M/S SURYA ROSHNI LIMITED vs. STATE OF GUJARAT

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 17284 of 2021

FOR APPROVAL AND SIGNATURE: HONOURABLE MS. JUSTICE SONIA GOKANI

and HONOURABLE MS. JUSTICE NISHA M. THAKORE

========================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? NO 2 To be referred to the Reporter or not ? NO 3 Whether their Lordships wish to see the fair copy of the judgment ? NO 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? NO ========================================================== M/S SURYA ROSHNI LIMITED Versus STATE OF GUJARAT ========================================================== Appearance: MR D K TRIVEDI(5283) for the Petitioner(s) No. 1 for the Respondent(s) No. 2,3,4,5 ADVANCE COPY SERVED TO GOVERNMENT PLEADER/PP for the Respondent(s) No. 1 ========================================================== CORAM: HONOURABLE MS. JUSTICE SONIA GOKANI and HONOURABLE MS. JUSTICE NISHA M. THAKORE

Date : 09/12/2021

ORAL JUDGMENT (PER : HONOURABLE MS. JUSTICE SONIA GOKANI) 1. The petitioner is before this Court seeking following reliefs: Page 1 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 “10… A. Your Lordships may be pleased to admit this petition; B. Your Lordships may be pleased to allow this petition; C. Your Lordships may be pleased to issue writ of mandamus or writ in the nature of mandamus or any other appropriate writ or order directing the respondents to forthwith grant of refund of tax amount of Rs.33,59,829/- collected from the petitioner and deposited by the seller, along with appropriate interest on such refund amount; D. Pending notice, admission and final hearing of this petition, this Hon’ble Court may be pleased to direct the respondents above named to forthwith grant refund of tax amount of Rs.33,59,829/- collected from the petitioner and deposited by the seller, along with appropriate interest on such refund amount; E.Ex-parte ad-interim relief in terms of prayer Clause ‘D’ hereinabove may kindly be granted in favour of the petitioner; F. Your Lordships may be pleased to grant such other and further relief/(s) that may be deemed fit and proper in the interest of justice in favour of the Petitioner.” 2. Facts leading to the present special Page 2 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 civil applications in nut-shell are as under: 2.1 The petitioner is a Public Limited Company registered under the Companies Act, 1956 and is having one of its plants situated at Bahadurgar, Haryana. 2.2 It approached this Court by way of petition because of the refund application filed by the petitioner before the respondent authority, which has not been processed. The Board Resolution dated 30.05.2017 had authorised the person, who is before this Court in his capacity as a General Manager. It is the grievance on the part of the petitioner that the petitioner is engaged in manufacturing Electric Resistant Welded Pipes. It is registered with the Haryana Value Added Tax Page 3 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 Department. 2.3 According to the petitioner, it was regularly purchasing the Natural Gas from M/s.Indian

