TMI Blog2013 (5) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... int to buyer's facility. Delivery of gas from one pipeline to other in the course of transportation of gas to buyer's facility according to GSPA is for the purpose of making integrated and continuous movement of gas from delivery point to buyer's facility. From the aforesaid reading of the contract, it appears that the petitioner or the seller is relieved from its liability immediately after delivery of possession of gas to the buyer at the sale point, i.e., Gadimoga in Andhra Pradesh. The seller or the petitioner shall be entitled for payment of cost of gas supplied at Gadimoga for the measured quantity. Virtually, the seller or the petitioner is absolved of the liability after delivery of gas at Gadimoga to the transporter, i.e. RGTIL and shall be entitled for payment of sale consideration on the basis of delivery made to RGTIL and not at Orai in the State of U.P. Accordingly, in view of the provisions contained in Section 3 of the CST Act readwith definition of sale given in the CST Act or the VAT Act or even Sales of Goods Act, sale takes place in Gadimoga itself so far as petitioner is concerned. Delivery point being at Gadimoga, the sale consideration also co-relates to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Hence, the sale transaction which is the subject matter of the instant case is not an intra-state sale but is an inter-state sale and State of U.P. lacks jurisdiction to impose tax (VAT). Section 43 of the VAT Act provides that the amount deposited by assessee which is not due as a tax be held by the State Government as a trustee and in case claimed, should be refunded. Thus, in case, tax realised is not passed on the consumer then under the statutory mandate assesse seems to have got right to seek refund but if it is passed on to the consumer then it may be refunded to consumer in such a manner as may be prescribed in the statute for the purpose. It has been submitted by the petitioner's counsel that it has not been passed on to the consumer while selling the fertilizers but reliance has recovered from the respondents no. 4 to 10 who are also assessee. Accordingly, there appears to be no reason to held that state is not liable to refund the tax which has been charged without jurisdiction. - Misc. Bench No.- 6281 of 2010, Misc. Bench No. - 1346 of 2012, Misc. Bench No. -1445 of 2012,Misc. Bench No. -1471 of 2012,Misc. Bench No. -1655 of 2012,Misc. Bench No. - 1676 of 2012 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Prashant Chandra, Shri S.M.K. Chaudhari, Shri Sunil Gupta, learned Senior Counsels assisted by their associate counsels, assailing the impugned order passed by assessing authority assisted by other counsels and Shri J. N. Mathur, learned Senior Counsel assisted by Shri H.P.Srivastava for the State of U.P. A large number of cases have been cited by the both sides, relevant of which is considered while dealing with different issues under the aforesaid heads. (I) FACTS 4. The petitioner is a public limited company incorporated under the Indian Companies Act, 1956 having its office in the State of Uttar Pradesh at Park Road, Lucknow and is engaged in business of extracting and refining petroleum and petro-chemical products. 5. Under Entry 53 of List I of the Seventh Schedule of Constitution of India Parliament has got power to make legislation for regulation and development of oilfields, mineral oil resources, petroleum, petroleum products, other liquids and substances declared by Parliament by law to be dangerously inflammable. Natural gas product extracted from oil wells is predominantly comprising of methane. Production of natural gas is not independent of the production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... policy by the Government of India. The petitioner has formed a consortium with NIKO Ltd, a company organized and existing under the laws of Cayman Islands with its Indian office at Mumbai. The consortium was the successful bidder for Block KG-D6 and termed as Contractor. On 24.3.2000 Reliance Platforms Communications. Com (P) Ltd. was incorporated which was changed to Global Fuel Management Services Ltd. and is now called "Reliance Natural Resources Ltd. (in short RNRL). 7. A Production Sharing Contract (in short PSC) was entered into between the Government of India and the contractor on 12.4.2000. The PSC, as recorded, is within the contract area identified as Block KGDWN-98-3. KG-D6 is situated offshore the coast of Andhra Pradesh in the Indian Ocean. Such blocks are called "deep water exploration blocks." The exploration in such areas requires employment of highly skilled and experienced technical persons and an extremely expensive and time consuming exercise. All exploration expenses required to locate petroleum resources have to be borne by the contractor. Thus, the contractor is bound to incur huge cost and resources for discovery of reserves in the area at their risk. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urce, gas, is held by the Government and trust on behalf the people. Therefore, for legal purposes, the Government owns the gas till it reaches its final consumer; (b) the PSC is the basis on which the contractor exercises his right over the supply of gas. Since it is the very basis of such a right, the contractor does not have the competent power to give any rights which do not accrue to it under the PSC. From the above analysis, the following are the broad sustainable conclusions which can be derived from the position of the Union: (1)The natural resources are vested with the Government as a matter of trust in the name of the people of India. Thus, it is the solemn duty of the State to protect the national interest. (2)Even though exploration, extraction and exploitation of natural resources are within the domain of governmental function, the Government has decided to privatize some of its functions. For this reason, the constitutional restrictions on the government would equally apply to the private players in this process. Natural resources must always be used in the interests of the country, and not private interests. (3) The broader constitutional principles, the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers have entered into agreement with the companies like Reliance Gas Transportation Infrastructure Ltd. (in short RGTIL) to transport the gas from Gadimoga to Hajira in Gujrat through pipeline operated by RGTIL. From Hajira (Gujrat), transportation through gas pipeline takes place by Gas Authority of India Ltd. (in short GAIL). The Gail bring the gas through its pipeline to district Auraiya in the State of U.P. From Auraiya, in terms of agreement, the required quantity of gas is taken by the respondent nos. 4 to 10 to their respective plants or factories where they manufacture fertilizers, chemicals and other products. 11. The respondent nos. 4 to 10 entered into separate agreements with RGTIL and GAIL. At the delivery point, i.e., Gadimoga, the purchaser, i.e., respondent nos. 4 to 10 take delivery of natural gas, furnish Form C to the petitioner issued by the State Trade Tax Authorities and the Form C so received is furnished to the assessing authority. Specific case of the petitioner is that delivery point of natural gas to the purchaser is the outlet flange of petitioner's delivery facility located at the onshore processing terminal of the Gas Field at Gadimoga of Andhra Prad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 2009 3145097.42 653990146 13079803 667069949 August 2009 3342799.33 708145996 14162919 722308915 Sept. 2009 2731953.25 562086467 11241729 573328197 Oct. 2009 3085889.82 624933802 12498676 637432479 Nov. 2009 3265804.80 657416925 13148337 670565262 Dec. 2009 3531058.20 711881518 14237630 726119148 Jan 2010 3117667.88 625713763 12514275 638228037 Feb 2010 3039287.87 608192809 12163855 620356664 March2010 4125933.90 804705389.13 16094108.58 820799497.71 Total 34937276.86 7106457565.33 142129149.14 7248586714.47 14. The petitioner received a notice dated 18.1.2010 and after service of notice and before final decision, ex parte provisional assessment was made on 25.1.2010 fixing liability with regard to Value Added Tax and the appeal preferred before the Additional Commissioner,Grade- 2, Range-3, Lucknow was dismissed on 7.5.2010. Thereafter, the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by interim order dated 26.7.2010, the preliminary objection raised with regard to maintainability of writ petition and the objection raised by the respondents in that regard on account of availability of alternative remedy was rejected while admitting the writ petition and the interim order dated 26.7.2010 was passed. Special Leave Petition was preferred by the State of U.P. which was disposed of by order dated 23.1.2012. Hon'ble Supreme Court without interfering with the order dated 26.7.2010 keeping in view the statement made by the petitioner to pay tax subject to the outcome of writ petition, had not interfered with the findings of this Court in its order dated 26.7.2010 in regard to availability of alternative remedy and the State Government also does not appear to have pressed for it. 19. However, it shall be appropriate to consider the argument of parties with regard to alternative remedy. Section 2 (b) of the U.P. VAT Act, 2008 defines the 'assessing authority' which is as under:- "2(b) "assessing authority' means any person-- (i)appointed and posted by the State Government; or (ii)appointed by the State Government and posted by the Commissioner; or (iii) appoin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercised the jurisdiction of assessing authority on 11.6.2010. While passing the impugned order, only option open to him was to leave the case for adjudication by his successor in office. Accordingly, the impugned order suffers from lack of jurisdiction. Apart from above, under Rule 4 (11) of the U.P. VAT Rules, 2008 in the event of casual vacancy of Additional Commissioner or the Joint Commissioner, the Commissioner shall have power to authorize to discharge the function by assigning the work to any other Additional Commissioner or Joint Commissioner. Neither the VAT Act, 2008 nor VAT Rules confers power on the Additional Commissioner to discharge the duty of Joint Commissioner (assessment) in corporate circle as an assessing authority. Apart from the aforesaid judgment of the Hon'ble Supreme Court, it should not be over-sighted that while construing the statute, meaning should be given to each and every word, every section of whole of the statute. Statutory provision should not be read in piecemeal. The CST Act should be considered in its totality alongwith VAT Act vide 2009 (27) LCD 1232, Mansa Ram Yadav and others Vs. State of U.P. and others. Apart from CST Act, when issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ip Singh Uban and others, 2000 (7) SCC 296; Dhanajay Reddy Vs. State of Karnataka, AIR 2001 SC 1512, Commissioner Of Income Tax, Mumbai Vs. Anjum M.H. Ghaswala and others, 2002 (1) SCC 633; Prabha Shankar Dubey Vs. State of M.P., AIR 2004 SC 486 and Ramphal Kundu Vs. Kamal Sharma, AIR 2004 SC 1657. 