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2016 DIGILAW 1408 (ALL)

HINDUSTAN PETROLEUM CORPN. LTD. v. STATE OF U. P.

2016-04-18

RAKESH SRIVASTAVA, SUDHIR AGARWAL

body2016
JUDGMENT By the Court.—Verification of vertical storage tanks and flow meters installed at the depots of the petitioner in terms of the provisions of The Standards of Weights & Measurement (Enforcement) Act, 1985 (for short ‘Act’) is in question in this writ petition. 2. The undisputed facts of the case are: Hindustan Petroleum Corporation, the petitioner, a company registered under the Companies Act, 1956 is engaged in manufacture, distribution, sale and marketing of petroleum products such as petrol, diesel etc. The petitioner has its refineries at Mumbai and Vishakhapatnam and has a wide network of depots, terminals, L.P.G. bottling plants etc. One of the terminal of the petitioner is located at Karari, District-Jhansi, Uttar Pradesh for storage of motor spirit, high speed diesel and other allied products. The depots including one at Karari have storage facilities consisting of large capacity tanks for storing petroleum and its allied products, which are transported through pipelines and/or by tank wagons or tank lorries. After storing petroleum and its allied products at its depots, the petitioner transports the same as per demand throughout the State of Uttar Pradesh to its various retail outlets, for distribution to the consumers by tank lorries either owned by the petitioner or engaged by it on contract. 3. In December, 2001 the petitioner was served with an undated notice No. 309 issued by the Senior Inspector, Weights and Measure Department, Jhansi under Section 28 of the Act requiring the petitioner to get the storage tank and flow meter installed at its Karari depot verified by the Weights and Measures Department. 4. In the reply dated 14.12.2001, submitted by the petitioner to the show-cause notice mentioned above, it was stated by the petitioner that the storage tanks at Karari depot had already been calibrated and they would be re-calibrated as and when calibration fell due. In so far as calibration of flow meters is concerned it was stated by the petitioner that flow meters were being used for internal verification and as such they were not required to be calibrated. 5. On 5.2.2002, the department issued another notice to the petitioner wherein it was stated that in case the petitioner did not get the storage tanks and flow meters being used by it at Karari depot, calibrated, appropriate action would be initiated against the petitioner under the Act. 6. 5. On 5.2.2002, the department issued another notice to the petitioner wherein it was stated that in case the petitioner did not get the storage tanks and flow meters being used by it at Karari depot, calibrated, appropriate action would be initiated against the petitioner under the Act. 6. In the reply submitted by the petitioner to the said show-cause notice the petitioner took the stand that the vertical storage tanks situated at Karari depot were meant only for storage of petroleum products for domestic purpose and internal checking and they were never used for commercial/industrial transaction and as such they did not require any calibration. 7. The petitioner without waiting for any response from the authorities rushed to this Court and filed the present writ petition. 8. The undated notice No. 309 and notice dated 5.2.2002 issued by the Senior Inspector, Weights and Measures Department, Jhansi, requiring the petitioner to get the storage tanks and flow meters being used by it at its Karari depot, Jhansi, verified are under challenge in the present writ petition 9. Learned counsel for the petitioner has vehemently submitted that the tank lorries by which the petroleum and its allied products is transported to its various retail outlets for distribution to the consumers are built and fabricated as per the specifications laid down in the Petroleum Act, 1934 and the petroleum products filled in the said lorries are measured by calibrated Dip-rods duly verified by the department. Dip-rod is being used as the standard measure by the petitioner as well as the retailers and at the time of loading of the petroleum and its allied products on to the trucks at the terminals/depots and before it is supplied to the retailers, the quantity is measured by using dip-rod for distribution and not for any transaction. The learned counsel has submitted that the provisions of the Act would be attracted if the storage tanks and flow meters are used for in any transaction or industrial production, but keeping petroleum and its allied products in storage tanks does not amount to transaction. The counsel submitted that unless the storage tanks are used in transaction for trade and commerce the provisions of the Act would not be attracted. The counsel submitted that unless the storage tanks are used in transaction for trade and commerce the provisions of the Act would not be attracted. In so far as the flow meters are concerned the learned counsel has vehemently submitted that the said flow meters were being used for internal purposes and these meters basically serve as a check within the system. It has been contended that the flow meters were not being used for any commercial transaction and as such the provisions of the Act were not applicable in so far as the vertical tank and flow meters are concerned. 