w.e.f. 01.04.2021. 6. In the result, I pass the following:- ORDER

(i) The petition is hereby allowed. (ii) The impugned Circular at annexure-C dated 02.03.2018 issued by the 2nd respondent is hereby quashed. (iii) The petitioner is declared to be entitled to concessional rate of 2% on the inter-state purchases of High Speed Diesel by the petitioner during the period from 01.07.2017 to 31.03.2021. (iv) The respondents 2 to 4 are hereby directed to issue C-Forms in favour of the petitioner for purchase of H for the aforesaid period from 01.07.2017 to 31.03.2021. (v) It is however made clear that in view of the amendment to Section 8(3)(b) of the CST Act w.e.f.

8 01.04.2021, all transactions of the petitioner subsequent to 01.04.2021 will not stand covered by this Order. JUDGE

Bmc/Srl.