25. In the case of M/S. Zunaid Enterprises others vs. State of M.P. others decided by Hon'ble Supreme Court on 22.2.2012, the petition was filed against the judgment of High Court, whereby factual finding was recorded on the basis of material before it. Their Lordships held that the controversy should have been referred to the assessing authority because of the fact that there was serious disputed question of fact. It was held that the assessing authority may appreciate the material and decide whether it is inter-state sale or intrastate sale. In the present case, the assessing authority has recorded its finding on the basis of evidence on record after providing opportunity of hearing to the parties. Assuming the assessing authorities' factual finding as correct, the question with regard to inter-state sale or intrastate sale may be looked into. Moreover, substantially, there appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITUTIONAL AND STATUTORY PROVISIONS 30. Reliance entered into product sharing agreement with the Government of India with regard to exploration and sharing of natural gas and under the rights conferred by product sharing agreement, the Reliance entered into GSPA for sharing of natural resources and thereafter sale and purchase of natural gas is carried out in pursuance to right conferred by constitutional provisions as well as statutory provisions. Shri Abhishek Manu Singhvi, Shri R.N.Trivedi and other counsels had invited attention of this Court towards different provisions of Indian Constitution, Statutory Provisions, Rules and Regulations, reference of which is necessary to be given to resolve the controversy. 31. Article 269 of the Constitution contains provision with regard to tax levied and collected by the Union but assigned to the States which includes tax on consignment of goods where such consignment takes place in the course of inter-State trade or commerce. Competence of State legislature to impose tax vis-a-vis Union of India may resolve by applying doctrine of pith and substance since the nomenclature used by the taxing statute is not conclusive vide AIR 1990 SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of trade or commerce among the States. It further refers freedom from law which goes beyond regulations which burdens, restricts or prevents the trade movements between states and within state vide AIR 2006 SC 2550 Jindal Stainless Steel Ltd. vs. State of Haryana. Article 304 confers power on Parliament to impose restrictions on trade, commerce and intercourse between one state and another state or within any part of the territory of India as may be required in public interest. Article 303 deals with the restrictions on the legislative powers of the Union and of the States with regard to trade and commerce. Article 304 deals with restrictions on trade, commerce and intercourse among States. For convenience, Article 304 is reproduced as under:- "Article 304- Restrictions on trade, commerce and intercourse among State:- Notwithstanding anything in article 301 or article 303, the Legislature of a State may by law- (a) impose on goods imported from other States [or the Union territories] any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced; and (b) i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Union of India may frame Regulation for development of oil fields and mineral oil resources etc. Under Entry 92 A of List I, tax may be imposed by Union of India with regard to goods where sale or purchase takes place in the course of inter-Stater trade or commerce. For convenience, Entry 53, 92A and 92B are reproduced as under:- "Entry 53:- Regulation and development of oil fields and mineral oil resources; petroleum and petroleum products; other liquids and substances declared by Parliament by law to be dangerously inflammable. Entry 92A- Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce" Entry 92B- Taxes on the consignment of goods (whether the consignment is to the person making it or to any other person), where such consignment takes place in the coursed of inter-State trade or commerce." 40. The power of the State Government to impose tax on the sale or purchase of goods has been conferred by Entry 54 List II of 7 Schedule, which is as under:- "Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List 1." 41. Articl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to the power of the Union to levey taxes on the sale or purchase of goods other than newspapes where such sale or purchase takes places in the course of inter-State trade or commerce. The taxes levied by the Union in exercise of this added power are to be assigned to the States. The Amendment seeks to empower Parliament by law to formulate principles not only for determining when a sale or purchase of goods takes place in the course of inter-State trade or commerce but also for determining when a sale or purchase takes place in the course of import into, or export out of the territory of India or outside a particular State." 43. In the aforesaid backdrop, Law Commission (supra) after considering the judgment of Hon'ble Supreme Court reported in (1952) SCR 1112 and (1954) SCR 53, Tranvancore-Cochin Cases, considered the original Article 286 and accepted the principle laid down by Hon'ble Supreme Court in its judgment (supra) as well as decisions of American Supreme Court, to quote relevant portion:- "Under this head, we, therefore, recommend the acceptance of the principles laid down by the Supreme Court. We express them in the following manner:- A sale or purchase of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) after discussing the entire pros and cons of inter-State trade and judgment of Indian Supreme Court and American Supreme Court finally recommended to amend Article 286 with sound reasoning. Concluding remarks of Second Law Commission Report is as under:- "The principles for determining when a sale or purchase takes place in the course of inter-State trade or commerce may be framed in the following manner- A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce, only if the sale or purchase- (a) occasions the movement of the goods from one State to another, or (b) is effected by a transfer of documents of title to the goods during their movement from one State to another. Explanation- Where goods are delivered to a carrier or other bailee for transmission, the movement of the goods shall, for the purposes of sub-clause (b) be deemed to commence at the time of such delivery and terminate at the time when delivery is taken from such carrier or bailee." The laying down of principles for determining when a sale or purchase takes place in the course of inter-State trade or commerce does not relieve us of the necessity of lay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons will have to be borne in mind. We are of the view that the location of the goods will be a very suitable test to apply in determining the situs of a sale. The physical existence of the goods at a place at a particular time is easily capable of ascertainment and such a test will avoid legal controversies. The difficulty, however, is in fixing the point of time at which the location of the goods should be taken as determining the situs of the sale. Is it to be the time of the making of the contractor or the appropriation of the goods to the contract or the passing of the property in the goods or the delivery of the goods? We have given very careful consideration to the various questions which would arise in the event of one or the other of these points of time being taken with reference to the location of the goods as indicative of the situs of a sale. We have come to the conclusion that in the case of all sales of specific or ascertained goods their location at the time of the marking of the contract of sale should determine their situs for the purpose of article 286 (1) (a). In regard to unascertained or future goods two views were considered by us. It was suggested that in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided that as soon as a sale is deemed to have taken place within a State, it shall be deemed to have taken place outside all other States. It will be recalled that the absence of such a provision in Article 286(1)(a) readwith the Explanation proposed to be deleted caused a great deal of controversy and resulted in varying interpretation being put on that Article read with the Explanation. The principles we enunciate under this head are as follows:- "1. A sale or purchase of goods shall be deemed to take place where the goods are- (a) in the case of specific or ascertained goods, at the time the contract of sale is made; and (b) in the case of unascertained or future goods, at the time of their appropriation to the contract of sale, by the seller or by the buyer whether the assent of the other party is prior or subsequent to such appropriation. Explanation- Where there is a single contract of sale or purchase of goods situated at more placed than one, the above provision shall apply as if there were separate contracts in respect of the goods at each of such places. 2- When a sale or purchase of goods is determined in accordance with sub-clause (1) to be within a Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Hon'ble Supreme Court and it has been held that in the event of ambiguity, Law Commission's Report may be guiding spirit. 51. In a case reported in AIR 1989 SC 1247 Mithilesh Kumari and another versus Prem Behari Khare, Hon'ble supreme Court held that where particular enactment or amendment is the result of the recommendation of the Law Commission of India, it may be permissible to refer to relevant report. Their Lordships relied upon the earlier judgment reported in AIR 1976 SC 2386 Shanta Singh versus State of Punjab where Hon'ble Supreme Court of India relied upon the Law Commission Reports with regard to Benami transactions. It was in pursuance to the report of the Law Commission that Benami Transactions (Prohibition of Right to Recover Property) Ordinance, 1988 was promulgated. Their Lordships of Hon'ble Supreme Court held that the Report of the Law Commission may be referred to as external aid to construction of the statutory provisions. To quote : "15....................Is it permissible to refer to the Law Commission's Report to ascertain the legislative intent behind the provision ? We are of the view that where a particular enactment or amendment is the result of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion, 1973 and held that in a lengthy litigation proceeding, there is no infirmity in awarding interest on costs while awarding damages for wrongful retention of money. 55. Thus, Hon'ble Supreme Court held that the report of Law Commission is valuable as a matter is of history and it is permissible to refer the opinion expressed by Law Commission while interpreting the statutory provision. Accordingly, in the event of conflicting opinions or uncertainty in law, the report of Law Commission may be taken into account while constructing such statutory provision. Aforesaid proposition has been reiterated by Hon'ble Supreme Court in the cases reported in AIR 1957 SC 857 Mobarik Ali Ahmad versus The State of Bombay, (1980)2 SCC 684 Bachan Singh versus State of Punjab, 1981 Suppl. SCC 87 S.P. Gupta versus Union of India, (1993)4 SCC 119 R.K. Jain versus Union of India, (2006)11 SCC 245 Centrotrade Minerals and Metal Inc. versus Hindusatan Copper Limited, (2009)6 SCC 99 G. Sekar versus Geetha. 