M/S. Orient Refractories Limited vs. State Of Rajasthan

Facts

The petitioner, M/s. Orient Refractories Limited, sought a direction from the Rajasthan High Court to issue 'C' forms. Previously, under the pre-GST regime, the petitioner purchased High Speed Diesel (HSD) against 'C' forms for manufacturing activities. Post-GST, this was denied due to an amendment in Clause (d) of Section 2 of the CST Act, which redefined 'Goods'. The petitioner contended that HSD purchased for manufacturing and processing of goods through interstate trade should still be eligible for 'C' forms. The respondents, including the State of Rajasthan and the Union of India, opposed this.

Held

The Court held that the respondents are liable to issue 'C' Forms in respect of High Speed Diesel procured for manufacturing and processing of goods through interstate trade. This decision was based on the ratio of the Court's previous judgment in Hindustan Zinc Limited Vs. State of Rajasthan & ors. (S.B. Civil Writ Petition No. 5506/2018). The Court reasoned that the amendment to Section 2(d) of the CST Act should not affect the eligibility for 'C' forms for HSD used in manufacturing. The ratio decidendi is that essential inputs for manufacturing, procured through interstate trade, remain eligible for concessional tax treatment via 'C' forms, irrespective of minor definitional changes that do not alter the fundamental nature of the transaction for manufacturing purposes. 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 from the concerned authorities. These claims are to be processed within twelve weeks of written submission by the petitioner with requisite documents.

Key Issues

1. Whether the petitioner is entitled to the issuance of 'C' forms for the purchase of High Speed Diesel for manufacturing and processing of goods through interstate trade, despite the amendment to Section 2(d) of the CST Act? (Question of law) Petitioner's argument: The petitioner argued that the amendment to Section 2(d) of the CST Act should not preclude them from obtaining 'C' forms for HSD used in manufacturing and processing of goods via interstate trade, as this was the practice in the pre-GST regime. They relied on the principle that such essential inputs for manufacturing should continue to be facilitated. Revenue/State's argument: The respondents contended that the amendment to the definition of 'Goods' in Section 2(d) of the CST Act, which led to the denial of 'C' forms, was legally valid and that the petitioner was no longer entitled to them.