10. Per contra, the learned counsel for the respondents has submitted that the issue is no longer res integra in view of decision of the Apex Court. The counsel has submitted that the volume of petroleum and its allied products is necessary to be determined in connection with the assessment of excise duty. It was further contended that products in the storage tanks were drawn for sale to various dealers and that too was a transaction and that the tanks and flow meters were not being used for domestic or internal purposes as alleged and as such the petitioners were obliged to get their tanks and flow meters calibrated and stamped. 11. Heard counsel for the parties and perused the record. 12. In the year 1976 the Parliament enacted The Standards of Weights and Measures Act, 1976. The object of the Act was to establish standards of weights and measures, to regulate inter-State trade or commerce in weights, measures and other goods which are sold or distributed by weight, measure or number, and to provide for matters, connected therewith or incidental thereto. 13. In 1985, in order to facilitate the enforcement of 1976 Act, “The Standards of Weights & Measurement (Enforcement) Act, 1985” was enacted to provide for enforcement of the standards of weights and measures, established under 1976 Act, and for incidental requirement. 14. Before embarking on the question, we may notice some of the relevant provisions of the Act. Sections 3(o) and section 24 (1) read as under : “3(o) words and expressions used in this Act and not defined but defined in the Standards Act shall have the meaning respectively assigned to them in that Act.” Section 24 (1). 14. Before embarking on the question, we may notice some of the relevant provisions of the Act. Sections 3(o) and section 24 (1) read as under : “3(o) words and expressions used in this Act and not defined but defined in the Standards Act shall have the meaning respectively assigned to them in that Act.” Section 24 (1). Verification and stamping of weights and measures.—(1) “Every person having any weight or measure in his possession, custody or control in circumstances indicating that such weight or measure is being, or is intended or likely to be, used by him in any transaction or for industrial production or for protection, shall, before putting such weight or measure into such use, have such weight or measure verified at such place and during such hours as the Controller may, by general or special order, specify in this behalf (hereinafter referred to as the specified place or specified time), on payment of such fees as may be prescribed. 15. Section 2 (z) and 2 (zd) of The Standards of Weights and Measures Act, 1976 reads as under : “2(z) ‘transaction’ means- (i) any contract, whether for sale, purchase, exchange or any other purpose, or (ii) any assessment of royalty, toll, duty or other dues, or (iii) the assessment of any work done, wages, due or service rendered; 2(zd) “weight or measure” means a weight or measure specified by or under this Act, and includes a weighing or measuring instrument;” 16. It is not in dispute that any weight and measure being being used in any transaction or for industrial production or for protection is liable to be calibrated and verified under the Act. 17. The question came up for consideration before the Apex Court in Mohan Meakins Breweries Limited v. Controller of Weights and Measures, Uttar Pradesh, Lucknow, (1989) 2 SCC 405 , wherein upon taking into consideration the provisions of Section 2(jj) of the U.P. Weights and Measures (Enforcement) Act, 1959, (for short ‘U.P. Act”) it was held that storage of liquor in vats was covered by the expression “use in transaction for trade or commerce”. Paragraph 5 of the said report is reproduced below : “5. Under the aforesaid definition clause the legislature has given an artificial extended meaning to the expression “use in transaction for trade or commerce”. Paragraph 5 of the said report is reproduced below : “5. Under the aforesaid definition clause the legislature has given an artificial extended meaning to the expression “use in transaction for trade or commerce”. According to the definition it means use for the purposes of determining or declaring the quantity of anything in terms of measurement of length or capacity or weight in or in connection with the clauses (a) and (b) mentioned therein. Clause (b) refers to any assessment of royalty; toll; duty or other dues. According to the extended meaning given by the legislature the provisions of the Act would be attracted if the assessment of royalty; toll; duty or dues is to be determined on the basis of the quantity of anything in terms of measurement of length, area, volume or weight. There is no dispute that for the purposes of determining excise duty on the liquor produced by a manufacturer the assessment is made on the basis of the volume of the liquor produced and sold by the appellants. Since volume of the liquor produced and stored in vats is connected with the assessment of excise duty, it is covered by the expression “use in transaction for trade or commerce”. Ordinarily, the storage of alcohol in vats by itself may not amount to transaction for trade or commerce but under the extended meaning of the expression under Section 2(jj) even the storage of liquor in vats would be covered by the expression “use in transaction for trade or commerce” as volume of the liquor is necessary to be determined in connection with the assessment of excise duty. We are, therefore, in agreement with the view taken by the High Court.” 