56. In compliance of Law Commission's Report, by 6th Constitutional Amendment, Article 286 was amended. A comparative chart has been filed by the petitioner's counsel containing unamended and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en declared by Parliament by law to be essential for the life of the community shall have effect unless it has been reserved for the consideration of the President and has received his assent. (3) Any law of a State shall, in so far as it imposes, or authorises the imposition of--- (a) a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce; or (b) a tax on the sale or purchase of goods, being a tax of the nature referred to in sub-clause (b), sub clause (c) or sub-clause (d) of clause (29A) of article 366. be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may be law specify 57- From the aforesaid comparative chart dealing with amendments made in Article 286, there appears to be no room of doubt that by the amendment, the Parliament took over power to deal with inter-state trade and legislate law on the subject and make it more clear so as to remove ambiguity noted by the Hon'ble Supreme Court before 11.9.1956. V- CENTRAL SALES TAX ACT 1956 58. Immediately after the commencement of 6th Amendment Act, Parliamen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r for cash or deferred payment or for any other valuable consideration, and includes,- (i) a transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; (ii) a transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (iii) a delivery of goods on hire-purchase or any system of payment by instalments; (iv) a transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (v) a supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (vi) a supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration,but does not include a mortgage or hypothecation of or a charge or pledge on goods;] 61. Section 3 of the CST Act deals with the situation when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of import or export, whereas Section 6 deals with the situation where as to when there shall be liability to pay tax on inter-State sale. For convenience, Section 6 of the CST Act is reproduced as under:- "6 Liability to tax on inter-State sales:- (1) Subject to the other provisions contained in this Act, every dealer shall, with effect from such date as the Central Government may, by notification in the Official Gazette, appoint, not being earlier than thirty days from the date of such notification, be liable to pay tax under this Act on all sales of goods other than electrical energy effected by him in the course of inter-State trade or commerce during any year on and from the date so notified: Provided that a dealer shall not be liable to pay tax under this Act on any sale of goods which, in accordance with the provisions of sub-section (3) of section 5, is a sale in the course of export of those goods out of the territory of India. (1A) A dealer shall be liable to pay tax under this Act on a sale of any goods effected by him in the course of inter-State trade or commerce notwithstanding that no tax would have been leviable (whether on the seller or the purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of - (i) any foreign diplomatic mission or consulate in India; or (ii) the United Nations or any other similar international body, entitled to privileges under any convention or agreement to which India is a party or under any law for the time being in force, if such official, personnel, consular or diplomatic agent, as the case may be, has purchased such goods for himself or for the purposes of such mission, consulate, United Nations or other body. (4) The provisions of sub-section (3) shall not apply to the sale of goods made in the course of inter-State trade or commerce unless the dealer selling such goods furnishes to the prescribed authority a certificate in the prescribed manner on the prescribed form duly filled and signed by the official, personnel, consular or diplomatic agent, as the case may be. 63. Section 6A of the CST Act was inserted in 1973 which deals with the burden of proof where a claim is made in case of transfer of goods otherwise than by way of sale. For convenience, Section 6 A of the Act is reproduced as under:- "6A Burden of proof, etc., in case of transfer of goods claimed otherwise than by way of sale- (1) Where any dealer claims that he i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales fall within clause (a) or clause (b) of section, 3 shall be levied by the Government of India and the tax so levied shall be collected by that Government in accordance with provision of sub-section (2), in the State from which the movement of the goods commenced: Provided that, in the case of a sale of goods during their movement from one State to another, being a sale subsequent to the first sale in respect of the same goods and being also a sale which does not fall within sub-section (2) of section 6, the tax shall be levied and collected- (a) where such subsequent sale has been effected by a registered dealer, in the State from which the registered dealer obtained or, as the case may be, could have obtained, the form prescribed for the purposes of [sub-section (4) of section (8) in connection with the purchase of such goods; and (b) where such subsequent sale has been effected by an unregistered dealer in the State from which subsequent sale has been effected. Section 9(3):- The proceeds in any financial year of any tax, [including any interest or penalty] levied and collected under this Act in any State (other than a Union Territory) on behalf of the Government o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 and 15 pertains to and deal with distinct topics and different aspects of Articles 286 and 269. It follows that if a question arises whether a sale is an inter-State sale or not, it has to be answered with reference to and on the basis of section 3 and section 3 alone. Section 4, or for that matter section 5, is not relevant on the said question--see the Constitution Bench decision in TISCO vs. S.R. Sarkar and the decisions in Manganese Ore (India) Ltd. vs. Regional Asst. Commr. of Sales Tax and Union of India vs. K.G. Khosla Co. Ltd. Similarly, where the question arises, in which State is the Tax leviable, one must look to and apply the test in Section 9(1); no other provision is relevant on this question." VI- LITERAL CONSTRUCTION/DEEMING PROVISION IN SECTION 3 OF THE CST ACT 68. At this stage, it shall be appropriate to consider Section 3 of the CST Act literally. The situation dealt with by Section 3 with regard to inter-state sale has been subjected to deeming provision. The legislature in its wisdom has used the word "shall deem to take place" dealing with two conditions with regard to inter-state sale. It has rightly been argued by learned Senior Counsels that becaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. H.E.H., The Nizam, Hyderabad, their Lordships ruled that the word 'deemed' used in Section 10 (3) of the Act is used to give effect to the operation of a statutory provision from a particular date or from the date the Act was brought into force. In (2000) 5 SCC 415 Rishabh Agro Industries Ltd. vs. P.N.B. Capital Services Ltd. their Lordships held that the word 'deemed' means 'supposed', 'considered', 'construed', 'thought', 'taken to be', or ' presumed'. 73. Aforesaid proposition has been reiterated by catena of judgments. Some of them are AIR 1958 All 498 M.R. Mehrotra vs. State, AIR 1972 SC 2350 Ramprakash vs. S.A.F. Abbas, AIR 1959 Bom 477 New Shorrok Spinning And Manufacturing Co. Ltd. vs. N.V. Raval Income Tax Officer AIR 1971 SC 44 Hira H. Advani vs. State of Maharashtra, AIR 1951 Cal 139 Madhai Mondal vs. Pram Krishna Binsar, AIR 1963 Bom. 61 Khatizabai Mohamed Ibrahim vs. Controller of Estate Duty. To sum up, whenever word 'deemed' is used in the statute in relation to a person or thing, it implies that the legislature after due consideration exercised their judgment in conforming with the status attributed to a person or thing. These two synonyms of the word 'deem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pled with the movement of goods, shall, for the purpose of clause (b) be deemed to commence immediately when it is delivered to a carrier or bailee and terminate when delivery is taken from such carrier or bailee. Thus, in the event of inter-state sale, the trade in such category starts immediately at the time of delivery of goods to bailee or transporter in pursuance to covenant to transport the same outside the State. 78. However, mere movement of goods from one State shall not be sufficient in view of Explanation 2. Movement of goods must commence in one State and terminate in other State but in case it commences from one State, then passes to other State, again redirected to same state, it shall not be deemed to be movement of goods from one State to other State and shall not be inter-state trade. Meaning thereby, passing of goods to other State with its redirection to same State shall not constitute inter-state trade. 79. The provision contained in Section 3 of the CST Act does not seem to be ambiguous or require any clarification. Every word of Section 3 individually and jointly are quite clear and does not require supply of causus omisus. Plea of reading down cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year between the same two dealers: Provided also that where, in the case of any transaction of sale, the delivery of goods is spread over to different quarters in a financial year or of different financial years, it shall be necessary to furnish a separate declaration or certificate in respect of goods delivered in each quarter of a financial year. (4) The certificate referred to in sub-section (2) of section 6 shall be in Form E I and Form E II, as the case may be]. (5) The declaration referred to in sub-section (1) of section 6A shall be in Form F. Provided that a single declaration may cover transfer of goods, by a dealer, to any other place of his or to his agent or principle, as the case may be, effected during a period of one calendar month: Provided further that if the space provided in Form F is not sufficient for making the entries, the particulars specified in Form 'F' may be given in separate annexures attached to that form so long as it is indicated in the form that the annexures form part thereof and every such annexure is also signed by the person signing the declaration in Form F: Provided further that Form F in force/before the commencement of the Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct reveals that the State may impose tax on the sale or purchase of goods in the manner provided therein. Right of the State to impose tax is confined to statutory provision contained in the VAT Act. 86. Section 7 of the VAT Act further provides that no tax shall be levied on certain sales and purchases, which includes inter-State trade or commerce or where sale or purchase takes place outside the State. For convenience, Section 7 is reproduced as under:- "7. Tax not to be levied on certain sales and purchases.