Page 119 - DHC Budget Book 2021-22 Final

11.1
Amendments in Central Sales Tax Act, 1956 [Effective from the enactment of the bill]
— Sub-section 3(b) of Sec. 8 of the CST Act is proposed to be substituted to exclude inter- state procurement of goods (petroleum crude, motor spirit etc.) which are intended for use in telecommunications network or in mining or in the generation or distribution of electricity or any other form of power, at a concessional rate of tax.
— With the above amendment, it has also been proposed to grant concessional benefit (against C Form) only for manufacture or processing for sale of those goods which are covered under the CST Act [under Sec 2(d)]
Comment:
— With the introduction of GST w.e.f 01-07-
2017, consequential amendments were also effected in the CST Act and amendment in the definition of ‘Goods’ under Sec. 2(d) of CST
Act restricted the operation of CST Act for only six commodities [outside the ambit of GST] i.e. Petroleum Crude, High Speed Diesel, Motor Spirit (Petrol), Aviation Turbine Fuel, Natural Gas and liquor.
— With the above amendment under CST Act, the issue relating to procurement of goods against C Form (@2% as against normal VAT rate in the State) for use in processing or manufacture of
goods which were outside the ambit of CST Act or in telecommunication network, or in mining or in the generation or distribution of electricity or any other form of power became a major bone of litigation.
— Numerous Writ Petitions were filed throughout the country before various High Courts on the above issues. The matter was largely settled and decided in favour of the assessee and also upheld by Supreme Court in some cases for usage of C forms. The judiciary interpreted that the term ‘goods’ in the phrase ‘for goods for sale’ as used in Sec. 8(3)(b) of the CST Act cannot
be limited to the six commodities mentioned
in Sec. 2 (d) of the CST Act therein and must
be interpreted contextually to include any goods whatsoever [Printer (Mysore) Limited vs. Assistant Commercial Tax Officer [1994 SCR (1) 682].
Thus with the above amendment proposed to be effective from enactment of Bill, there would be an additional burden on manufacturing and mining companies as well as on those companies who mines the input and uses them for the manufacture of other final products resulting in increased cost of fuel (also no credit is available under VAT) and appears to result in re-opening the floodgates
for unsavoury litigation in relation to issuance of C-forms.
Content
Central Sales Tax Indirect Tax 117