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2024 DIGILAW 1273 (GUJ)

Tetra Pak India Pvt Ltd v. State of Gujarat

2024-06-14

BHARGAV D.KARIA, NIRAL R.MEHTA

body2024
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 : “2. We are in agreement with the view taken by the Punjab and Haryana High Court in Carpo Power Limited vs. State of Haryana & Ors., which has already been upheld by this Court by dismissing Special Leave Petition (C) No.20572 of 2018 vide order dated 13th August, 2018. 3. We are in agreement with the view taken by the Punjab and Haryana High Court in Carpo Power Limited vs. State of Haryana & Ors., which has already been upheld by this Court by dismissing Special Leave Petition (C) No.20572 of 2018 vide order dated 13th August, 2018. 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 16.03.2018 till 31.03.2019, in anticipation of C form declarations being furnished by the petitioner. 4.5. 4.4. Thereafter, seller charged concessional tax at the rate of 2% under the CST Act from the petitioner from 16.03.2018 till 31.03.2019, in anticipation of C form declarations being furnished by the petitioner. 4.5. Because of the legal ambiguity during the relevant period, the commercial tax department of the State of Maharashtra cancelled the registration of the petitioner under the CST Act without giving any intimation or opportunity to the petitioner to clarify its stand, Due to this, the petitioner was unable to obtain C-Form declarations in time from the commercial tax department of the State of Maharashtra. 4.6. As the petitioner was not able to immediately provide C-Form declarations to the seller, the seller encashed bank guarantee provided by the petitioner for differential tax under the CST Act for the period from 16.03.2018 to 31.03.2019. 4.7. In so far as the period from 01.07.2017 till 15.03.2018 is concerned, the seller had charged full rate of tax in the invoice itself which the petitioner was made to pay to the seller which was further deposited in the Government treasury. 4.8. Thereafter the registration of the petitioner under the CST Act was restored by the Maharashtra commercial tax department in the year 2022 pursuant to order passed in this regard by the appellate authority which was based on the order of Hon’ble Supreme Court in the case of Ramco Cements Ltd. (supra). 4.9. The C-Form declarations were thereafter belatedly issued by TARY the Maharashtra commercial tax department to the petitioner for the years 2017-18 and 2018-19. The C-Form declarations were forwarded by the petitioner to the seller. 4.10. The issue of belated issuance of C-Form declarations, which was faced by the petitioner, was also faced by number of other dealers. In many of such cases refund was denied to the seller on the basis of such C-Form declarations on the ground that such tax had been borne by the buyers and therefore refund could be claimed by the buyers such as the petitioner and not by the seller. Apart from tax, the seller had also paid interest under the CST Act which is also required to be refunded. 4.11. Apart from tax, the seller had also paid interest under the CST Act which is also required to be refunded. 4.11. While observing that refund claim can be filed by the buyers, the assessing authority relied upon the judgment of this Court in the case of J.K. Cement Ltd. v/s State of Gujarat reported in (2022) 99 GSTR 328 (Guj.) which has been subsequently affirmed by Hon’ble Supreme Court. 4.12. In the meantime the seller raised debit notes on the petitioner for recovering interest paid on differential tax due to belated issuance of C-Form declarations. 4.13. The petitioner invoked arbitration clause in the agreement with the seller for disputing the invocation of bank guarantee for recovery of tax under the CST Act. The seller made counter claim for interest paid to the Gujarat VAT Department on differential tax amount. The arbitrator passed award holding that the petitioner could claim refund of tax from the Vat Department of Gujarat and further that the petitioner is liable to reimburse the interest amount paid by the seller. 4.14. The petitioner therefore approached the 2nd respondent authority for putting forth its refund claim in respect of the principal tax as well as the interest amount. The petitioner relied upon the judgment of this Court in case of J. K. Cement Ltd. (Supra) wherein under similar circumstances this Court ordered granting of refund under the CST Act to the purchaser of goods. The petitioner produced copies of invoices as well as C-Form declarations in support of the refund claim. Reminder for processing of refund was given by letter dated 02.10.2023. 4.15. Corrigendum to the refund application was submitted for rectifying the refund amount to be granted for the years 2017-18 and 2018-19. 5.1. Learned Advocate Mr. Uchit Sheth for the petitioner submitted that in spite of repeated request made by the petitioner before the second respondent authority-Deputy Commissioner of State Tax, refund in favour of the petitioner was not granted though the facts of the petitioner are covered by the decision of this Court in case of J.K.Cement Limited (Supra) which has been confirmed by the Hon'ble Supreme Court. It was therefore submitted that refusing to refund the amount of excess tax collected and deposited by the petitioner even though the C-Form declaration have been duly furnished, is contrary to the above decisions. 