---No tax under this Act shall be levied and paid on the turnover of-- (a) sale or purchase where such sale or purchase take place-- (i) in the course of inter-State trade or commerce; or (ii) outside the State; or (iii) in the course of the export out of or in the course of the import into, the territory of India; (b) sale or purchase of any goods named or described in column (2) of the Schedule I or; (c)such sale or purchase; or sale or purchase of such goods by such class of dealers, as may be specified in the notification issued by the State Government in this behalf: Provided that while issuing notification under clause (c), the State Government may imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sale excluding the amount collected towards the tax or the tax due under the Act, whoever is less. (2) (1975)2 SCC 358 Joint Commrl. Tax Officer versus Spencer and Co. "TURNOVER" means the aggregate amount for which goods are bought or sold, or supplied or distributed, by a dealer, either directly or through another, on his own account or on account of others whether for cash or for deferred payment or other valuable consideration. (3) AIR 1962 SC 1352 George Oakes (P) Limited versus State of Madras "turnover" means the amount of money which is turned over in the business. (4) (2007)7 SCC 320 State of U.P. versus P.N.C. Construction Co. Limited The ''turnover' as defined under Section 2(i) of the Act means the total amount for which goods are supplied or distributed by any of sale by a dealer on his own account or on account of others for cash or deferred payment or for any other valuable consideration. (5) (2008)4 SCC 548 Mariroku Ut Injdia (P) Limited versus State of U.P. The aggregate amount for which the goods are sold constitutes the ''turnover' relating to such sales within meaning of Section 2(h) of the Act. (6) AIR 1999 all 333 Dheeraj Coal Traders versu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the time when the sale takes place these goods have come into actual physical existence. In the instant case also it was never disputed before the High Court or before us that the manganese ore was loaded into the wagons after being extracted from the mines and that the sales of these manganese ores despatched from Madhya Pradesh to various States actually took place and the goods were ultimately accepted by the buyers in other States. In these circumstances, therefore, it is quite clear in this case that the movement of the goods took place in pursuance of the contracts of sale which ultimately merged into actual sales and it was only there after that the tax was sought to be levied by the State of Madhya Pradesh. It was also not disputed that the tax has been levied only on such sales of the manganese ore despatched from the State of Madhya Pradesh which came from the mines situated in the State of Madhya Pradesh. Thus all the incidents of an inter-State sale are present in the instant case and the view taken by the High Court that the sales were covered by s. 3(a) of the Central Sales Tax Act is absolutely correct and we fully endorse the same." 94. In (1976) 2 SCC 44 Balab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty in the goods is to be transferred." Section 4(1), therefore, clearly provides that a contract of sale of goods includes also an agreement to transfer property in goods to the buyer for a price. The inevitable conclusion that follows from the combined effect of the interpretation of s. 3 of the Central Sales Tax Act and s. 4 of the Sale of Goods Act is that an agreement to sell is also an essential ingredient of sale provided it contains a stipulation for transfer of goods from the seller to the buyer. This being the position if there is a movement of goods from one State to another, not in pursuance of the sale itself, but in pursuance of an agreement to sell, which later merges into a sale, the movement of goods would be deemed to have been occasioned by the sale itself wherever it takes place. In this view of the matter the question as to whether agreement to sell was a forward contract or a contract in respect of unascertainable or future goods would make no difference for the simple reason that when once a sale takes place, or for that matter when the goods start moving from one State to another in pursuance of the agreement to sell they cease to be future goods becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ays the price thereof. After having purchased the goods he then books the goods from State X to State Y in his own name. This is also a case where the sale is purely an internal sale having taken place in State X and the movement of goods is not occasioned by the sale but takes place after the property is purchased by B and becomes his property." 95. Shri J. N. Mathur, learned Senior Advocate representing the State has relied upon the example given under Case No. 111 of Para 12 of the aforesaid judgment (supra) and would submit that the delivery being given at Orai in the State of U.P. under sale takes place at Gadimoga. However, learned Senior Counsel does not seem to take into account the observation made by the Hon'ble Supreme Court in the same judgment with regard to inter-State sale. Paras 14,15,16 and 17 of the judgment of Balabhagas Hulaschan (supra) are reproduced as under:- " 14- (1) That the word 'sale' appearing in s. 2(g) as also in s. 3(a) of the Central Sales Tax Act includes an agreement to sell also provided the said agreement contains a stipulation regarding passing of the property. Even in the Bengal Immunity Company Ltd's case (supra) this Court observed thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In (1985) 4 SCC 173 Sahney Steel and Press Works Ltd. another vs. Commercial Tax Officer others, Section 3 of the Act was again interpreted by the Hon'ble Supreme Court and relying upon earlier judgment, Hon'ble Supreme Court ruled that movement of goods makes out inter-State sale under Section 3(a) of the CST Act. The Hon'ble Supreme Court considered the controversy with regard to movement of goods in the following words:- "In the instant case, the goods were despatched by the branch office situated outside the State of Andhra Pradesh to the buyer and not by the registered office at Hyderabad. In our opinion, that makes no difference at all. The manufacture of the goods at the Hyderabad factory and their movement thereafter from Hyderabad to the branch office outside the State was an incident of the contract entered into with the buyer, for it was intended that the same goods should be delivered by the branch office to the buyer. There was no break in the movement of the goods. The branch office merely acted as a conduit through which the goods passed on their way to the buyer. It would have been a different matter if the particular goods had been despatched by the registere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocess and was not related to the requirement of any particular customer. Until an appropriation of the vehicle was made by the stock-yard incharge against a contract of sale out of the stocks available with him it was open to the appellant to allot any vehicle to any purchaser or even to transfer the vehicles from the stock-yard in the State to a stock-yard in another State. It was held on the facts that the sale by the appellant to a purchaser from its stock-yard was not an inter-State sale. On the other side of the line is State of Bihar Anr. v. Tata Engineering Locomotive Co. Ltd. In that case, the turnover in dispute related to sales made 789 by the company to its dealers of trucks for being sold in the territories assigned to them under the dealership agreements. Each dealer was assigned an exclusive territory and under the agreement between the dealers and the company, they had to place their indents, pay the price of the goods to be purchased and obtain delivery orders from the Bombay office of the company. In pursuance of such delivery orders trucks used to be delivered in the State of Bihar to be taken over to the territories assigned to the dealers. Under the terms o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble Supreme Court reiterating the aforesaid proposition of law held that the determinative test of inter-State sale is: whether the purchasing dealers were obliged contractually to remove the goods from Delhi, in which they were bought, to the assigned territories and whether in fact the goods stood actually removed, the entire contract must be examined to answer this question. 101. In (2011) 4 SCC 705 Hyderabad Engineering Industries vs. State of Andhra Pradesh, it has been held that it is sufficient if the agreement of sale contemplates an inter-State movement of the goods though the sale itself may take place at the destination or in the course of the movement of the goods, to quote relevant portion:- "For a sale to be in the course of inter-State trade or commerce under Section 3(a), the two conditions must be fulfilled. There must be sale of goods. Such sale should occasion the movement of the goods from one State to another. A sale would be deemed to have occasioned the movement of the goods from one State to another within the meaning of clause (a) of Section 3 of the Act when the movement of those goods is the result of a covenant or incidence of the contract of sale, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions, there are certain other statutory provisions meant to regulate the extraction, distribution, sale and purchase of petroleum and natural gas and for the purpose, different Boards have been constituted conferred with statutory powers referred to by Shri Sunil Gupta, learned Senior Counsel. They are:-The Petroleum and Natural Gas Regulatory Board Act, 2006, Policy for Development of Natural Gas Pipelines, The Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand Natural Gas Pipelines) Regulations, 2008, The Petroleum and Natural Gas Regulatory Board (Access Code For Common Carrier or Contract Carrier Natural Gas Pipelines) Regulations, 2008, The Petroleum and Natural Gas Regulatory Board (Affiliate Code of Conduct for Entities Engaged in Marketing of Natural Gas and Laying, Building, Operating or Expanding Natural Gas Pipeline) Regulations, 2008, The Petroleum and Natural Gas Regulatory Board (Determination of Natural Gas Pipeline Tariff) Regulations, 2008, The Petroleum and Natural Gas Regulatory Board(Guiding Principles for declaring or authorizing Natural Gas Pipeline as Common Carrier or Contract Carrier) Regulations, 2009, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f unascertained goods or future goods, the sale shall take place at the time of appropriation of goods in pursuance to contract of sale by seller or buyer. Assent subsequent to or prior to appropriation shall make no difference. 106. Section 4 of the Act begins with the word 'subject to provision contained in Section 3'. Hon'ble Supreme Court from time to time in catena of judgments considered and interpreted the word 'subject to'. It shall be appropriate to consider some of the cases, whereby Hon'ble Supreme Court has interpreted the word "subject" to in one or other form. In AIR 1961 SC 1152 K.R.C.S. Balakrishna Chetty and Sons Co. versus The State of Madras, their Lordships held that it does not mean 'conditional upon' but liable to the rules and provisions. It has reference to effectuating the intention of law. In AIR 1964 SC 207 South India Corporation (P) Limited versus Secretary, Board of Revenue, Travandrum and another, while considering the words, "subject to other provisions of the Constitution", their Lordships ruled that if there is irresistible conflict between the pre-existing laws and the provision or provisions of the Constitution, the latter shall prevail t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de or commerce. 