Caparo Power LTD vs. State Of Haryana And Ors.

Held

The Court held in favour of the petitioner, allowing the writ petition. It was decided that the respondents are liable to issue 'C' Forms in respect of the natural gas purchased by the petitioner for use in electricity generation. The Court reasoned that the provisions of Section 8 of the CST Act and Rule 12 of the CST (R&T) Rules had not been amended and did not restrict the usage of 'C' Forms solely for re-sale of the six items listed in the amended definition of 'goods' in Section 2(d) of the CST Act. The purchase of goods for purposes such as generation or distribution of electricity qualifies a purchaser for registration under Section 7(2) of the CST Act. The Court also noted that the petitioner's registration certificate under the CST Act had not been cancelled, and the provisions for amendment or cancellation under Section 7(4) had not been invoked. The ratio decidendi is that a dealer registered under the CST Act for a specified purpose, even if the tax liability on the end product is zero under the GST regime, remains entitled to 'C' Forms for inter-state purchases of specified goods used for that purpose, provided the registration is not cancelled. The Court directed that if the petitioner had paid any amount due to the wrongful refusal to issue 'C' Forms, they are entitled to a refund or adjustment within twelve weeks of making a claim.

Facts

The petitioner, Carpo Power Limited, challenged the respondents' refusal to issue 'C' Forms for natural gas purchased in inter-state trade and used for electricity generation. The petitioner operates a power plant in Haryana and purchases natural gas from Gujarat-based oil companies. Prior to the Goods and Services Tax (GST) regime, the petitioner was registered under the Haryana Value Added Tax Act, 2003, and the Central Sales Tax Act, 1956. The registration certificate under the CST Act included natural gas for use in electricity generation. The core of the dispute is whether the petitioner is entitled to 'C' Forms after the amendment of the CST Act and the introduction of GST.

Key Issues

1. Whether the petitioner, a dealer purchasing natural gas for electricity generation, is entitled to the issuance of 'C' Forms under the Central Sales Tax Act, 1956, and the Central Sales Tax (Registration and Turnover) Rules, 1957, in light of the amendments to the CST Act and the introduction of GST laws? (Question of law) Petitioner's Contention: The petitioner argued that its registration under the CST Act, which includes natural gas for electricity generation, remains valid. They contended that the definition of 'goods' in Section 2(d) of the CST Act, as amended, specifically includes natural gas, and that the purpose of use for electricity generation is also covered. They asserted that the Haryana Goods and Services Tax Act, 2017 (HGST Act), falls within the definition of 'sales tax law' under the CST Act, satisfying the conditions for registration under Section 7(2). Revenue's Contention: The respondents argued that the petitioner is not engaged in the re-sale of natural gas and therefore not entitled to 'C' Forms. They contended that the petitioner's registration under the CST Act lapsed with the commencement of the HGST Act, as the petitioner was no longer liable to pay tax on electricity under the Haryana Value Added Tax Act, 2003. They further argued that the CST Act provisions, particularly Sections 7 and 8, would only apply if the petitioner sold the same goods (natural gas) that it purchased.