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2010 (1) TMI 1129 - HC - VAT and Sales TaxWhether the subject transaction was a loan transaction or a "sale" within the meaning of section 2(n) of the Tamil Nadu General Sales Tax Act and section 2(g) of the Central Sales Tax Act, 1956? Held that:- The Central Government was expected to maintain uniform petroleum price throughout the territory of India. None of the States attempted to collect sales tax on the transaction. In case one among the States started collecting sales tax under the local or Central Sales Tax Act on the loan transaction, treating it as a sale, it would cause serious implications as the petroleum cost would be higher in those States which took the crude oil on loan from the refinery situated in the State of Tamil Nadu. The allocation as well as re-allocation were made before the ship entered the territorial waters of India. Therefore, there was no question of sale taking place within the jurisdiction of the State of Tamil Nadu so as to enable the sales tax authorities to treat the transaction as sale and to collect sales tax either under the Tamil Nadu General Sales Tax Act or under the Central Sales Tax Act. Therefore, necessarily, the transaction has to be treated as one of loan or barter and not sale. W.P. No. 9356 of 1998 is dismissed as infructuous. W.P. No. 9357 of 1998 is allowed. There will be a writ of declaration declaring the transaction in the name and style of "procedure for loan transactions of crude oil between the oil companies" pursuant to the procedure adopted by the Oil Co-ordination Committee as a simple barter or loan transaction without the element of sale.
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