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2015 (6) TMI 1058 - HC - VAT and Sales TaxDemand of sales tax / vat on sale of aviation turbine fuel (ATF) to foreign aircrafts - Constitutional validity of notification - Held that - there may be various other airlines originating from foreign countries which are not parties to the said convention, but in order to identify those airlines which originate from the countries which are parties to the convention,such a declaration is required. Therefore I do not find that notification dated December 3, 2003 is illegal, or it lacks competence and it is contrary to the provision of the Central enactment. On the contrary, the requirement of issuance of declaration by a purchaser of ATF and lubricants, i.e., aircraft of a foreign country which is a party to the Convention on International Civil Aviation or which has entered into air services or air transport agreement with India and operating international air services to or from India would get endorsed. Therefore there is a distinct purpose in insisting for production of such declaration made by the State Government and hence the contention raised by the petitioner s counsel on the vires of the said notification is without any substance. Validity of assessment orders - Held that - in respect of certain transactions made to certain airlines there are declarations produced and in respect of other transactions of the very same airline, it may not be produced is the submission of the petitioner s counsel. It is also noted that in respect of airlines of certain foreign countries no declaration may have been produced. This aspect would have to be examined and there may be certain cases where the declarations have not been produced with regard to certain aircrafts. Petitioner would have to be given an opportunity to produce evidence pointing out the list of countries which are parties to the convention or which have entered into agreements with India and in respect of whose aircrafts thesale of ATF and lubricants have taken place to the satisfaction of the third respondent/authority. If the third respondent is satisfied on the material to be produced by the petitioner, then it could consider the grant of exemption in respect of those transactions. But if the third respondent is of the opinion that the additional materials to be produced by the petitioner are not sufficient to come to a conclusion that an exemption would have to be granted, then in that case it can grant some time to the petitioner to produce requisite declarations from foreign airlines and thereafter proceed to consider the matter afresh and pass a fresh order in that regard. - Matter remanded back.
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 OrderThe 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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