H D Enterprise vs. State Of Gujarat

Held

The Court held that the jurisdictional officer, having approved the amendment of the registration certificate under the CST Act, cannot unilaterally review or put such approval on hold without express power. Seeking guidance from a superior authority is not a valid ground for suspending an already granted approval. The Court found that the amendment to Section 2(d) of the CST Act by the Taxation Laws (Amendment) Act, 2017, does not provide for automatic cancellation or inactivation of CST registration certificates for dealers not dealing in the specified goods. Unlike the Gujarat Value Added Tax Act, 2003, which expressly provides for automatic deregistration, the CST Act lacks such a provision. Therefore, CST registrations do not automatically become inactive. The Court also held that a dealer registered under the GST Act can simultaneously hold a registration under the CST Act for goods that fall within the definition of 'goods' under the amended Section 2(d) of the CST Act, enabling them to avail concessional tax rates under Section 8 of the CST Act. The petitions were allowed, and the impugned letters were quashed.

Facts

The petitioners, partnership firms registered under the Central Sales Tax Act, 1956 (CST Act), applied on October 13, 2018, to include High Speed Diesel Oil in their registration certificates for use in mining operations. Their online applications were approved, reflecting the addition of High Speed Diesel Oil as eligible goods for mining use effective October 24, 2018. However, on February 27, 2019, the jurisdictional State Tax Officer issued letters stating the approval was erroneous and put on hold pending guidance from a superior authority. Aggrieved, the petitioners filed writ petitions before the High Court, challenging these letters.

Key Issues

1. Whether the jurisdictional officer, having approved the amendment of the registration certificate under the CST Act, has the authority to review and put such approval on hold, especially without express power, and whether seeking guidance from a superior authority is a valid ground for such action? 2. Whether CST registrations of dealers automatically become inactive upon the coming into force of the Taxation Laws (Amendment) Act, 2017, which amended the definition of 'goods' in Section 2(d) of the CST Act, if they were dealing in commodities other than those specified? 3. Whether a dealer registered under the Goods and Services Tax (GST) Act can also be registered under the CST Act for specific goods, particularly for availing concessional tax rates? Petitioner's arguments: The impugned letter is without authority, arbitrary, and illegal, as an authority cannot review its own order without express power. Seeking guidance from a superior is not a valid ground for putting an approved amendment on hold. The petitioners are entitled to include High Speed Diesel Oil for use in mining under Section 8(3) of the CST Act. Revenue's arguments: The definition of 'goods' under Section 2(d) of the CST Act was amended in 2017, restricting it to six specified items. Petitioners were not dealing in these specified items prior to GST. Their CST registration ceased to be active upon migration to GST. The amendment was erroneously approved, and the hold was to prevent contravention of the statute. CST registration was kept active only for annual returns and assessment issues.