Pernod Ricard INDIA (P) LTD., Thr. Their Aut. Sign, Manoj Mishra vs. State Of Goa, Thr. The Finance Secretary And 2 Ors

Held

The Court held that the impugned direction and the undertaking were ultra vires the statutory provisions. The Court reasoned that statutory authorities must act strictly within the four corners of the law, and executive instructions cannot override or supplement statutory provisions. The insistence on an undertaking not contemplated by the CST Act, CST Rules, or Goa Rules was found to be an impermissible action. The Court noted that the respondents' perception of deficient statutory provisions to protect revenue interests, even if assumed to be correct, could not be redressed through executive instructions or undertakings devoid of statutory backing. The Court also found prejudice in compelling the petitioners to furnish an undertaking without statutory underpinning, potentially exposing them to liabilities not contemplated by existing laws. The Court explicitly stated that it would not delve into the larger issue of whether ENA for alcohol manufacture is covered under the GST regime, as it did not directly arise in these petitions. The ratio decidendi is that statutory authorities cannot demand undertakings or impose conditions for issuing statutory forms if such demands are not supported by the relevant statutes or rules, and such insistence constitutes prejudice.

Facts

The petitioners, United Spirits Ltd. and Pernod Ricard India (P) Ltd., challenged the respondents' insistence on an undertaking for payment of future GST, interest, and penalty as a precondition for issuing "C and F Forms" under the Central Sales Tax Act, 1956 (CST Act). The petitioners argued they had fulfilled all statutory requirements for these forms. The respondents, the State of Goa and its tax authorities, sought this undertaking due to potential future GST liability on Extra Neutral Alcohol (ENA) used for alcohol for human consumption, a matter pending before the GST Council. The petitioners contended that no provision in the CST Act, CST Rules, or Goa Rules empowered the respondents to demand such an undertaking, deeming it ultra vires.

Key Issues

1. Whether the respondents can insist upon an undertaking from the petitioners for the payment of future GST, interest, and penalty as a precondition for issuing "C and F Forms" under the CST Act, 1956, and its associated rules, when no such provision exists in the said statutes and rules? (Question of law) Petitioner's arguments: The petitioners argued that the CST Act, CST Rules, and Goa Rules do not contain any provision empowering the respondents to demand the impugned undertaking. They asserted that statutory authorities must act strictly within the statutory framework. They also highlighted that the GST Council had decided to maintain the status quo regarding ENA and apply the CST regime pending a final decision, and that the Office Memorandum (OM) dated 21.04.2021 itself acknowledged the applicability of the CST/VAT regime. They relied on precedents like Om Prakash v. Ashwini Kumar and Bhavnagar University v. Palitana Sugar Mill Pvt. Ltd. & Ors. to support their contention that executive instructions cannot override statutory provisions. They further argued that withholding forms based on potential future liability is impermissible, citing Chowhan Machinery Mart v. State of Orissa, Tata Steel Ltd. v. Jharkhand & Ors., and Manan Auto Link Pvt. Ltd. v. State of Gujarat. Respondents' arguments: The Advocate General defended the action by referring to Articles 246A, 269A, and 279A of the Constitution of India. The judgment does not explicitly detail the respondents' arguments regarding the specific provision empowering the undertaking, but it implies their concern was revenue protection in light of potential GST applicability.