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2020 (6) TMI 56 - HC - VAT and Sales TaxRecovery of VAT - supply of petroleum crude - TNVAT Act - It is the case of the respective petitioners that the exploration and supply of petroleum crude oil has taken place outside the State of Tamil Nadu and in the Exclusive Economic Zone of India as defined in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976 and therefore no VAT can be levied - HELD THAT:- Petroleum products are liable to pay tax under Entry 41, Part B to the 1st Schedule being declared goods within the meaning of Section 14 of the CST Act, 1956. Therefore, if the sale had taken place within the state, it would be liable to tax under Section 3 of the Tamil Nadu VAT Act, 2006. There is no doubt there was sale between the petitioners and other co-explorers of petroleum crude oil under the “Crude Oil Sale Agreement”dated 26.9.2003 for the Sale and Purchase of Crude Oil - Whether the sale had taken place within the State of Tamil nadu or not and whether the liability to pay tax would be on the seller and on the buyer under section 3 of the Tamil Nadu VAT Act, 2006 would require determination by the Assessing Officer. There is no mechanism provided for payment of tax on the recipient of good on reverse charge basis under the Tamil Nadu VAT Act, 2006 except in the case of works contract under the Rules made thereunder. An agreement cannot shift the burden of tax on the buyer. It would not be correct to infer that the liability to pay tax can be shifted to the buyer namely Chennai Petroleum Corporation Ltd. However, Chennai Petroleum Corporation Ltd had agreed to pay tax from and on behalf of the suppliers. Each of the oil-producing companies where liable to pay proportionate tax on the crude oil explored and sold to Chennai Petroleum Corporation Ltd provided. However, tax is payable only if the sale had taken place within the State of Tamil Nadu. Whether or not the delivery of crude oil from the development area to the delivery point fell within the territorial jurisdiction of the State of Tamil Nadu or outside is a question of fact which require to be determined before the respondent - as the case involves disputed questions of fact based on the agreements signed between the parties, the present writ petitions are liable to be dismissed. Petition dismissed.
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