Case Law Details

Case Name : Legend Distilleries Pvt. Ltd. Vs State Of Chhattisgarh Through Secretary (Chhattisgarh High Court)
Appeal Number : WPT No. 39 of 2021
Date of Judgement/Order : 11/05/2022
Related Assessment Year :

Legend Distilleries Pvt. Ltd. Vs State Of Chhattisgarh Through Secretary (Chhattisgarh High Court)

ENA and the Malt Spirit in its original form are not the alcoholic liquor fit for human consumption and would therefore, not come within the amended definition of clause(d) of Section 2 of the CST Act and in view thereof, the petitioner would not be entitled to get the ‘C’ Form, as claimed by the petitioner herein.

FULL TEXT OF THE JUDGMENT/ORDER OF CHHATTISGARH HIGH COURT

By way of this petition, the petitioner is praying for issuance of an appropriate direction, commanding the Respondent Authorities to issue “C” Form to the petitioner and further to consider the application filed by the petitioner for issuance of “C” Form.

2. Learned counsel for the petitioner submits that the petitioner is a registered dealer under the CST Act and the Chhattisgarh Value Added Tax Act, 2005 (hereinafter referred to as “VAT Act”) and is also a License Holder under the State Excise Department, whereby the petitioner has been issued the license of foreign liquor-9 and authorizing to manufacture the IMFL. It is contended that the material required for manufacturing of IMFL was ENA and Malt Spirit and the petitioner has valid permit to purchase the same. Further contention of learned counsel for the petitioner is that the petitioner was being issued “C” form till 30-06-2017 for the goods covered under Section 2(d) of the CST Act, [as applicable up to 30-06-2017], so as to get the concession of the levy of tax at the rate of 2% by the respondent department. However, with the enforcement of the Goods and Services Tax Act, 2017 (hereinafter referred to as “GST Act”), the respondents have denied the facility of concessional tax by declining to issue “C” Form as required under the CST Act. It is contended further that as the ENA and Malt Spirit are used for human consumption, therefore, the petitioner is entitled for “C” Form on purchase of such goods. However, owing to amendment in the definition of “Goods” provided under Section 2(d) of the CST Act, which came into force with effect from 05-05-2017 by virtue of Taxation Laws Amendment Act, 2017, dated 04-05-2017, the petitioner has been denied the said “C” Form. While inviting attention to Section 9(2) of the GST Act, it is contended further that the Alcoholic Liquor used for human consumption has been kept away from the ambit of the levy of GST and therefore, despite amendment in the definition of “Goods” under CST Act, it still covers Alcoholic Liquor, which is used for human consumption for inter-state purchase of it. The respondent authorities have, therefore, erred in declining the petitioner for issuance of said “C” Form. In support of his contentions, learned counsel for the petitioner has placed his reliance upon the decision rendered by the Coordinate Bench of this Court in the matter of Shree Raipur Cement Plant vs. State of Chhattisgarh and others, decided on 18-05-2018 in Writ Petition (T)No.83 of 2018.

3. In reply, it is stated by learned counsel appearing for the Respondents No.1 to 3/State that prior to the amendment in the definition of “Goods”, all the materials, articles and commodities etc. were included under the definition of “Goods” as provided under clause (d) of Section 2 of the CST Act with exception of newspaper, actionable claims, stocks, shares and securities and therefore, the alcohol of any character was also covered under the said definition. But, owing to amendment in the definition of “Goods”, alcohol of specified nature, i.e. Alcoholic Liquor for human consumption” alone is covered under it and as the alleged raw materials used for manufacturing of IMFL do not fall within the ambit of said definition, the petitioner is, therefore, not entitled to obtain the said “C” Form. In support of his contentions, learned State counsel has placed his reliance upon the decision rendered by the Constitutional Bench of the Supreme Court in the matter of Synthetics and Chemicals Ltd and others vs. State of U.P. and others, reported in (1990) 1 SCC 109.

4. I have heard learned counsel for the parties and perused the entire papers annexed with this petition carefully.

5. Before adverting to the aforesaid contention of the parties, it is necessary to examine the relevant provision of the CST Act, i.e. Section 2(d) of it, which provides the definition of “Goods” prior to and subsequent to its amendment.

6. Prior to its amendment, it reads as under:

Section 2(d): “Goods” includes all materials, articles, commodities and all other kinds of movable property, but does not include newspapers, actionable claims, stocks, shares and securities.”

And, subsequent to its amendment, which came into force with effect from 05-05-2017, it provides as under:-

“Goods means-

(i) petroleum crude;

(ii) high speed diesel;

(iii) motor spirit (commonly known as petrol);

(iv) natural gas;

(v) aviation turbine fuel; and

(vi) alcoholic liquor for human consumption

7. A bare perusal and comparison of the aforesaid provision would show that prior to amendment, all the materials, articles and commodities etc. were included under the definition of “Goods” with exception of newspaper, actionable claims, stocks, shares and securities and therefore, by virtue of the said definition, the alcohol of any character was also covered under the definition of “Goods”. However, by virtue of said amendment in the definition of “Goods” under Section 2(d) of the CST Act, alcohol of specified nature, i.e. “alcoholic liquor for human consumption” alone is covered under it. In view thereof, prior to 30-06-2017, “C” Form was being issued by the respondent authorities as the ENA and Malt Spirit were covered under the definition of “Goods” under Section 2(d) of the CST Act, but, since there was an amendment and according to it, the “alcoholic liquor for human consumption” alone was covered under the said definition, as such, ENA and Rectified Spirit are not fit for human consumption in its original

