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2005 DIGILAW 202 (SC)

GAIL INDIA LTD. v. SALES TAX OFFICER, GUJARAT

2005-02-01

ARIJIT PASAYAT, C.K.THAKKER, RUMA PAL

body2005
ORDER CAs Nos. 1649-54 of 2001 and WPs Nos. 110,615 of 2000, 213 of 2003 and 222 of 2004 1. The appellant purchases gas from the Oil and Natural Gas Commission (ONGC) which is supplied by it through pipelines from the State of Gujarat to the purchasers within Gujarat and in various other States. According to the appellant, these were only stock transfers in respect of which local sales tax had been paid not only in Gujarat but also in the States in which the sales ultimately took place. In respect of Assessment Years 1994-95 to 1999-2000, assessment orders were passed against the appellant under the Central Sales Tax Act, 1956 (for short "the Act") on the ground that the transfers effected by the appellant were in fact inter-State sales within the meaning of the 1956 Act and, therefore, liable to Central sales tax and that in the absence of any form the appellant was not entitled to the benefit of the concessional rate of the sales tax duty. 2. These appeals have been preferred directly from the assessment orders without exhausting the remedies available to the appellant either under the Gujarat Sales Tax Act, 1969 or if that was not available for any reason, then a to the High Court under Article 226 of the Constitution. According to the appellant, they have approached this Court directly because of the decision of this Court in Ashok Leyland Ltd. v. Union of India1 which had directed similar issues raised to be decided by the local Tribunal. This order has also been followed by another Bench of this Court in K.C.P. Ltd. v. State of M.p2. At the time of issuing notice, this Court had granted stay of the• demand raised by the respondent on the appellant. The interim order is still operative. 3. It is pointed out by the learned counsel appearing on behalf of the respondent that similar matters had been disposed of by an order passed by this Court on 4-2-2004 by remanding the matter back to the appropriate Tribunal for a decision on the issue whether the sales in question were inter-State or intra-State sales and whether the appellant was liable to pay under the 1956 Act. At that time, the appellant had sought for delinking of its matter on the ground that issues involved in this case were different. 4. At that time, the appellant had sought for delinking of its matter on the ground that issues involved in this case were different. 4. Be that as it may, we are of the view that it is not a pure question of law which may be decided by this Court at this stage. There are issues which would need resolution by a fact-finding tribunal. Following the decision in Ashok Leyland Ltd 1 as well as in K. C. P. Ltd.2 we remand the matter for being heard and disposed of by the Gujarat Sales Tax Appellate Tribunal which will determine the issues indicated herein in accordance with the provisions of Rule 67 of the Gujarat Sales Tax Rules, 1970 i.e. after notice in the appropriate form to the States concerned to which, as claimed by the appellant, payment of local sales tax has been made. The Tribunal shall dispose of the matter within a period of four months. 5. The interim order granted by this Court on 10-3-2002 shall continue for a period of four months. If within the aforesaid period the matter is not disposed of by the Tribunal for any reason not attributable to the appellant it will be open to the appellant to pray for continuation of the interim order which the Tribunal may grant after hearing the respondent uninhibited by the interim order granted by this Court. It is pointed out by the learned counsel appearing on behalf of the appellant that apart from this particular issue there were other issues arising out of the assessment order which also would require determination by the Tribunal. Any of such issues raised may also be decided by the Tribunal provided the appellants file the appeal within a period of two weeks from date. If such an appeal is filed before the Tribunal, the interim order will continue for four weeks as directed. If no such appeal is filed, the interim order granted by us will automatically stand vacated. 6. The interim order passed by this Court had not in fact protected the future demands. It will be open to the appellant to apply for interim relief in respect of the same before the Tribunal. 7. The civil appeals are disposed of accordingly. There shall be no order as to costs. 8. The writ petitions are disposed of in terms of the order passed in the civil appeals. It will be open to the appellant to apply for interim relief in respect of the same before the Tribunal. 7. The civil appeals are disposed of accordingly. There shall be no order as to costs. 8. The writ petitions are disposed of in terms of the order passed in the civil appeals. Civil Appeals Nos. 926-29 of2005 @ SLPs Nos. 6110, 6189, 6251, 6281 of 2002 and WPs Nos. 534 and 540 of2001 9. Leave granted. 10.The assessment years in question are 1998-99 to 2000-2002. The question raised is whether particular transactions entered into between the appellant were inter-State sales within the meaning of the Central Sales Tax Act, 1956 or were sales which have taken place in Vishakhapatnam in the State of Andhra Pradesh and, therefore, subject to the tax under the Andhra Pradesh General Sales Tax Act, 1957. 11.The appellant had exported aluminium through Vishakhapatnam under the Duty Entitlement Pass Book Scheme (DEPB) whereunder the appellant was entitled to get credit on the import duty of goods which were allowed to be imported by the appellant up to a prescribed limit. This right of the appellant was recognised under the EXIM Policy to be freely transferable. The appellant held an auction of its import duty entitlement in respect of the DEPB Scheme at Vishakhapatnam. The successful purchasers were personsl concerns of West Bengal and Maharashtra. The appellant treated the sales as inter-State sale and duly paid the sales tax under the Central Sales Tax Act. A show-cause notice was issued by the Commercial Tax Officer, Vishakhapatnam claiming that the transaction was a local sale within the meaning of the Andhra Pradesh General Sales Tax Act. It was alleged in the show-cause notice that the DEPB licences were registered with the Vishakhapatnam port through which the exports were made. It was, therefore, held that the site of the sales was Andhra Pradesh. Impugning this decision, the learned counsel for the appellant has submitted that the sale was clearly an inter-State sale because the licences were granted by the Director General of Foreign Trade under the DEPB Scheme in Cuttack. The appellant f carries on business in Bhubaneshwar. The auction was held in Bhubaneshwar. It is, therefore, said that there was no question of the sale being effected in ishakhapatnam. The appellant f carries on business in Bhubaneshwar. The auction was held in Bhubaneshwar. It is, therefore, said that there was no question of the sale being effected in ishakhapatnam. Because of the extraterritorial element by reason of the fact that the purchasers of the benefit under the DEPB Scheme were from Bengal and Maharashtra, it is stated that the sales were clearly inter-State sales. 12. We are of the opinion that the issue whether the transactions in question were inter-State sales or intra-State sales and if so whether the said had taken place in Andhra Pradesh are issues which should be decided as a question of fact initially by a fact-finding tribunal. It is true that by virtue of the provisions of Sections 21-E and 2l-of the Andhra Pradesh General Sales Tax Act the appellant could not have approached the Tribunal or the High Court. However, relying upon the decision of this Court in Ashok Leyland Ltd. v. Union of 1ndia1 as well as the decision of this Court in K.c.P.Ltd. v. State of M.P2 we transfer these matters to the Andhra Pradesh Sales Tax Appellate Tribunal for determining the aforesaid issues and any other issues which are appropriately raised at the instance of the parties. Pending the determination by the Tribunal the interim order granted by this Court on 22-3-2002 will continue to operate. We make it clear that before the Tribunal takes any decision the Union of India and the State of Orissa must be given notice. 13. The civil appeals are, accordingly, disposed of. There shall be no order as to costs. 14. The writ petitions are disposed of in terms of the above order.