Case Summary

Case Title: Tata Steel Limited v. State of Gujarat & Ors.
Court: High Court of Gujarat at Ahmedabad
Petition No.: R/Special Civil Application No. 10058 of 2024
Date of Judgment: 20 September 2024
Category of Dispute: Refund of CST paid at excess rate (Form-C issue)
Relevant Sections: Section 6 & 7, CST Act, 1956; Article 227, Constitution of India; Article 256 (binding nature of Central directions); Rule 12, CST (R&T) Rules.

Facts (Paras 5–31)

The petitioner, Tata Steel Limited (erstwhile Bhushan Steel Ltd.), was purchasing Regasified Liquid Natural Gas (RLNG) from Respondent No.4 in Gujarat for its Maharashtra operations. Until GST came into force (01.07.2017), such interstate purchases were taxed at 2% CST against Form-C. Post GST, the Maharashtra authorities refused to issue Form-C, compelling purchases at 15% CST.

Although the Punjab & Haryana High Court in Caparo Power Ltd. v. State of Haryana (2018) held that Form-C continued to be valid even after GST and the Supreme Court dismissed the State’s SLP, Maharashtra delayed implementing the same. Consequently, Tata Steel paid excess CST. Later, Bombay High Court in Tata Steel BSL Ltd. v. UOI directed issuance of Form-C, following which Tata Steel applied for refund of Rs. 2.40 crore, but no action was taken by Gujarat authorities, leading to the present petition.

Questions (Para 4)

• Whether Tata Steel is entitled to refund of Rs. 2,40,11,770/- collected as CST at 15% instead of 2% after furnishing Form-C?

• Whether the State is bound by Central Government instructions dated 01.11.2018 and judicial precedents confirming entitlement to concessional rate?

Observations (Paras 32–43)

The Court noted:

• The issue was no longer res integra, as Gujarat High Court in Tetra Pak India Pvt. Ltd. v. State of Gujarat (2024) and earlier in J.K. Cement Ltd. v. State of Gujarat (2019) had already held that refund of excess CST is payable directly to the buyer who bore the tax burden.

• The principle of unjust enrichment bars refund to the seller since tax burden was passed on to the buyer. Thus, the buyer (Tata Steel) is the rightful claimant.

• The Union’s circular dated 01.11.2018 directing all States to comply with the Caparo Power decision was binding under Article 256 of the Constitution.

• Delay or refusal by the State to process refund was untenable and contrary to law.

Judgment (Paras 44–45)

The High Court directed the Gujarat authorities to process Tata Steel’s refund application of Rs. 2,40,11,770/- along with statutory interest after verifying Form-C declarations. The refund must be sanctioned within 12 weeks. The petition was allowed and rule made absolute.

Cases Referred

Between Fine Lines

This judgment is a major relief for industries facing denial of Form-C post GST. The Gujarat High Court reinforced that taxpayers cannot be denied refunds of excess CST merely due to procedural lapses of State authorities. It confirms that buyers who ultimately bear the burden of higher CST are entitled to direct refunds with statutory interest, strengthening fairness and consistency in tax administration.

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