18. In so far as storage tanks are concerned the issue apparently is directly covered by a decision of the Apex Court in the case of Mohan Meakins Breweries (supra) as the definition of “use in transaction for trade or commerce” as contained in section 2(jj) the U.P. Act, is in pari materia with the definition of “transaction” in the Act. In so far as storage tanks are concerned the issue apparently is directly covered by a decision of the Apex Court in the case of Mohan Meakins Breweries (supra) as the definition of “use in transaction for trade or commerce” as contained in section 2(jj) the U.P. Act, is in pari materia with the definition of “transaction” in the Act. Section 2(jj) of the U.P. Act is reproduced below for ready reference : “2(jj) use in transaction for trade or commerce use in transaction for trade or commerce with its grammatical variation and cognate expressions, means use for the purposes of determining or declaring the quantity of anything in terms of measurement of length, area, volume, capacity or weight in or in connection with (a) any contract, whether by way of sale, purchase, exchange or otherwise, or (b) any assessment of royalty; toll; duty or other dues’ or (c) the assessment of any work done or services rendered, otherwise than in relation to research or scientific studies or in individual households for house-holds purposes.” 19. In so far as flow meters are concerned it has been submitted that they are being used for internal checking only and as such do not require any calibration. 20. In the case in Cochin Refineries Ltd. v. State of Kerala and others, AIR 2002 Kerala 290, a learned Single Judge of the Kerala High Court while rejecting a similar argument advanced by the Cochin Refinery, in paragraph 21 of the said report observed as under: “21. The issue is thus simplified substantially. When a product ultimately reaches a container which is calibrated or is capable of being subjected to examination so as to assess the quantity of the goods, the petitioner says, the flow meter to which it is led, needs no calibration. Therefore, it is claimed that in the process of filling, even though a measure system is used, nevertheless it does not require and it is not in measure requiring calibration. This argument is difficult to be appreciated; In fact it is basically absurd. At the final point of delivery, the goods are either transferred or they are parted with and in the course of a trade. Necessarily a strict view is to be employed. When such filling is carried out, the flow-meters have to give accurately the amount of product that stands parted with, even it be initially a stock transfer. At the final point of delivery, the goods are either transferred or they are parted with and in the course of a trade. Necessarily a strict view is to be employed. When such filling is carried out, the flow-meters have to give accurately the amount of product that stands parted with, even it be initially a stock transfer. It may be that the container to which the product is loaded may be calibrated or the quantity capable of being assessed by other methods. But as far as the petitioners are concerned, they have entered in a ‘transaction’ and a definite quantity is parted with in favour of the third person. The size of the container or capability offered is being accurately measured are irrelevant. We may even advert to a simple example. The capacity of a gasoline tank of the car may be prefixed, and it cannot be changed. Can a petrol pump owner justifiably say while filling up an empty tank, that his dispensing equipment needs no calibration as the capacity of the tank is predetermined. Or can a vendor selling vegetable oil be permitted to use an unauthorised decanter, claiming that the customer has brought to him a bottle which has a predetermined capacity for holding the oil. The law does not permit it and at times it may even run counter to a popular or common sense view. But strict obedience is called for, though it may be inconveniencing. At the filling point, be it a sale or a stock transfer, there can be spelt out a transaction, and therefore there cannot be two different yardsticks. As pointed out by the respondents, the calibration of tanker lorries or wagons are done by other agencies, and after the advent of the Act, the above can be no defence for seeking exemption. In fact Parts II and III of the General Rules, 1987 extensively deal with calibration of tanks, especially that is relatable to petroleum products.” 21. We are in respectable agreement with the observations made by the learned Single Judge. 22. In view of the above, the writ petition is devoid of merit and is accordingly dismissed. No orders as to costs.