Oil

Corporation

Limited (‘M/s.IOCL’ hereinafter), Vadodara and the jurisdictional authorities were not issuing ‘C’ Form. Therefore, the petitioner was required to receive Natural Gas supplied by M/s.IOCL, Vadodara on supply of the Central Sales Tax (‘the CST’ hereinafter) at full rate at 15%. The entire CST amount has been collected by M/s.IOCL, Vadodara at full rate and deposited the same with the Gujarat VAT Department. 2.4 The directions had been issued in the judicial decision for the department to issue the ‘C’ Forms in respect of the Natural Gas. The jurisdictional VAT Page 4 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 authorities when realised the mistake, they started issuing the ‘C’ Forms with regard to the supply of Natural Gas made by M/s.IOCL during the period from 01.10.2017 to 30.06.2019. 2.5 The petitioner requested the General Manager, Gas Marketing, Indian Oil Corporation Ltd. to the Assessing Authority of Gujarat Commercial Tax Department to refund the excess charged CST directly to the petitioner in accordance with the decision of this Court in case of Udaipur Cement Works Ltd. vs. State of Gujarat rendered in Special Civil Application No.8870 of 2020. The said decision has based on the earlier decision of this Court in case of J.K. Cement Ltd. vs. State of Gujarat, rendered in Special Civil Page 5 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 Application No.15333 of 2019 with Special Civil Application No.16288 of 2019 delivered on 18.12.2019. 2.6 M/s.IOCL, Vadodara has issued three separate certificates for the Financial Years 2017-2018, 2018-2019 and 2019-2020 certifying that whatever CST was collected from the petitioner was paid to the Government Treasury within the prescribed time frame, details of invoices etc. had also been furnished. 2.7 The petitioner has submitted the refund claim on 06.08.2021 aggregating Rs.33,59,829/- along with the decision of this Court and the decision of Punjab & Haryana High Court, upheld by the Apex Court. The refund application has also been tendered on 25.08.2021 to the Deputy Page 6 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 Commissioner of State Tax as also to the Chief Commissioner of State Tax. At no stage, the respondents replied to this request made by the petitioner and hence, this petition with the aforementioned prayers. 3. We have heard the learned advocate, Mr.D.K.Trivedi, who has heavily relied on the decision of this Court in case of J.K. Cement Ltd. (supra) followed in Udaipur Cement Works Ltd (supra). According to him, decision of J.K. Cement Ltd. has been upheld by the Apex Court in Special Leave Petition (C) 2279 and 2280 of 2021. 3.1 He has further urged that his case is squarely covered by the decision and yet, the authority for some strange reasons has not been acceding to the request of Page 7 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 refund of amount which is due and payable. 4. Learned AGP, Ms.Maithily Mehta has pointed out that the amendment in Sub- section 3 Clause (b) of Section 8 in Central Sales Tax Act, 1956 is made prospective and would not apply to the case of the present petitioner where the dealings are all anterior to 28.03.2021. 5. We could notice from the decided case laws as also from the chronology of events in the instant case that matter is covered by the decision of J.K. Cement Ltd. (supra) and followed in Udaipur Cement Works Ltd (supra), confirmed by the Apex Court. M/s.IOCL, Vadodara has also issued the certificate and had also followed what needed to be done at its end and yet the request of refund has not been acceded to. Page 8 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 5.1 This Court was dealing with the tax amount collected from the petitioner by the seller and deposited with the respondent authority under the Central Sales Tax Act. The petitioner - J.K. Cement Ltd. before this Court was incorporated under the provisions of the Companies Act, 1956 and it was engaged in the manufacture and sale of cement and in the mining activity. It was registered under the Central Sales Tax Act (‘the CST Act’ hereinafter). The petitioner had purchased diesel from the refinery of M/s.Reliance Industries Ltd. located in the State of Gujarat for use of mining activity. Prior to the introduction of the Goods and Services Tax (‘the GST’ for short) regime, the authorities of the State of Rajasthan under the CST Act issued ‘C’ Form declarations to the petitioner Page 9 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 enabling the petitioner to purchase diesel at concessional rate of tax from the seller. After the Goods and Services Tax regime from 01.07.2017 encompassing all goods except six commodities viz. crude oil, petrol, diesel, aviation turbine fuel, natural gas and alcoholic liquor. Interstate transactions were governed by the CST Act. 5.2 That the diesel continued to come within the ambit of the CST Act, after 01.07.2017, the authorities in the State of Rajasthan refused to issue ‘C’ Form declarations of purchase of diesel at concessional rate on the ground that after introduction of the GST regime, the registration certificates of the dealers of the

petitioner

stood

automatically Page 10 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 cancelled and they were not eligible for making

purchase

against

‘C’

Form declarations. Hence, the seller – Reliance Industries Limited had started raising invoice charging full tax @ 20% on sale of diesel. As the request of the petitioner to issue the ‘C’ Form had not been heeded by the State of Rajashtan, it approached the Rajasthan High Court seeking a direction to issue the ‘C’ Form declaration in respect of the diesel required for use of mining activitites. This had been done by the Rajashtan High Court, the authorities of the State of Rajasthan started issuing the ‘C’ Forms. Consequently, the seller started charging the concessional rate of tax for the sale made by the petitioner. 5.3 The Rajashtan High Court also Page 11 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 directed that in case of the petitioner in those cases where it needed to pay the amount on account of wrongful refusal to issue ‘C’ Form declarations, was entitled to refund from the concerned authorities who collected the excess tax and they were directed to process the refund claims within twelve weeks from the date of refund claim. 5.4 On the basis of the judgment of the Rajasthan High Court, the seller intimated the respondent authorities of the State of Gujarat regarding the directions of the High Court to refund the excess amount and informed that its various buyers from the State of Rajasthan would approach the authorities for refund. Page 12 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 5.5 Pursuant to the said decision, the petitioner addressed a letter to the seller informing it about the order passed in its case and the jurisdictional authority under the CST Act also had been approached seeking the refund of excess tax collected from the petitioner in accordance with the directions of the Rajasthan High Court. Despite the repeated oral inquiries, the respondent authorities did not respond to the claim of refund made by the petitioner nor refunded the amount of excess tax. Aggrieved the petitioner, therefore, preferred a petition seeking a direction to the respondents to forthwith refund the tax amount collected from the petitioner with appropriate interest on such refund amount. 5.6 Here the State had objected on the Page 13 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 ground that the respondents were not disputing the collection of the amount towards tax in absence of ‘C’ Form declaration. However, such refunds can be granted to the seller i.e. Reliance Industries Limited and not to the petitioner and as the transactions were in the nature of interstate transactions, the Commercial Tax Department of Rajasthan was required to issue ‘C’ Forms to the petitioner, which were then required to be forwarded to Reliance Industries Limited. It was also contended by the State that as the Rajasthan Commercial Tax Department refused to grant ‘C’ Forms to the petitioners, they were liable to pay tax @ 20% which was deposited with the Gujarat Commercial Tax Department and since the assessment

