Additional Chief Secretary Vs Southern Agrifurane Industries Private Limited (Madras High Court)
The Madras High Court dismissed an intra-court appeal filed by the State against the order of the Learned Single Judge concerning issuance of C-Forms for purchase of Extra Neutral Alcohol (ENA) from other States. The Court noted that ENA is required for the manufacture of alcohol for human consumption as well as industrial purposes, and that after the GST regime came into force on 01.07.2017, the GST Council could not reach a decision on bringing ENA within GST due to differing opinions among its members. Consequently, in several meetings, the Council decided to maintain status quo on the issue.
The respondent, a manufacturer of liquor for human consumption, had sought issuance of C-Forms from the State Government for inter-State purchase of ENA, but the request was denied on the ground that the new GST regime did not permit issuance of C-Forms. The respondent challenged this denial and succeeded before the Learned Single Judge, who directed the State to issue C-Forms until suitable amendments were made in the law excluding ENA used for manufacture of alcoholic liquor for human consumption from the ambit of GST.
Before the Division Bench, the State submitted that amendments had been made to Section 9 of the VAT Act with effect from 12.11.2024 excluding un-denatured ENA or rectified spirit used for manufacture of alcoholic liquor for human consumption, and argued that the amendment operated prospectively. However, the Court held that the GST Council had consciously decided to maintain status quo regarding ENA, which meant the pre-01.07.2017 position continued. The Court observed that manufacturers dependent on inter-State supply of ENA could not be denied C-Forms and that indecision of the GST Council could not impede the respondent’s right to trade. Finding no error in the Single Judge’s order, the Court dismissed the writ appeal and directed the State to issue C-Forms subject to statutory compliance.
