The Bombay High Court at Goa has refused to grant Vedanta Limited the benefit of concessional rate of Central Sales Tax (CST) on High Speed Diesel (HSD) used in its mining operations, holding that the company diverted part of the diesel for resale to private truck operators, which fell outside the permitted scope of usage specified in its registration certificate.
The bench of Justice Bharati Dangre and Justice Nivedita P. Mehta has observed that none of the parties have paid attention to the goods for which the registration is granted, namely, HSD and petrol, which is used for running and maintenance of machinery for mining and processing iron ore for sale i.e. restricting its use to the machineries and had it been a case that the registration was specifically obtained for the vehicles, the certificate could have said so but, it only restricts the HSD and petrol used for running and maintenance of the machinery and it is not possible to segregate the two terms running and maintenance as they are used qua ‘machinery for mining and for processing of iron ore for sale’ indicating that the petrol or diesel which is utilized for operation of the machinery for mining and processing of iron ore for sale, would be entitled for the benefit of concessional rate and not otherwise.
However, in a related petition filed by Sesa Mining Corporation Limited, the Court set aside the order denying issuance of C-Forms and directed the authorities to reconsider the request on merits, noting that the rejection was based solely on the introduction of GST and the misconception that dealers could no longer hold CST registrations post-GST.
The petitioner/assessee, Vedanta Limited, engaged in iron ore mining, procured HSD from other States using C-Forms, which allowed purchase at a concessional 2% CST rate. This diesel was declared to be used for running and maintaining machinery in mining operations as specified in its CST registration certificate.
However, tax authorities found that a significant portion of the diesel was being supplied to private truck owners and transport contractors, not used directly for Vedanta’s mining machinery. The cost of this diesel supply was adjusted against transport payments, making it a resale rather than consumption for mining.
The Court held that the registration certificate permitted concessional diesel only for running mining machinery, not for resale or supply to third-party transporters. Vedanta had resold diesel to private truck operators, which disqualified the diesel from concessional CST benefit. Authorities had already allowed concessional C-Forms only for diesel used in Vedanta’s own trucks and equipment at the Codli mines, but the Court refused any further relief.
In contrast, the Court held that Sesa Mining’s request for C-Forms was wrongfully denied only because the tax department assumed CST registration had become invalid after GST.
The Court clarified that CST registrations do not lapse automatically after GST implementation. C-Forms can still be issued for purchases of petroleum products (including HSD) that remain outside the GST framework.
Therefore, the Court set aside the rejection order and directed authorities to reconsider Sesa Mining’s application afresh within eight weeks.
Case Details
Case Title: Vedanta Limited Versus Union of India
Case No.: Writ Petition No. 876 Of 2017 And Writ Petition No. 856 Of 2018
Date: 28//07/2025
Counsel For Petitioner: Gopal Krishna Mudra, Advocate
Counsel For Respondent: Raviraj Chodankar
