Mining Excluded From CST Form C Rate Is Valid: Rajasthan HC

Excluding Mining from Concessional Form C Rate Under CST Act Not Discriminatory: Rajasthan High Court Upholds 2021 Amendment

Published: 10 October 2026 · NyayVidhan

A Division Bench of the Rajasthan High Court upheld the Finance Act, 2021 amendment to Section 8(3)(b) of the Central Sales Tax Act, 1956, which took mining, telecommunication and power out of the uses qualifying for the concessional inter-State rate against Form C (paras 3, 6, 10, 28). It held that the excluded and retained industries are not similarly placed, that the mining industry had no vested right to the concession, and that the choice was a policy decision (paras 16, 27).

Key holdings

Mining had no vested right to buy inputs at the concessional Form C rate (paras 16, 27).

Industries deleted from and retained in Section 8(3)(b) are not of the same category; the classification is reasonable (paras 16, 27).

The challenger must prove that the excluded and retained classes are similarly placed (para 16).

Higher costs from paying CST at the full rate are hardship, not a ground of invalidity (paras 21, 27).

The amendment was not meant to overcome Carpo Power Ltd., which decided a different issue (paras 17, 26, 27).

Brief Facts

The petitioner, a firm mining natural stone, buys High Speed Diesel (HSD) from oil companies outside Rajasthan for use in mining (paras 2, 7). HSD is among the six items defined as ‘goods’ in Section 2(d) (para 8). Before 2021, Section 8(3)(b) let it buy HSD at the reduced rate against Form C; the substituted clause covers only use in the manufacture or processing for sale of Section 2(d) goods (paras 2, 6, 9). The firm said the exclusion breached Article 14, was meant to overcome Carpo Power Ltd. v. State of Haryana, and that input tax credit could not be claimed for the full-rate tax (para 4). The respondents called it a policy decision (para 5).

Court's Findings

Relying on State of M.P. v. Rakesh Kohli and State of Himachal Pradesh v. Goel Bus Service, the Bench started from the presumption of constitutionality, the challenger's onus and the legislature's wider latitude to classify in fiscal statutes; hardship alone is no ground (paras 11-13). Tax classification is viewed liberally and is valid if rationally based and no one in a similarly situated class is singled out (paras 14-15). The mining industry had no vested right to buy inputs at a concessional inter-State rate; after GST, VAT and CST apply for limited purposes, and which industries get the Form C benefit is a policy decision whose wisdom the Court cannot review (para 16). No case was made out that the excluded industries were identically placed with those still entitled; classification by nature of industry has a reasonable basis (para 16). Carpo Power decided a different question, Form C for natural gas used to generate electricity after GST, so the amendment was not meant to overcome it (paras 17-18, 26). The input tax credit position was unchanged, and higher costs are hardship, not invalidity (paras 20-21). Indian Express Newspapers, Pepsi Foods and NHPC did not apply (paras 22-26).

Legal Principle

A fiscal statute that withdraws a tax concession from some classes of industry does not violate Article 14 merely because the excluded industry now pays more. The challenger must show that the excluded and retained classes are similarly placed; classification by nature of industry is a policy choice within the legislature's discretion (paras 11, 16, 21, 27).

Precedents Relied Upon

State of M.P. v. Rakesh Kohli & Ors. (2012) 6 SCC 312
Relied Upon Discussed at ¶ 11, 12
Principles for testing the constitutional validity of a taxation law: presumption of constitutionality, onus on the challenger, greater latitude for classification, hardship irrelevant, and some constitutional infirmity needed beyond mere arbitrariness.
State of Himachal Pradesh and Ors. v. Goel Bus Service 2023 SCC OnLine SC 46
Relied Upon Discussed at ¶ 11, 13
Courts show judicial restraint with tax legislation unless it is manifestly unjust or glaringly unconstitutional.
East Indian Tobacco Co. v. State of Andhra Pradesh AIR 1962 SC 1733
Relied Upon Discussed at ¶ 14
If a State may pick one commodity for taxation without offending Article 14, it may equally pick one category of goods.

View all precedents (13)

Ganga Sugar Corporation v. State of UP 1980 (1) SCC 223
Relied Upon Discussed at ¶ 14
Classification for taxation under Article 14 must be viewed liberally, not meticulously.
Hiralal Rattanlal Etc. v. State Of U.P. And Anr. Etc. (1973) 1 SCC 216
Relied Upon Discussed at ¶ 14
Separate tax treatment of processed and unprocessed pulses was a reasonable classification; the legislature has wide power to choose what to tax.
Kerala Hotel and Restaurant Assn. v. State of Kerala (1990) 2 SCC 502
Relied Upon Discussed at ¶ 14
Unless a taxation classification is palpably arbitrary, the yardstick is left to legislative wisdom.
Anant Mills Ltd. v. State of Gujarat (1975) 2 SCC 175
Relied Upon Discussed at ¶ 15
Article 14 permits classification on an intelligible differentia with a rational nexus; taxation laws allow the legislature larger discretion.
Spences Hotel (P) Ltd. v. State of W.B. (1991) 2 SCC 154
Relied Upon Discussed at ¶ 15
Equal protection in taxation does not require equal rates for different classes; a flat-rate luxury tax was upheld.
Union of India & Ors. v. N.S. Rathnam & Sons (2015) 10 SCC 681
Relied Upon Discussed at ¶ 15
Permissible classification needs an intelligible differentia with a rational relation to the object; mere inequality is not enough.
Carpo Power Limited v. State of Haryana and Ors. (2018) 53 GSTR 24
Distinguished Discussed at ¶ 4, 17, 18, 26, 27
Decided entitlement to Form C for natural gas used to generate electricity after GST; a different issue, so the 2021 amendment was not enacted to overcome it.
Indian Express Newspapers (Bombay) Private Ltd. & Ors. v. Union of India and others (1985) 1 SCC 64
Distinguished Discussed at ¶ 4, 22, 23
Directions to reconsider an import duty on newsprint turned on that case’s peculiar facts.
Deputy Commissioner of Income Tax and Ors. v. Pepsi Foods Ltd. (2021) 7 SCC 413
Distinguished Discussed at ¶ 4, 22, 24
Automatic vacation of a Tribunal stay was struck down for treating unequals equally; not applicable here.
NHPC Ltd. v. State of Himachal Pradesh, Secretary and Ors. AIR 2023 SC 4457
Distinguished Discussed at ¶ 4, 22, 25, 26
A legislature may remove the basis of a judgment within constitutional limits; inapplicable because the amendment was not meant to overcome a judicial decision.

Excluding Mining from Concessional Form C Rate Under CST Act Not Discriminatory: Rajasthan High Court Upholds 2021 Amendment

Judgment Intelligence

Key holdings

Brief Facts

Court's Findings

Legal Principle

Precedents Relied Upon

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