proceedings

qua

Reliance Page 14 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 Industries Limited were still pending for the assessment years in question, the respondent authorities were still to process the application for grant of refund. The Court in this backdrop of facts and contentions held thus: “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. 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 Page 15 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 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 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 Page 16 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 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 Page 17 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 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. 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 Page 18 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 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 Page 19 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 to claim the refund. Under the circumstances, the respondent authorities are not justified in not processing the refund claims of the petitioners.” (Emphasis supplied) 6. We have noticed that every arguments which have been put forth today also have been duly considered by this Court. It is also not in dispute that the petitioner which has claimed the refund for having paid the excess amount to M/s.IOCL, Vadodara is not obligated to file the return before any of the respondents. The respondent authorities as held in the earlier decision was not justified in not processing the refund claims only because the return of M/s.IOCL, Vadodara are under examination or are in the process of being finalized. Nothing of course to that effect also has come on the record, the fact remains that, that also cannot furnish the Page 20 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 ground to the authority to deny the refund. 6.1 This is an attempt on the part of the respondent-State not to be following the binding decision of this Court which also is now the decision of the Apex Court, we need to remind them of the decision of E I DUPONT INDIA PRIVATE LIMITED & 1 vs UNION OF INDIA & 3., reported in 2014 (305) ELT 282 (Guj.), where while parting, the Court in strong words disapproved the arbitrary act on the part of the lower adjudicating authority and in ignoring the binding precedents. Apt would be to refer to those words: “[6.0] In view of the above and for the reasons stated above and the decision of this Court in the case of NBM Industries (Supra), the impugned orders passed by the respondent No.4 rejecting the refund claims of the petitioner cannot be sustained and they deserve to be quashed and set aside and are accordingly Page 21 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 quashed and set aside and the respondents – adjudicating authorities are hereby directed to sanction the respective refund claims of the claimant after following the law laid down by this Court in the case of NBM Industries (Supra) and pass fresh orders within a period of two months from the date of the receipt of the present order and to make the actual payment within a period of four weeks thereafter and also grant consequential reliefs which may be available to the petitioners under the relevant provision of the rules more particularly Rule 5 of the Rules. [6.1] Before parting with the present order, we are constrained to strongly disapprove such arbitrary act on the part of the lower adjudicating authority and/or lower authorities in ignoring the binding decisions/orders passed by the higher appellate authorities/courts. Time and again the Hon’ble Supreme Court as well as various High Courts and this Court have disapproved such conduct/act on the part of the lower authorities in ignoring the binding decisions/orders passed by the higher appellate authorities/courts. Still it appears that message has not reached the concerned authorities. In the recent decision in the case of Claris Lifesciences Ltd. (Supra) in para 26 this Court has observed as under: Page 22 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 “26. Despite such clear and specific directions and authoritative pronouncements, act of issuance of show cause notice by the Deputy Commissioner is wholly impermissible and unpalatable and deserves to be quashed and struck down with a specific note of strong disapproval. The respondents simply could not have exercised the powers contained under the statute in such arbitrary exercise and in complete disregard to the pronouncement of this Court particularly reminding the Revenue authorities of the binding effect of decision of Tribunal on the identical question of law. This not only led to multiplicity of proceedings but also speaks of disregard to the direction of this Court rendered in the earlier petition of this very petitioner. Resultantly, petition stands allowed. Both the show cause notices dated 21.8.2012 and 22.1.2013 are quashed and struck down.” It appears that still the message has not reached the concerned authorities in following the binding decisions of the higher appellate authorities and/or courts solely on the ground that the same is in the case of another assessee. Such a conduct is also required to be viewed from another angle. This would not only amount to disregarding the direction of the court rendered in earlier petitions but Page 23 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 would also lead to multiplicity of proceedings. When the courts are overburdened and are accused of arrears, it is the duty of the concerned authorities to avoid multiplicity of proceedings and lessen the burden of the courts. Being a part of the justice delivery system. All efforts should be made by the authorities/quasi judicial authorities and judicial authorities to see that there is no multiplicity of proceedings and to pass the orders considering the binding decisions. It would also avoid unnecessary harassment to the parties as well as the unnecessary expenditure. [6.2] As observed hereinabove despite clear and unequivocal message by the pronouncement of the decisions by the Hon’ble Supreme Court as well as this Court, the message has not reached to the concerned authorities, we direct respondent No.2 – Central Board Excise and Customs, New Delhi to issue a detailed circular to all the adjudicating authorities considering the observations made by this Court in the present judgment and order as well as the law laid down by the Hon’ble Supreme Court in various decisions referred to in the present judgment and order, within a period of 30 days from the date of receipt of the present order so that such eventuality may not happen again and again.” 7. While

directing

the

authorities concerned to process the refund, in view of Page 24 of 25

C/SCA/17284/2021 JUDGMENT DATED: 09/12/2021 the aforesaid, we allow the writ petition with the token cost which is quantified at Rs.10,000/- (Ten Thousand Only) to be paid to the petitioner along with its refund claims by the respondent concerned. Let the respondents process the refund claim of the writ petitioner and grant the refund tax amount collected from the writ petitioner and deposited by the seller in accordance with law within a period of twelve weeks from the date of receipt of copy of this order. (SONIA GOKANI, J) (NISHA M. THAKORE,J) M.M.MIRZA Page 25 of 25