5.2. It was therefore submitted that refusing to refund the amount of excess tax collected and deposited by the petitioner even though the C-Form declaration have been duly furnished, is contrary to the above decisions. 5.2. It was submitted that though the petitioner was legally entitled to purchase goods as concessional rate of tax against C-Form declarations, the petitioner was forced to make purchases by paying CST at the rate of 15% instead of 2% in view of the legal ambiguity during the interregnum period and as result of charging of such tax in invoices for the period till 16.03.2018 and thereafter, invocation of Bank Guarantee for the period from 16.03.2018 to 31.03.2019, the tax deposited by the seller with the respondents WET authorities, is now settled and therefore, the respondent authorities are liable to pay the refund of the excess payment of tax and retention of tax deposited at the rate of 15% in spite of the fact that the applicable rate of tax is 2% under the CST Act is without authority of law. 5.3. It was submitted that the petitioner has therefore approached to this Court for direction to the respondent to forthwith grant the refund of excess tax amount of Rs.3,94,46,741 collected from the petitioner and deposited by the seller with respondents from the years 2017-18 to 2018-19 along with appropriate interest on such refund amount. The petitioner has also prayed for refund of the interest amount of Rs.1,13,86,862/- paid by the seller and charged from the petitioner by way of debit note along with appropriate interest on such refund amount. 6. On the other hand, learned Assistant Government Pleader Ms. Maithili Mehta for the respondent No.1 could not controvert the submissions made on behalf of the petitioner that the petitioner is entitled to the excess amount of tax paid by the petitioner as per the decision of this Court in case of J.K.Cement Limited (Supra). 7. Having heard the learned advocates for the respective parties, this Court in case of J.K.Cement Limited (Supra) has held as under : “14. In the backdrop of the facts and contentions noted hereinabove, it is an undisputed position that the petitioners have borne the burden of tax as the CST authorities at Rajasthan had refused to issue C forms after the coming into force of the GST regime. In the backdrop of the facts and contentions noted hereinabove, it is an undisputed position that the petitioners have borne the burden of tax as the CST authorities at Rajasthan had refused to issue C forms after the coming into force of the GST regime. On account of non-issuance of C forms, the petitioners were not in a position to submit C form declarations in respect of the diesel purchased by them for their mining activity, as a result whereof, the petitioners could not purchase diesel at concessional rate of tax from the seller - Reliance Industries Limited, which collected tax at the rate of 20 % from the petitioners and deposited the same with the respondent authorities. Now, on account of the directions issued by the Rajasthan High Court in the decisions referred to hereinabove, the CST authorities at Rajasthan have issued C form declarations in respect of the transactions in question. The respondent authorities do not dispute that against the C form declarations, the tax collected from the petitioners and deposited by Reliance Industries Limited is required to be refunded. The sole refrain of the respondent authorities is that such refund can be made to the seller – Reliance Industries Limited after its assessment for the period in question is concluded and not to the petitioners who are not registered as dealers in Gujarat. 15. In the opinion of this court, while adopting the above stand, the respondents have failed to take into consideration the fact that insofar as Reliance Industries Limited is concerned, it has already collected the tax from the petitioners, and hence, if Reliance Industries Limited seeks refund of the amount against the C form declarations, it would not be entitled to such refund as such claim would be hit by the principles of unjust enrichment. As held by the Supreme Court in State of Madhya Pradesh v. Vyankatlal (supra), only the persons on whom lay the ultimate burden to pay the amount would be entitled to get a refund of the same. The petitioners having borne the ultimate burden in this case, it is only they who would be entitled to refund of the same. 16. Besides the Rajasthan High Court in the petitioners’ own case has held that the authorities at Rajasthan were liable to issue ‘C’ forms in respect of high speed diesel procured for mining purpose through interstate trade. The petitioners having borne the ultimate burden in this case, it is only they who would be entitled to refund of the same. 16. Besides the Rajasthan High Court in the petitioners’ own case has held that the authorities at Rajasthan were liable to issue ‘C’ forms in respect of high speed diesel procured for mining purpose through interstate trade. The court has further held that in the event of the petitioners having had to pay any amount on account of the respondents’ wrongful refusal to issue ‘C’ forms, the petitioners shall be entitled to refund and/or adjustment from the concerned authorities who had collected excess tax. The court further directed the concerned authorities to process such claim within twelve weeks of the same being made by the petitioners in writing and the petitioners furnishing the requisite documents/forms. 