109. In a case reported in AIR 1961 SC 65 Tata Iron Steel Co. vs. S.R. Sarkar, their Lordships of Supreme Court after considering different provisions of the Act have held that the purpose of sub-section 2 of Section 4 is to define when a sale shall be deemed to take place inside a State and sub-section 1 of Section 4 provides that when a sale or purchase of goods is determined in accordance with sub-section 2 to take place inside a State, to quote relevant portion:- "The Parliament by sub-section 2 of section 4 attempted to define when a sale shall be deemed to take place inside a State, and by sub- section 1 of section 4 provided that when a sale or purchase of goods was determined in accordance with sub-section 2 to take place inside a State, such sale or purchase shall be deemed to have taken place outside all other States. But sub- section 1 having been made subject to the provisions contained in section 3, it is evident that only those sales which were not in the course of inter-State trade or commerce should be determined under sub- section 1 of section 4 as having taken place outside a State. We are unable to hold that any weight can be attached to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situs of a sale may fall for consideration from more than point of view. It may require to be considered for the purpose of determining its exigibility to tax as also for other purposes such as the one arising in the present case. Of course a sale which is in the course of inter-state trade or commerce cannot be taxed by a State Legislature even if its situs is within the State, because the State Legislature has no legislative competence to impose tax on sale in the course of inter-State trade or commerce. That can be done only by Parliament. If therefore a question arises whether a sale is exigible to tax by the State Legislature, it may have to be considered whether it is a sale in the course of inter-State trade or commerce. The same sale in another context may have to be examined from a different point of view for determining where its situs lies and whether it is a sale inside the State or outside the State. There is therefore no incompatibility in the same sale being both a sale in the course of inter-state trade or commerce within the meaning of Section 3 of the Central Act as also a sale inside the State in accordance with the principles laid down in sub-section (2) of Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Torts 385, 386.] 5. The transfer of a benefice, together with all its interests, to a spiritual corporation. See spiritual corporation under Corporation. Cf. Impropriation. 6. The benefice so transferred.-- appropriate, vb.--appropriable, adj.--appropriator, n. 114. In the Major Law Lexicon, by P. Ramanatha Aiyar, fourth edition, dictionary meaning of word "appropriate" in terms of judgment of Hon'ble Supreme Court, another Courts has been defined as under: "Appropriate. To make a thing one's own; to set apart for, or assign for a particular use to the exclusion of all other uses; to claim or use as by an exclusive right; to make peculiar, as to appropriate words to ideas; to take from another to one's self, with or without violence; necessary and proper (as) "appropriate words and expressions." "Appropriate" is said to be "to allot", assign, set apart, or apply anything to the use of a particular person or thing, or for a particular purpose," (3 Cyc 565). "The assembly appropriated more money than was needed", "to appropriate a spot of ground for a garden." To assign for a special purpose; to prescribe a particular use for particular moneys, or for the payment of a partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistration and Turnover Rules, 1957. Admittedly Form C duly signed by the assessing authority was handed over to the seller and furnished at the time of assessment. It is not disputed that the Form C was issued by the assessing authority of the State of U.P. and submitted to seller and produced at the time of assessment. 118. In view of various pronouncements of Hon'ble Supreme Court (supra) there can be an agreement between the parties with regard to sale of unascertained goods under Section 3 of the CST Act and when a question crops up with regard to inter-state sale or purchase of goods, in view of Entry 92-A readwith Article 286 only Parliament has got power to legislate law and not the State Government. This is also evident from the definition of Tax given under Section 2 (a)(g) of the VAT Act (supra). A close reading of Sections 3, 4, 5 and 7 of the VAT Act reveals that the authority of the State Government is to impose VAT Tax only with regard to sale or purchase of goods taking place in the State of U.P. 119. Hon'ble Supreme Court, while considering Section 3 and 4 of Central Sales Tax Act in a case reported in (1996) 4 SCC 230, BHEL Vs. Union of India, held as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roved by the Management Committee." 125. The procedure with regard to valuation of natural gas has been dealt with under Clause 21.6 of the PSC, which is as under:- "Clause 21.6 Valuation of Natural Gas 21.6.1 : The Contractor shall endeavour to sell all Natural Gas produced and saved from the Contract Area at arms-length prices to the benefits of Parties to the Contract. 21.6.2 : Notwithstanding the provision of Article 21.6.1, Natural Gas produced from the Contract Area shall be valued for the purposes of this Contract as follows:- (a) Gas which is used as per Article 21.2 or flared with the approval of the Government or re-injected or sold to the Government pursuant to Article 21.4.5 shall be ascribed as zero value. (b) Gas which is sold to the Government or any other Government nominee shall be valued at the prices actually obtained; and (c) Gas which is sold or disposed of otherwise than in accordance with paragraph (a) or (b) shall be valued on the basis of competitive arms length sales in the region for similar sales under similar conditions. 21.6.3 :- The formula or basis on which the prices shall be determined pursuant to Articles 21.6.2 (b) or (c) shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to between the Government of India and the petitioner, is in pursuance to constitutional obligation vis a vis statutory provisions (supra) and has overriding effect. 127. Shri R.N.Trivedi, learned Senior Counsel has filed comparative chart indicating the similarity between PSC and GSPA, which has not been objected at any stage of argument advanced by the learned counsel for the State of U.P. It shall be appropriate to reproduce the chart which shows binding similarity with regard to contractual obligation. "COMPARATIVE CHART OF RELEVANT PROVISIONS OF PSC AND GSPA PSC GSPA PSC GSPA Delivery Point means, except as otherwise herein provided or as may be otherwise agreed between the Parties having regard to international practice, the point at which Petroleum reaches the outlet flange of the delivery facility, either offshore or onshore and different Delivery Point (s) may be established for purposes of sales (s) of Petroleum from the Contract Area shall be approved by the Management Committee (Article 1.31/at pg. 6) Delivery Point means, the outlet flange of Sellers delivery facilities located at the onshore processing terminal of the Gas Fields ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Gas produced from the Contract Area shall be valued for the purposes of this Contract as follows: (a) Gas which is used as per Article 21.2 or flared with the approval of the Government or re-injected or sold to the Government pursuant to Article 21.4.5 shall be ascribed a zero value; (b) Gas which is sold to the Government or any other Government nominee shall be valued at the prices actually obtained; and (c) Gas which is sold or disposed of otherwise than in accordance with paragraph (a) or (b) shall be valued on the basis of competitive arms length sales in the region for similar sales under similar conditions. The formula or basis on whichthe prices shall be determined pursuant to Article 21.6.2 (b) or (c) shall be approved by the Government prior to the sale of Natural Gas to the consumers/buyers. For granting this approval, Government shall take into account the prevailing policy, if any, on pricing of Natural Gas including any linkages with traded liquid fuels, and it may delegate this function to a regulatory authority as and when such an authority is in existence (Article 21.6/at pg. 66) Sales Price (a) The price of Gas at the Delivery Point ( Sales Price ) shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act with the Government of India dated 12 April 2000 in respect of Block KG-DWN-98/3 ("PSC") and a Join Operating Agreement dated 4 October 2002 in respect of the PSC ("JOA"). Each of the Sellers desire to supply Gas to be available to them for sale from the Gas Fields to Buyer in a commingled stream in the qualities and subject to the terms stated herein. (c) The PSC requires Sellers to maintain accounts in United States Dollars and accordingly all calculations under this Agreement shall be done in United States Dollars and where necessary, United States Dollars shall be converted into Indian Rupees as provided herein. (d)Buyer desires to purchase Gas supplied by Sellers for use in Buyer's Facilities in the quantities and subject to the terms stated herein". Definition: "Buyer" has the meaning given to such term in the Preamble to this Agreement. "Buyer Event of Default" has the meaning given to such term in Clause 21(b). "Buyer's Facilities" means the Gas handling and consuming facilities at Buyer's fertiliser facility located at Jagdishpur Industrial Area, Dist. Sultanpur, PIN - 227817, Uttar Pradesh, India, at which the Gas supplied under this Agreement is to be con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess, compress, store, treat, transport, meter, test, or deliver Gas at the Delivery Point for sale to Buyer. "Seller's Representative" has the meaning given to such term in Clause 26(h). "Taxes" means any and all present or future statutory taxes, levies, duties, cesses, charges, withholdings and imposts, or any similar charges or levies imposed by any Relevant Authority of Republic of India from time to time including sales tax, value added tax, excise duty, customs duty, octroi duty, works contract tax, construction cess, service tax and stamp duty, but shall not include any corporate or income tax". "Sale and Purchase of Gas (a) Scope of Sellers' Obligations: Sellers shall sell and deliver Gas from the Gas Fields at the Delivery Point on an as-available basis, at the Sales Price and subject to the terms and conditions set forth herein. Seller shall deliver the Gas to Buyer or Buyer's designee for onward transmission to Buyer's facilities. (b) Scope of