Procurement of fuel under Form-C post implementation of GST – recent developments

by | Jun 3, 2019

This is in continuation to our update shared vide the trailing mail that taxpayers can make inter-state procurement of diesel under Form-C. Vide this update, we wish to inform you the recent developments in this regard:

* In a recent case DPJ-NKC (JV) v. CCT, Odisha, 2019-VIL-166-ORI, the High Court relied on the ruling in the case of Caparo Power Limited (discussed in trailing mail) and held that Form-C can be issued for procurement of fuel post introduction of GST. The High Court further held that Circular prohibiting issuance of Form-C, shall not be enforced;

* The Excise and Taxation Commissioner, Haryana issued an Instruction dated September 24, 2018 clarifying that Form-C can be issued for purchase of diesel inter-alia for generation of electricity to be captively consumed, subject to fulfilment of specific conditions.

NITYA Comments:

This issue assumes importance as cost of procurement of diesel increases significantly if done at full rate of VAT/CST vis-à-vis concessional rate of CST. The taxpayers can consider taking up the issue with the oil companies to supply diesel at concessional rate against Form-C and simultaneously approach tax authorities for issuance thereof. A request can be made with the tax authorities to resume the registration under the Central Sales Tax Act, 1957 (‘CST Act’), so that requisite compliances can be affected. In case the authorities still do not issue Form-C, the taxpayers can consider preferring a Writ of Mandamus with the High Court in such cases.