17. In the present case, in the absence of ‘C’ forms having been issued by the Rajasthan authorities, the respondent authorities have collected excess tax from the seller – Reliance Industries Limited, who in turn has collected the same from the petitioners. Therefore, in terms of the above order passed by the Rajasthan High Court, once the Rajasthan authorities issue C forms against the sales made by Reliance Industries Limited to the petitioners and the petitioners produce the requisite documents/forms before the respondent authorities, the respondent authorities are required to process such claim within twelve weeks of the same being made in writing by the petitioners. 18. Pursuant to the above order passed by the Rajasthan High Court, the petitioner in Special Civil Application No.15333 of 2019 has made an application dated 19.4.2019 to the second respondent for refund of Rs.2,12,09,162/- charged by Reliance Industries Limited. Along with the application, the petitioner has furnished a copy of the order of the Rajasthan High Court, a statement showing the details of high speed diesel purchases, Form 'C' Quarter IIIrd and IVth (F.Y. 2017-18), copy of the letter from Reliance Industries Limited to the Deputy Commissioner of Gujarat Sales Tax and copy of sample invoice. The petitioner in Special Civil Application No.16288 of 2019 has made an application dated 31.8.2019 to the second respondent seeking refund of Rs.1,97,32,644/-. Along with such application, the said petitioner has furnished a statement showing details of purchases, tax charged and submission of ‘C’ forms against such purchases as well as copy of sample invoice, etc. The petitioner in Special Civil Application No.16288 of 2019 has made an application dated 31.8.2019 to the second respondent seeking refund of Rs.1,97,32,644/-. Along with such application, the said petitioner has furnished a statement showing details of purchases, tax charged and submission of ‘C’ forms against such purchases as well as copy of sample invoice, etc. Thus, the petitioners had duly complied with the direction issued by the Rajasthan High Court and in case the respondents required the petitioners to furnish any other details, it was always open for them to call upon the petitioners to furnish the same. However, the respondent authorities have taken a stand that since it is Reliance Industries Limited which has deposited the tax, such refund application has to be made by it and upon refund being made to Reliance Industries Limited, it can pay the same to the petitioner. However, as noted earlier, Reliance Industries Limited cannot make an application for refund inasmuch as such claim would be barred by the principle of unjust enrichment. Moreover, as stated by the respondents, in the case of Reliance Industries Limited, the refund claim would be processed during the course of its assessment for the period in question, which may take years together and in the meanwhile the petitioners would be deprived of such amount. Moreover, it may be that while processing the refund claim during the course of Reliance Industries Limited's assessment, the respondents may even adjust the refund amount against its dues. Thus, the stand of the respondents that Reliance Industries Limited should file the refund claim and then pay the amount so refunded to the petitioners is neither legally tenable nor is it practically workable. 19. In the opinion of this court, in the light of the clear directions issued by the Rajasthan High Court in the judgment and order referred to hereinabove, which the respondent authorities are bound to comply with, upon the petitioners making applications for refund along with the requisite documents, the respondents were duty bound to process such claim within a period of twelve weeks from the date of such application. The stand adopted by the respondents that the refund can be made to only to Reliance Industries Limited flies in the face of the order passed by the Rajasthan High Court as well as the above-referred decisions on which reliance has been placed by the learned advocate for the petitioners and is nothing but a purely hyper technical stand adopted by them. Once Reliance Industries Limited has, in clear terms, written to the authorities that various buyers who have purchased HSD in the course of inter-state trade for use in mining activities will be approaching their office for refund of the differential tax amount and has enclosed therewith Customer-wise details of inter-state sales made to buyers in Rajasthan at full rate, it is evident that Reliance Industries Limited is not disputing the fact that it is the petitioners who are entitled to claim the refund. Under the circumstances, the respondent authorities are not justified in not processing the refund claims of the petitioners. 