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2015 (6) TMI 1058 - HC - VAT and Sales Tax


Issues Involved:
1. Validity of Notification SO No. 3720 dated November 18, 2002, and Notification No. FD 120 CSL 2003 dated December 3, 2003.
2. Validity of the assessment order dated December 19, 2011, for the assessment year 2008-09.

Detailed Analysis:

Issue 1: Validity of Notifications

The petitioner, a public sector entity of the Central Government involved in marketing petroleum products, challenged Notification SO No. 3720 dated November 18, 2002, issued by the Central Government and Notification No. FD 120 CSL 2003 dated December 3, 2003, issued by the State Government. The petitioner argued that under Article 253 of the Constitution, only the Central Government has the authority to implement International Treaties and Conventions. The petitioner contended that the State Government's notification, which required a declaration from foreign airlines to grant tax exemption on the sale of aviation turbine fuel (ATF), was without jurisdiction and legislative competence.

The court noted that the Central Act, Foreign Aircraft (Exemption from Taxes and Duties on Fuel and Lubricants) Act, 2002, was enacted to implement international agreements pursuant to the Convention on International Civil Aviation. Section 3 of the Act allows the Central Government to exempt taxes and duties on fuel and lubricants supplied to foreign aircraft. The Central Government issued a notification on November 18, 2002, exempting such sales from all taxes and duties in India. Subsequently, the State Government issued a notification on December 3, 2003, requiring a declaration from foreign airlines to avail of this exemption.

The court held that the State Government's notification was not contrary to the Central Government's notification. The requirement of a declaration was deemed an aid to the implementation of the Central Act and not in contradiction to it. The declaration served as evidence to authenticate the sale of ATF to foreign aircraft from countries that are parties to the Convention on International Civil Aviation or have agreements with India. Thus, the court found no illegality or lack of competence in the State Government's notification.

Issue 2: Validity of the Assessment Order

The petitioner also challenged the assessment order dated December 19, 2011, for the assessment year 2008-09, which levied a tax of Rs. 1,63,09,180 on the turnover of Rs. 5,82,47,070 related to the sale of ATF to foreign aircraft. The petitioner argued that the names of foreign airlines were noted in the invoices and delivery challans, which should suffice to prove the sale to foreign airlines without the need for additional declarations.

The court noted that while the invoices and delivery challans indicated the sale to foreign airlines, they did not provide sufficient evidence to ascertain whether the sales were made to aircraft from countries that are parties to the Convention or have agreements with India. The court held that additional materials or declarations were necessary to establish this fact. The court opined that the petitioner should be given an opportunity to produce evidence showing the list of countries that are parties to the Convention or have agreements with India and to prove that the sales were made to aircraft from these countries.

The court set aside the assessment order dated December 19, 2011, and remitted the matter to the third respondent for reconsideration. The petitioner was directed to appear before the third respondent on July 6, 2015, to present the necessary evidence. The third respondent was instructed to reconsider the matter and pass a fresh order in accordance with the law, granting the petitioner time to produce the requisite declarations if necessary.

Conclusion:

The court upheld the validity of the State Government's notification dated December 3, 2003, and set aside the assessment order dated December 19, 2011. The matter was remitted to the third respondent for fresh consideration, allowing the petitioner to produce additional evidence to support its claim for tax exemption on the sale of ATF to foreign aircraft.

 

 

 

 

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