Buyer's Obligations: Buyer shall purchase from each Seller that Seller's Participating Interest share of Gas in the qualities and at the Sales Price and subject to the terms and conditions set forth herein. Buyer or Buye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indents) in accordance with the nomination procedures set out in Exhibit 4. Sellers shall schedule Gas flow and allocate Gas deliveries in accordance with the scheduling and allocation procedures set out in Exhibit.4". "Commissioning Period (a) During the Commissioning Period, Sellers may (at their discretion) supply Gas and Buyer may (as its discretion) take delivery of Gas, but Sellers shall have no obligation to supply Gas (or liability for failure to supply Gas) and Buyer shall have no obligation to take Gas (or liability for failure to take Gas) during such period. Buyer shall pay Sellers for the Allocated Quantity of Gas supplied during the Commissioning Period at the Sales Price and any Gas deliveries during the Commissioning Period shall be subject to the other provisions of this Agreement excluding Clauses 11 and 12, which shall not apply. (b) The determination of Monthly Contact Quantity, Adjusted Monthly Contract, Monthly Deficiency Quantity, Adjusted Annual Contract Quantity, Annual Take Obligation, Annual Deficiency Quantity, Monthly Supply Quantity, Adjusted Monthly Supply Quantity, and Shortfall Quantity shall exclude any relevant period falling within the Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curred by RGTIL (A) in cleaning or clearing RGTIL's facilities or rectifying an other damage caused by the acceptance of such Gas by RGTIL; (B) in disposing of and replacing Gas in RGTIL's facilities contaminated by such Gas delivered by Sellers; and (C) otherwise in connection with any reasonable measures taken by RGTIL to bring the Gas within the Specifications. (v) Buyer's sole remedy with respect to the tendering by Sellers of Gas that does not meet the Specifications shall be rejection of such Gas under Clause 14 (b)(iii) (or, in case that Buyer accepts Gas not being aware of the failure of such Gas to meet the Specifications, Buyer's sole remedy shall be the provisions made in Clause 14(b)(iv). Payment (a) Payments shall be made in full in accordance with the invoices and debit notes not later than the fourth (4th) Business Day after the day on which electronic delivery of the invoices and debit notes occurs; provided, however, that if such delivery occurs after 17:30 hours, it shall be deemed to occur on the following day. Without prejudice to any other rights and remedies available under this Agreement or under law, if any Party fails to make a payment to another Part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly have been levied against Buyer or for which Buyer has assured full and exclusive liability for payment in connection with the pursuant to this Agreement or any activities connected thereto and Seller may recover such sums from Buyer including all costs, expenses and charges incurred by Sellers in connection therewith." 130. Exhibit 1 of the aforesaid contract contains proforma with regard to Daily Contract Quantity. Exhibit 2 relates to Sales Price and Exhibit 3 provides different conditions regulating Gas Quality Specifications. Nomination, Scheduling and Allocation Procedures have been provided under Ext. 4 of the agreement. Measurement is to be done in terms of provisions contained in Exhibit 5. Clause 1 of the Exhibit 5 provides that the seller shall provide and install, at their own expenses the measurement at delivery point, i.e., Gadimoga in the present case. The measured quantity shall be recorded in MMBtu at the delivery point. It shall be appropriate to reproduce relevant portion from Exhibit 5 which is as under:- "1. Delivery Point Measurement Equipment 1. Sellers shall provide and install, at their own expense, at the point upstream of and near and Delivery Po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h claim, if found correct by Buyer or Sellers shall be adjusted against the subsequent invoice(s) of supply of Gas. The cost of such special test shall be borne by Sellers if the percentage of inaccuracy is found to be beyond + 1%, but the cost of such special test shall be borne by Buyer if the percentage of inaccuracy is no greater than + 1%." 131. From the aforesaid reading of contractual obligation in terms of GSPA, there appears to be no reason to disagree with the petitioner's contention that the delivery point of the natural gas to the buyer is at Gadimoga. The quantity of gas delivered to the buyer is measured in accordance to MMBtu Scale at delivery point and according to GSPA, it is the buyer who owes responsibility with regard to damage or loss caused, if any. However, in case quantity of gas made available by the seller during contractual period is less than the adjusted monthly supply quantity, then it shall be shortfall quantity, which may be supplied by the seller. Supply of natural gas by the petitioner is subject to execution of gas transportation agreement requiring the transporter to transport gas from delivery point to the inlet of buyer. It is for the buyer t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity, the genuineness and effectiveness of GSPA in question cannot be doubted which has been entered into between the parties in pursuance to statutory provisions and PSA. It has got binding effect. It is binding on the parties and State Government not to ignore the binding nature of PSC, GSPA and GTA with an intention to acquire right to impose VAT. XIII- GAS TRANSMISSION AGREEMENT (GTA) 135. The condition precedent with regard to inter-state trade under Section 3 of the CST Act is that there should be movement of goods from one State to other and should be affected by transfer of documents of title to the goods during their movement from one State to the other. The delivery of goods to a carrier or a bailee for transmission shall be deemed to commence at the time of such delivery and shall terminate at the time when delivery is taken from such carrier. Meaning thereby, in the present context, the delivery of natural gas to a buyer must be at Gadimoga, i.e. delivery point to the carrier and should terminate when delivery is taken. 136. To fulfil aforesaid conditions, the buyer (respondents) entered into agreement with Reliance Gas Transportation Infrastructure Ltd. (RGTIL). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pper for failure to schedule or accept any Authorised Overrun Quantity. (c) In providing Transportation Services, Transporter shall have the right to commingle Shipper's Gas with other Gas in Transporter's Facilities. (d) Transporter shall provide quantities of Gas required for line pack, and System Use Gas, and the Tariff shall include an allowance for recovery of the costs of such quantities of Gas. At the request of Transporter, Shipper shall sell or provide its pro rate share of Gas for such purposes at the prevailing market price, in proportion to Shipper's Exit Point MDQ. (e) In accordance with and subject to the terms and conditions of this Agreement, Transporter shall be responsible for the payment of Liquidated Damages with respect to Shortfall Quantities pursuant to Clause 6. "2.2:- Shipper's Obligation with Respect to Transportation Services:- (a) In accordance with and subject to the terms and conditions of this Agreement, in consideration of Transporter's obligations to provide Transportation Services, Shipper shall be responsible for the payment of Transportation Charges, and, if applicable, Monthly Ship-or-Pay Payments, Unauthorized Overrun Charges, and imb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agreement to tender or delivery of Gas by Shipper at the Exit Point shall include such actions taken by the Upstream Operator or the Downstream Operator (as applicable) or other party designated by Shipper, on Shipper's behalf." Clause 15.11 of the agreement further provides as under:- "This Agreement does not constitute either Party as the agent, partner or legal representative of the other for any purpose whatsoever, and neither Party shall have any express or implied right or authority to assume or to create any obligation or responsibility on behalf of or in the name of the other Party." 138. Under the agreement, different issues have been dealt broadly but keeping in view the relevant conditions referred here-in-above, there appears to be no room of doubt that the liability of transporter, subject to conditions provided in the agreement, is to transport the gas to exit point to the venue of downstream operator. It shall be obligation of shipper (buyer) to deliver gas to the transporter at entry point in terms of GSPA. Meaning thereby, the seller shall deliver the gas at delivery point, i.e., Gadimoga on behalf of buyer to the transporter in terms of GSPA. The transporter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 7 of the VAT Act, the State Government may not impose tax to a sale or purchase taking place outside its territory. 142. The agreement with RGTIL which is in common format reveals that the RGTIL i.e. transporter operates gas pipeline system in India from Kakinada in the State of Andhra Pradesh to Bharuch (Gujrat), referred as East-West pipeline. The buyer, i.e., Shipper secured transportation services from transporter for transportation of natural gas through East-West pipeline from entry point to exit point for onward transportation in downstream pipeline to consumer's facilities. The Gas Transport Agreement (in short GTA) reveals that the Shipper or buyer has executed GSPA (supra) or shall execute GSPA (supra) and for downstream transportation, GTA was executed. XIV- Common Carrier- OPEN ACCESS SYSTEM 143. The Petroleum and Natural Gas Regulatory Board Act, 2006 has been enacted by the Parliament (in short Regulatory Board Act) with the aim and object to check the exploitation and setting up of a petroleum and Natural Gas Regulatory Board to oversee and regulate the refining, processing, storage, transportation, distribution, marketing and sale of petroleum, petro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties subject to any mandatory specification, if any, laid down by the Board through regulations. 5- The transporter shall carry out verification, calibration or proving of measuring equipment as per the relevant codes and standards. 6- Either shipper or transporter may instal check meters at requisite points with a pre-condition so as not to interfere with the measurement equipment installed by the entity for custody transfer purpose. 7- Gas accounting shall be done on daily basis and the gas reconciliation, billing other terms shall be as decided between the entities." 