The amendment to Section 8(3)(b) of the CST Act, excluding mining from reduced tax rates, is constitutional and does not violate Article 14, as it maintains reasonable classification.

JUDGMENT :

(AVNEESH JHINGAN, J.)

1. This petition is filed challenging vires of Section 8(3)(b) of the Central Sales Tax Act, 1956 (for short ‘the CST’) as amended by Finance Act, 2021.

2. The relevant facts are that the petitioner firm is engaged in Mining of all type of natural stones. The petitioner is registered under the Goods & Services Tax Act, 2017, CST and the Rajasthan Value Added Tax Act, 2003 (hereinafter referred to as the “VAT Act”). For mining, petitioner purchases High Speed Diesel (for brevity ‘HSD’) in course of interstate trade or commerce. Under erstwhile section 8(3)(b) of CST, petitioner was entitled to purchase HSD at reduced rates on furnishing of Form “C”.

3. The grievance is that after amendment of section 8(3)(b) of CST, the goods used in telecommunication, mining or generation/distribution of electrical power cannot be purchased at reduced rate against Form “C”.

4. Learned counsel for the petitioner contended that the exclusion of mining from Section 8(3)(b) of the CST is discriminatory, arbitrary and in violation of Article 14 of the Constitution of India. Submission is that the statute has been amended to overcome the decision in the case of Carpo Power Limited vs. State of Haryana and Ors. reported in (2018) 53 GSTR 24, against which the SLP was dismissed. It is argued that the working of the petitioner shall be adversely affected being not entitled to purchase HSD on the reduced rates. The argument is fortified by stating that Input Tax Credit (‘ITC’) cannot be claimed of the full rate of tax paid under the CST on purchase of HSD. Reliance is placed upon decisions of the Supreme Court in case of Indian Express Newspapers (Bombay) Private Ltd. & Ors. Vs. Union of India and others (1985) 1 SCC 64; NHPC Ltd. Vs. State of Himachal Pradesh, Secretary and Ors. AIR 2023 SC 4457 and Deputy Commissioner of Income Tax and Ors.Vs. Pepsi Foods Ltd. (2021) 7 SCC 413.

5. As per contra, the amendment was within the domain of the legislature. The extending of benefit of making purchases on reduced rate against Form “C” to an industry is a policy decision.

6. It would be relevant to reproduce unamended and amended Section 8(3)(b) of CST Act.

“(3) The goods referred to in sub-section (1)-

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(b) are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for re-sale by him or subject to any rules made by the Central Government in thus behalf, for use by him in the manufacture or processing of goods for sale or in the telecommunication net work or in mining or in the generation or distribution of electricity or any other form of power.

AMENDMENT TO THE CENTRAL SALES TAX ACT, 1956 by Finance Act, 2021

In the Central Sales Tax Act, 1956, in section 8, in subsection (3), for clause (b), the following clause shall be substituted, namely:––“(b) are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for re-sale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing for sale of goods specified under clause (d) of section 2;”.

7. Under Section 3(a) of the CST, the sale and purchase of goods occasioned by the movements from one state to another are deemed to take place in course of interstate trade or commerce. These transactions are covered under the CST. In case in hand, the purchases of HSD are made by petitioner from the oil companies outside the State of Rajasthan for use in mining. The sale and purchase of HSD therefore, is in course of interstate trade or commerce.

8. After the amendment in Section 2(d) of CST in 2017, the definition of ‘goods’ includes six items in which HSD finds mention.

9. Section 8 of CST Act prescribes lower rates of tax on sale in course of interstate trade or commerce in respect of “every dealer” who sells goods to the registered dealer for purpose referred to i