Home Finance Center Amends CST Act

Center Amends CST Act

Bhubaneswar: With the Union Government has taken steps to bring necessary amendment in the CST Act, 1956, Odisha is all set to reap huge benefits in terms of revenue generation.

Due to presence of a clause in the Central Act, Odisha was losing Value Added Tax (VAT) more than Rs.500 Crore every year due to the misuse of Form-C by the Mineral Raising Contractors and Works Contractors of the State, said a senior official.

For last four long years Odisha was facing huge loss of VAT in this regard and the State repeatedly requested Union Government to bring in amendments in Central Act.

Recently once again, Odisha Government requested Union Ministry of Finance for bringing amendment of Sub Section(3) of Section 8 of Central Sales Tax (CST) Act, 1956.

Attention of Union Minister Finance Niramla Sitharaman was drawn by Odisha Finance Minister Niranjan Pujari to bring equisite amendment in the CST Act.

Union Minister Finance and Corporate Affairs Niramla Sitharaman has taken steps to bring in  the amendment in the CST Act, 1956 in the Finance Bill for which Odisha is going to reap big benefits in terms of Revenue Generation.

Way back in 2016, Union Government in order to bring in force the GST Act, certain amendments were made in CST Act, 1956 vide the Taxation Laws (Amendment) Act, 2017 dated 5 May, 2017.

In the amendment definition of “Goods” was amended as follows- good means- Petroleum Crude, High Speed Diesel, Motor Spirit-commonly known as Petrol, Natural Gas, Aviation Turbine Fuel and Alcoholic Liquor for human consumption with a view to restrict the applicability of CST Act to these six goods.

Due to which the interpretation of the Section 8 (3) b of CST Act, would be such that purchase of these six commodities can be allowed at a concessional rate on the strength of Form-C for resale or manufacture of these six commodities only and or use of these six commodities in Telecommunication Network, Mining and Generation of Electricity or any other Power.

Bu to protect the State Revenue-VAT, it was clarified not to use Form-C to manufacturers, contractors and Mining Lease Holders by interpreting the implication of the amendments made to CST Act and migration of registration granted under OVAT Act and CST Act to GST Act.

Later on, with the issue of Order by High Court of Orissa and similar orders of High Courts of other States, the window for issue of Form-C to manufacturers, Mining Contractors, and Works Contractors started purchasing High Speed Diesel(HSD) , paying CST@ 2 Percent.

This resulted in loss of VAT Revenue of HSD to the extent purchased from other States, for which Odisha was losing over Rs.500 Crore Per Annum due to misuse of Form-C.

Now with necessary amendment has been brought and Sub Section(3) of Section 8 has been omitted then Mineral Raising Contractors and Works Contractors will not be able to take advantage of Form-C as they were unduly enriching themselves at the cost of the State.