147. Regulation 8 further deals with entry point and exit point. Regulation 9 provides the obligation for the Shipper (buyer) to make arrangement at entry point and provide facility including measuring equipments etc. and Regulation 10 deals with pipeline capacity booking. It shall be appropriate to reproduce Regulations 9 and 10 of the Regulation 2008. "9. Facilities at entry point and exit point- (1) Shipper shall arrange to deliver gas at entry point on the pipeline system and shall provide all facilities, including measuring equipments, required for transfer of custody and delivery of gas to the tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the data provided by the shipper require technical study to accommodate his request and such study shall be completed within seven days from the date of receipt of request; or (d) advising that it is not technically or operationally feasible to provide access. (4) Shipper may release the capacity in favour of other shippers to the extent of the capacity booked. (5) The shipper may assign in part or full the capacity booked by him or trade in open market and the transporter shall deliver the capacity in physical terms of any person or entity which wishes to take physical delivery on the basis of a valid contract. (6) The nomination of natural gas for transportation shall contain the expected gas flow details of one or more days daily-nominated quantities as per the agreed schedule between the shipper and the transporter. (7)The accounting of the gas shall be in energy terms and shall be based on Gross calorific value as defined in ISO 6976-1:1983 (E)." 148. A combined reading of Regulations 9 and 10 reveals that the Shipper or buyer shall provide facilities including measuring equipments, required for transfer of custody and delivery of gas to the transporter unless othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory sanction to transport natural gas to onward destination in the State of U.P. 151. With regard to excess of gas, Regulation 12 provides that the contracted capacity between a shipper and a transporter shall be for a gas quantity not exceeding the own firmed up capacity and aggregated volume contracted by the transporter. The excess 33% capacity shall be allocated on common carrier principle in terms of Regulation 12. For convenience, Regulation 12 is reproduced as under:- "12. Methodology for providing access- (1) The contracted capacity between a shipper and a transporter shall be for a gas quantity not exceeding the own firmed up capacity and aggregated volume contracted by the transporter for a period of more than a year. (2) The excess 33% capacity shall be allocated on common carrier principle on first come first serve basis. [Provided that in case any capacity out of the 33% excess capacity under sub-regulation (2) is available at any time due to non-existence of demand from any shipper, then, the same may be contracted for a period of one year or more subject to the stipulation that in case another entity seeks booking of the same for a period of less than one yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 156. In case argument advanced by the learned counsel for the State of U.P. is accepted, then the seller or buyer of natural gas, who does not possess his own pipeline shall be prevented to transport his gas and everyone will have to install his own pipeline, which shall not be feasible or practical. Transportation of natural gas cannot be compared with transportation of tangible goods. Mixture of natural gas of the common quality during the course of transportation shall not affect the right of the buyer. Every buyer or shipper may draw its natural gas from open access gas pipeline with due measurement at exit point. 157. It is not disputed that a large number of customers are being allotted gas by 'Gas Linkage Committee' and the price determined by the sale committee, the customers draw gas from the pipeline. 80% or more of gas is Methane and remaining are other natural gases. Basically, it is the Methane which is being utilized by the industrial units. While transporting the gas from Hajira to onward destination because of addition of natural gas of GAIL, it is subjected to processing and extracting of some molecules to make it suitable for the industrial consumption and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or more parties or legally competent persons to one another. Contracts deal with variety of subjects relating to business transaction or performance. In Black's Law Dictionary (9th Edition Page 365), the contract has been defined as under:- "An agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law [Cases: Contracts-]The writing that sets forth such an agreement . "The term contract has been used indifferently to refer to three different thing: (1) the series of operative acts by the parties resulting in new legal relations: 92) the physical document executed by the parties as the lasting evidence of their having performed the necessary operative acts and also as an operative fact in itself: (3) the legal relations resulting from the operative acts, consisting of a right or rights in personam and their corresponding duties, accompanied by certain powers, privileges, and immunities. The sum of these legal relations is often called 'obligation'. The present editor prefers to define contract in sense(3).... William R. Anson, Principles of the Law of Contract 13 n. 2 (Arthur L. Corbin ed. 3d Am. ed. 1919). "A contract i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law dealing with agreements and exchange the general theory of contract. The terms of an agreement, or any particular term there was no express contact about when the money was payable. Loosely, a sale or conveyance. "Sometimes the word 'contract' is used to designate a transaction involving the exchange of goods or land for money. When money is exchanged for goods, this constitutes a sale. When money is exchanged for land, this constitutes a conveyance. Sales and conveyances may be the result of a previous contract but they are not the contracts in themselves. There is no undertaking or commitment to do or refrain from doing anything in the future. This indispensable element of contract is missing. John Edward Murray Jr. Murray on Contracts $ 2, at 5 (2d ed. 1974)." 161. The Black's Law Dictionary further defined the variety of contracts like absolute simulated contract, accessory contract, adhesion contract, aleatory contract, alternative contract, assessment contract, best-efforts contract, bilateral contract, blanket contract, bona fide contract, build-to-print contract, certain contract, collateral contract, commutative contract, conditional contract, consensual contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordinarily cannot be doubted unless, material on record, reveals the existence of conditions provided by Section 10 of the 1872 Act. Agreements in question should be construed keeping in view the statutory provisions and should be given literal meaning considering the trade compulsions and requirement. In view of Reliance case (supra) the Production Sharing Agreement (PSA) has got overriding effect over all the agreements like GSPA and GTA. The delivery point has been approved in a meeting convened by Empowered Group of Ministers dated 25.6.2008, copy of which has been annexed as Annexure No. SCA-2 to the counter affidavit filed by Union of India in Writ Petition No. 6281 (MB) of 2010. The delivery point is also fixed in terms of 2008 regulation (supra). Accordingly, there cannot be delivery point other than Gadimoga where in pursuance to covenant, sale takes place. No different meaning can be given to the agreement than what is literally contained therein, made in pursuance to statutory provisions. XVI- WHETHER GSPA/GTA ARE COLOURABLE DEVICE TO ESCAPE TAX LIABILITY? 165. Shri J. N. Mathur, learned Senior Counsel while defending the State's right to impose VAT submits tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in law with regard to Westminster principle, their Lordships have summarized and made observation as under:- "The majority judgment in McDowell held that "tax planning may be legitimate provided it is within the framework of law" (para 45). In the latter part of para 45, it held that "colourable device cannot be a part of tax planning and it is wrong to encourage the belief that it is honourable to avoid payment of tax by resorting to dubious methods". It is the obligation of every citizen to pay the taxes without resorting to subterfuges. The above observations should be read with para 46 where the majority holds "on this aspect one of us, Chinnappa Reddy, J. has proposed a separate opinion with which we agree".The words "this aspect" express the majority's agreement with the judgment of Reddy, J. only in relation to tax evasion through the use of colourable devices and by resorting to dubious methods and subterfuges. Thus,it cannot be said that all tax planning is illegal/illegitimate/impermissible. Moreover, Reddy,J. himself says that he agrees with the majority. In the judgment of Reddy,J. there are repeated references to schemes and devices in contradistinction to "legiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpressed by Lord Roskill on Duke of Westminster stated that the subject is not to be taxed by inference or analogy, but only by the plain words of a statute applicable to the facts and circumstances of each case. Revenue cannot tax a subject without a statute to support and in the course we also acknowledge that every tax payer is entitled to arrange his affairs so that his taxes shall be as low as possible and that he is not bound to choose that pattern which will replenish the treasury.Revenue's stand that the ratio laid down in McDowell is contrary to what has been laid down in Azadi Bachao Andolan, in our view, is unsustainable and, therefore, calls for no reconsideration by a larger branch. 170. Thus, while reiterating the McDowell (supra) in the light of subsequent judgment of Mathuram Agrawal and Azadi Bachao Andolan (supra) Hon'ble Supereme Court on one hand held that legislative measures be taken to plug the loopholes, but at the same time on the other hand, held that a genuine corporate structure set up for purely commercial purpose and indulging in genuine investment should be recognized. Of course, if the fraud is detected by the Court of Law, it can pierce the corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... single consideration for one or more objects, or any one or any part of any one of several considerations of a single object, is unlawful, the agreement is void." 175. In the present case, no finding has been recorded by the assessing authority that GSPA or GTA suffer from some illegality, misrepresentation of fact or any portion or part of it is for unlawful object and consideration. No portion of the contract or its object has been held to be forbidden by law by the assessing authority or that it is for any immoral purpose or opposed to public policy. 176. In absence of any such finding or pleading on record, argument advanced by Shri J.N.Mathur, learned Senior Counsel representing the State that the GSPA or GTA are sham and farce or are designed in such a manner so as to avoid tax or is an instrument to escape tax seems to be a misconceived argument. The GSPA and GTA seem to be drafted in accordance to Regulation 2008 and practice prevailing in the commercial field with regard to sale and purchase of natural gas. 177. It has been vehemently argued alternatively by Shri J.N.Mathur, learned Senior Counsel appearing for the State of U.P. that though the agreement may not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e held that by implication the expression 'the agreement' occurring in S. 5 (3) refers to the agreement with a foreign buyer." 