20. In case of the petitioners, it is an admitted position that the HSD has been purchased by them from Reliance Industries Limited in the course of inter-State trade for use in mining activities and they are, therefore, the ultimate consumers thereof and hence, the question of passing on the tax burden to anyone would not arise. Consequently, the question of unjust enrichment would also not arise. 21. For the foregoing reasons, the petitions succeed and are accordingly allowed. The respondents are directed to forthwith process the refund claims of the respective petitioners and grant refund of the tax amount collected from the petitioners and deposited by the seller in accordance with law within a period of twelve weeks of the receipt of a copy of this judgment. It is, however, clarified that once the refund claim of the petitioners is processed, Reliance Industries Limited would not be entitled to claim any such refund. Rule is made absolute accordingly, with no order as to costs. 8. The aforesaid decision of this Court was upheld by the Hon’ble Supreme Court by dismissing the SLP vide order dated 10.02.2021 as under : “1. Rule is made absolute accordingly, with no order as to costs. 8. The aforesaid decision of this Court was upheld by the Hon’ble Supreme Court by dismissing the SLP vide order dated 10.02.2021 as under : “1. The order of the High Court which is impugned in the Special Leave Petitions indicates the factual position that: (i) The respondent was denied a C form in respect of an inter-State sale as a result of which a higher rate of tax was charged; (ii) The respondent moved the Rajasthan High Court in a writ petition in which interim directions were initially issued on 20 February 2018 and subsequently on 18 May 2018 it was held that the refusal to issue a C form was contrary to law; (iii) The High Court upheld the entitlement of the respondent, in consequence, to seek a refund; and (iv) The State, as a matter of fact, has not disputed the refund which is due and payable. 2. Ms Aastha Mehta, learned counsel appearing on behalf of the petitioners submits that the High Court has not considered the provisions of Section 36 of the Gujarat VAT Act 2003. Learned counsel sought to persuade the Court to take a fresh look at the correctness of the view of the High Court, urging that under Section 36, a refund can be granted to a dealer registered in the State and that assessment proceedings are pending against the registered dealer. It was urged that the respondent is not registered as a dealer in Gujarat and that a refund can be granted only to the registered dealer. 3. The High Court has met this submission of the State of Gujarat by ruling that the dealer has passed on the burden to the respondent and hence, to deny the claim of refund to the respondent despite the State not contesting in principle the liability to refund would be "hyper-technical". 4. In view of the specific facts noted in paragraph 1 above, we decline to entertain the Special Leave Petitions, Having regard to the above facts and circumstances, we expressly keep open the interpretation of Section 36 to be urged by the State of Gujarat and decided by the competent forum in an appropriate case. Subject to the above clarification, the Special Leave Petitions are dismissed.” 9. Subject to the above clarification, the Special Leave Petitions are dismissed.” 9. Moreover, in the Arbitration Award between the petitioner and Bharat Petroleum Corporation Limited dated 17th October, 2023, it was also held that the petitioner was not entitled to interest amount of Rs.1,13,86,862/- paid by the Bharat Petroleum Corporation Limited. 10. Therefore, in view of the above, it is held that the petitioner is entitled to the refund of the excess payment of tax i.e. difference between 15% tax paid by the petitioner and 2% tax liable to be paid by the petitioner on furnishing of C-Form by the petitioner for purchase of natural gas from the Bharat Petroleum Corporation together with interest of Rs.1,13,86,862/- paid by the Bharat Petroleum Corporation on behalf of the petitioner on the delayed payment of tax in view of the decision of this Court in case of J.K. Cement Limited (Supra) which is upheld by the Hon'ble Supreme Court. 11. The respondents are therefore, directed to consider the refund application filed by the petitioner for the period 2017-18 and 2018-19 filed on 11.09.2023 to pass an order for amount of refund and interest claimed by the petitioner after verification of the C-Forms submitted by the petitioners with statutory interest payable under the provisions of the CST Act. Such exercise shall be completed within0 twelve weeks from the date of receipt of copy of this order Rule is made absolute to the aforesaid extent. No orders as to cost.