ENA and Malt Spirit in original form not to get 'C' Form

8. At this juncture, it is to be noted the principles laid down by the Supreme Court in the matter of Synthetics and Chemicals Ltd and others vs. State of U.P. and others (supra), wherein it has been held that the Rectified Spirit and the ENA are not the alcoholic liquor for human consumption. Paras 95 to 97 of the aforesaid judgment are relevant for the purpose, which read as under:-

95. It was also contended that the State ultimately falls back on the consideration for parting with the privilege to sell alcoholic liquors which has been the basis of series of decisions of this Court based on English and American decisions but according to the learned counsel for the petitioners this doctrine of privilege and consideration for sale of privilege also could be available to the State only in respect of alcohol or alcoholic liquors which are for human consumption. According to the learned counsel by merely widening the definition of intoxicating liquors in respective excise laws enacted by the State the ambit of authority of taxation could not be enlarged by the State Legislature when in List II Item 51 the words used are Alcoholic liquors for human consumption. Entry 84 in List I reads:

“84. Duties of excise on tobacco and other goods manufactured or produced in India except–

(a) alcoholic liquors for human consumption.

(b) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry.”

96. Entry 51 in List II reads:

“51. Duties of excise on the following goods manufactured or produced in the State and countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in India:

(a) alcoholic liquors for human consumption;

(b) opium, Indian hemp and other narcotic drugs and narcotics;

but not including medicinal and toilet preparations containing alcohol or any substance included in sub- paragraph (b) of this entry.”

97. A comparison of the language of these two entries clearly demonstrates that the powers of taxation on alcoholic liquors have been based on the way in which they are used as admittedly alcoholic liquor is a very wide term and may include variety of types of alcoholic liquors but our Constitution makers distributed them into two heads:

(a) for human consumption

(b) other than for human consumption

Alcoholic liquors which are for human consumption were put in Entry 51 List II authorizing the State Legislature to levy tax on them whereas alcoholic liquors other than for human consumption have been left to the Central Legislature under Entry 84 for levy of duty of excise. This scheme of these two entries in List I and II is clear enough to indicate the line of demarcation for purposes of taxation of alcoholic liquors. What has been excluded in Entry 84 has specifically been put within the authority of the State for purposes of taxation.”

9. It is thus evident, based upon the aforesaid principles, the ENA and the Malt Spirit in its original form are not the alcoholic liquor fit for human consumption and would therefore, not come within the amended definition of clause(d) of Section 2 of the CST Act and in view thereof, the petitioner would not be entitled to get the “C” Form, as claimed by the petitioner herein.

10. As observed hereinabove, based upon the principles laid down by the Constitutional Bench of the Supreme Court in the matter of Synthetics and Chemicals Ltd and others vs. State of U.P. and others (supra), the ENA and Malt Spirit are not the alcoholic liquor, which is fit for human consumption in its original form. Therefore, the provision prescribed under sub-sections (1) & (2) of Section 9 of the GST Act as tried to be implemented herein by learned counsel for the petitioner, would, however not be applicable. It is necessary to be noted at this juncture, sub-sections (1) & (2) of Section 9 of the said GST Act, which provide as under:-

Section 9LEVY AND COLLECTION: (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under on the value determined under section 15 and at such rates, not exceeding twenty per cent, as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person.

(2) The central tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified by the Government on the recommendations of the Council.

(3) —- xxx —- xxx —

(4) —- xxx —- xxx —

(5) —- xxx —- xxx —

11. Sub-section(1) of the aforesaid provision states that subject to the provisions of sub-section(2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption. Since the ENA and Malt Spirit in its original form are not found to be fit for human consumption, as observed hereinabove, therefore, no reliance could be placed on it. In so far as the applicability of sub-section(2) of the aforesaid provision is concerned, the same is, however, also not applicable as the notification required to be issued under it, is only with regard to the supply of items mentioned in clauses (i) to (v) of the amended provision of clause(d) of Section 2 of the CST Act and as the ENA and Malt Spirit are not found to be alcoholic liquor fit for human consumption, therefore, it would not fall in any of the said categories and, no notification as such, is therefore, required to be issued, as contended by learned counsel for the petitioner.

12. As far as the principles laid down by the Coordinate Bench of this Court in the matter of Shree Raipur Cement Plant vs. State of Chhattisgarh and others (supra), is concerned, the same is, however, noted to be distinguishable from the facts involved herein. As in the said matter, the question, which was taken into consideration was, as to whether the petitioner was entitled for issuance of “C” Form under the CST Act with regard to the item mentioned in clause (ii) of Section 2(d) of the amended Act of CST Act and for which, notification bringing the said item i.e. “High Speed Diesel” was required to be issued, in strict compliance of sub-section(2) of Section 9 of the GST Act, 2017 and in absence of issuance of such a notification, it was held that the petitioner cannot be denied for issuance of “C” Form under the CST Act with regard to the item contained in clause (ii) of the amended provision of clause (d) of Section 2 of the CST Act. The principles laid down in the said matter, therefore, clearly distinguishable from the facts involved herein and as such, no reliance could be placed upon it.

In view of above, I do not find any substance in this petition, which is accordingly dismissed. No order as to costs.

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