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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
BHARGAV D. KARIA, NIRAL R. MEHTA, JJ.
Tetra Pak India Pvt Ltd - Petitioner
Versus
State of Gujarat & Anr. - Respondents
R/Special Civil Application No. 20272 of 2023
Decided On : 14-06-2024
Refund - Taxation - CST Act - Sections 36 - The court interpreted the provisions of the CST Act regarding the issuance of C-Form declarations and the entitlement to refunds, emphasizing that the ultimate burden of tax determines the rightful claimant for refunds.
Fact of the Case:
The petitioner, a multinational company, faced issues with the issuance of C-Form declarations for purchasing natural gas under the CST Act after the GST regime began. The commercial tax department canceled the petitioner's registration, leading to excess tax payments and a claim for refunds.
Finding of the Court:
The court found that the petitioner was entitled to refunds for excess tax paid due to the non-issuance of C-Form declarations, supported by previous judgments affirming the right to refunds for those who bore the tax burden.
Issues: Whether the petitioner is entitled to a refund of excess tax paid under the CST Act due to the non-issuance of C-Form declarations and the implications of the GST regime on such transactions.
Ratio Decidendi: The court held that the petitioner, having borne the tax burden, is entitled to claim refunds, and the refusal to process such claims based on technical grounds was unjustified.
Result: The court directed the respondents to process the refund claims of the petitioner within twelve weeks.
JUDGMENT :
Bhargav D. Karia, J
1. Heard learned advocate Mr. Uchit N. Sheth for the petitioner and learned Assistant Ms. Maithili Mehta for the respondent-State.
2. Rule, returnable forthwith. Learned Assistant Government Pleader Ms. Maithili Mehta waives service of notice of rule for and on behalf of the respondent No.1.
3. Having regard to the controversy involved in narrow compass, with the consent of the learned advocates for the parties, the petition is taken up for hearing.
4. Brief facts of the case are as under :
4.1. The petitioner is a multinational company engaged in providing, processing and packaging the solutions. The petitioner is purchasing natural gas from the Bharat Petroleum Corporation Limited during the course of its business. After inception of GST regime with effect from 01.07.2017, there was confusion in the trade as well as the Department as regards continuity of registration of dealers under the CST Act and allowability of interstate supply of petroleum products at concessional rate under the CST Act when they were to be used in manufacture of goods Covered under GST regime. C-Form declaration were not being issued by the sales-tax department across the country on the ground that the petroleum products were not to be used for manufacture of goods. The Hon'ble Supreme Court dismissed the Special Leave Petition filed by the State on 13.08.2018 confirming the order passed by the Punjab and Haryana High Court in case of Carpo Power Limited Versus State of Haryana reported in (2018) 53 GSTR 24 (P&H) wherein, it is held that purchase against C-Form declaration was permissible even after introduction of the GST regime.
4.2. A circular/office memorandum dated 01.11.2018 was issued by the Central Government to Commissioner of Commercial Taxes of all state and union territories on the basis of the aforesaid decision clarifying that the issue relating to issuance of C-Form declaration has been set at rest. The Hon'ble Supreme Court by order dated 24.03.2021 in case of Commissioner of Commercial Taxes and Another Versus Ramco Cement Limited has held as under :
3. The High Court of Jharkhand at Ranchi has also dealt with the same issue in ‘Tata Steel Limited vs. State of Jharkhand’ reported in 2019 SCC Online Jharkhand 1255. This judgment, in our opinion, is exhaustive and answers all the points urged before us by the petitioner(s) in the instant special leave petitions.
4. It is brought to our notice that nine High Courts have taken the same view. Even the decision of the High Court of Rajasthan has been affirmed by this Court by dismissal of Special Leave Petition (C) No.27529 of 2019 and connected cases vide order dated 3rd February, 2020.
5. Considering the consistent view of nine High Courts, including dismissal of special leave petitions by different Bench of this Court, and being satisfied about the exposition on the matters in issue by the High Court of Madras vide impugned judgment and order being a possible view, we decline to interfere in these special leave petitions.
6. Notably, after the decision of Punjab and Haryana High Court even the Union of India has chosen to act upon the said decision by issuing Office Memorandum dated 1st November, 2018 and directing all the States/Union Territories to follow the view taken by the Punjab and Haryana High Court.”
4.3. During the initial period after 01.07.2017 till 15.03.2018, the seller issues invoice charging full rate of tax at the rate of 15% under the CST Act from the Petitioner under the belief that sale against ‘C’ form declarations was not permissible after the implementation of GST regime.
4.4. Thereafter, seller charged concessional tax at the rate of 2% under the CST Act from the petitioner from
The court established that the ultimate burden of tax determines the entitlement to refunds under the CST Act, regardless of the dealer's registration status.
The court ruled that the denial of a tax refund on grounds of limitation was wrong, emphasizing the principle of unjust enrichment, and clarified that the time limit of two years for refund applicati....
The cancellation of a tax declaration form does not retroactively affect previously valid inter-state sales, and tax demand notices cannot be deemed enforceable without prior assessment.
The court affirmed that an unlawful tax collection obligates the government to refund with interest, reinforcing the principle of unjust enrichment and constitutional mandates under Article 265.
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