180. In (1987) 2 SCC 424 K.P. Subbarama Sastri and others vs. K.S. Raghavan and others, Hon'ble Supreme Court while agreeing with the contractual obligations upheld the condition provided in the agreement with regard to payment of consideration in instalments giving sanctity to the contractual obligation. 181. In (2004) 4 SCC 698 Dr. Karan Singh vs. State of J K and another, while giving primacy to the constitutional provision upheld the settled proposition of law with regard to contractual obligation within four corners of statutory provisions. 182- In (1977) 3 SCC 147 The Bhopal Sugar Industries Ltd. vs. Sales Tax Officer, Bhopal, while considering the dispute under the tax law of Madhya Pradesh, Hon'ble Supreme Court ruled that the Court has to look the substance in the form of agreement, to quote relevant portion:- "It is well settled that while interpreting the terms of the agreement, the Court has to look to the substance rather than the form of it. The mere fact that the word 'agent' or 'agency' is used or the words 'buyer' and 'seller' are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition of law, there appears to be no reason to interpret GSPA in a manner other than what is revealed from it literal construction, moreso when, GSPA does not seem to be violative of constitutional mandate (supra); rather it is drafted in terms of Regulation 2008 . The collective reading of GSPA and GTA in the light of PSC and Regulation 2008 reveals that the delivery of natural gas takes place at Gadimoga to the buyer (shipper) through transporter with due measurement and payment thereon. Though it has been argued by Shri Mathur, representing the State, that payment is made after delivery of gas at Orai in U.P. in terms of measurement made there, but it seems to be misconceived argument and is not based on material on record. The Assessing Authority has also not recorded any finding that payment to seller(petitioner) is made after delivery of natural gas at Orai in State of U.P. Hence, argument advanced is based on unfounded facts. Otherwise also, it shall not change the nature of sale or trade. XVII- WHETHER MOVEMENT IS NECESSARY TO CONSTITUTE INTER-STATE SALE 186. While filing counter affidavit the Government of India as well as State of Andhra Pradesh, both have virtually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to remove the goods from other State, it shall be inter-state trade. Aforesaid proposition has been reiterated in the case reported in 2009 (4) SCC 231 DCM Limited vs. CST. Hon'ble Supreme Court held as under:- "In our view taking of delivery in Delhi by the purchasing dealers for their assigned territories outside Delhi per se would not take away the transactions in question from the category of inter-State sales. The determinative test to be applied in this case is: whether the purchasing dealers were obliged contractually to remove the goods from Delhi, in which they were bought, to the assigned territories and whether in fact the goods stood actually removed. It is this test that would decide the question as to whether the sales in question were "inter-State sales" or "local sales"." Keeping in view the aforesaid proposition of law discussed here-in-above in terms of GSPA readwith 2008 Regulation once the natural gas is handed over to transporter i.e. RGTIL and leaves State of Andhar Pradesh through the pipeline, it becomes inter-state sale and for any reason whatsoever the State of U.P. shall not be entitled to impose VAT. XVIII- SITUS OF THE SALE 192. Learned Senior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contract is concluded. The third view is, that the place where the goods are sold or delivered would be the situs of sale. The fourth view is, that where the essential ingredients, which complete a sale, are found in majority would be the situs of sale. There would be no difficulty in finding out situs of sale where it has been provided by legal fiction by the appropriate legislature. In the present case, we do not find Parliament has, by creating any fiction, fixed the location of sale in case of the transfer of right to use goods. We, therefore, have to look into the decisional law. The aforesaid decisions unambiguously laid down that where situs of sale has not been fixed or covered by any legal fiction created by the appropriate legislature, the location of sale would be place where the property in goods passes. The Constitution Bench held, that it was the passing of the property within the State that was intended to be fastened on for the purpose of determining whether the sale was inside or outside the State." Keeping in view the aforesaid proposition of law borne out from the constitution bench judgment of Hon'ble Supreme Court, in the present case, the situs of sale s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot exist at the time of agreement and is unascertained goods. Appropriation takes place only in the State of U.P. He relied upon the provisions contained in Section 6 and 23 of the Sales of Goods Act. Section 6 provides where the contract of sale is a future goods, when there shall be contract for sale of goods. Section 23 provides that where there is a contract for sale of unascertained or future goods by description and goods in a deliverable state, it is unconditionally appropriated to the contract, either by seller with the assent of the buyer, the property passes to the buyer. 196. Learned counsel relied upon Section 18 of the Act which provides that where there is contract for the sale of unascertained goods, no property in the goods shall be transferred to the buyer unless and until the goods are ascertained. Argument advanced by the learned Senior Counsel does not seem to be sustainable for the reasons that the natural gas or lean gas purchased by the buyer is in terms of British Measurement Unit. The measurement was done not only in terms of GSPA but in terms of Regulation 2008 and guideline issued by the Government of India. 197. So far as Clause 1 of Section 23 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nition of goods given in section 2 of the Sales of Goods Act, 1930 and other provisions. Section 5 deals with how the contract of sale is made. Section 6 deals with the existing or future goods. Section 11 relates to stipulations as to time. Section 15 deals with sale by description. Section 16 deals with the conditions as to quality or fitness. Section 19 deals with passing of property passes in goods. In case the entire material on record alongwith GSPA and Regulation 2008 are considered, there appears to be no reason to disbelieve that the parties intended to pass natural gas in the hands of buyer at Gadimoga. 201. Section 21 of the Sales of Goods Act provides that specific goods should be kept in deliverable state after due processing and removing the raw materials. Reliance supplied the lean gas to the buyer through its own machinery set up at Gadimoga. Entire processing is done by the Reliance to make the natural gas as 'lean gas' in conformity with Section 21 of the Sales of Goods Act. 202. In a case reported in AIR 1973 Rajasthan 132, Maharana Bhupal Electric Supply Co. Ltd. State of Rajasthan, a Division Bench of Rajasthan High Court ruled that the Gas, Water and Ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction of different provisions of Central Sales Tax Act not the Sales of Goods Act. Central Sales Tax is special enactment to regulate the inter-state sale whereas the Sales of Goods Act is general law. 208. Generalia Specialibus Non Derogant is well recognized principle of construction of statutory provision. " Generalia Specialibus Non Derogant has been applied by the courts:- One type of case that frequently comes up before courts is the one that involves a general law and a special law dealing with some aspect dealt with by the general law. In such a case the question is whether the general law, to the extent dealt with by the special law, is impliedly repealed. 209. In Begal Immunity Co. Ltd. vs State of Bihar reported in AIR 1955 SC 662, Hon'ble Supreme Court held (per Venkatarama Ayyar,J): One of the applications of the rule of harmonious construction is that a law generally dealing with a subject and another dealing particularly with one of the topics comprised therein, the general law is to e construed as yielding to the special in respect of the matters comprised therein. (Per majority) The principle that particular or special rule must control or cut d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding them to subjects specially dealt with by earlier legislation, you are not to hold that earlier and special legislation indirectly repealed, altered, or derogated from merely by force of such general words without any indication of a particular intention to do so. In such cases it is presumed to have only general cases in view, and not particular cases which have been already otherwise provided for by the special legislation. 214. In Anandji Haridas and Co. (P) Ltd. v. S.P. Kasture reported in AIR 1968 SC 565, the Hon'ble Supreme Court held: The special provision must be taken silently to exclude all cases falling within it from the purview of the more general provision. Section 11(4) (a) of C.P. Berar Sales Tax Act (21 of 1947) specially provides for the initiation of proceedings against a registered dealer who has not furnished returns in respect of any period by the prescribed date. Having made this special provision, the legislature must be taken to have intended that in a case falling Section 11 (4) (a) the Sales tax authority must proceed against the registered dealer under Section 11 (4) (a) and not under Section 11-A (1). 215. In Om Prakash v. Union of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislative power of the State under Entry 54 of the State List is subject to two limitations; one flowing from the entry itself which makes the said power subject to the provisions of Entry 92-A of List I, and the other, flowing from the prohibition contained in Article 286. The location of the situs of the sale in sales tax legislation of the State, would therefore, have no bearing or the chargeability of tax on sales in the course of inter-State trade or commerce since they fall outside the field of legislative competence of the State Legislatures and will have to be excluded while assessing the tax liability under the State legislation. The Central Sales Tax Act is a composite law enacted under Entry 92-A of List 1 readwith clause (1) of Article 269 as well as under clause (3) of Article 269, Clause (2) of Article 286 and sub-clause (a) of clause (3) of Article 286. The State Legislature cannot so frame rule as to convert an outside sale or a sale in the course of import and export into a sale inside the State. Accordingly, the provisions contained in the Sales Tax Act cannot be read in a manner which may whittle down the provision contained in the Sales Tax Act. 219. The jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 98% of Methane (CH-4) and traces of Nitrogen, Ethane, Propane and Butane. After processing of the gas, lean gas is extracted and in terms of agreement (Ext. 3), the buyers is entitled for natural gas containing minimum of 80% Methane. The East-West Pipeline of RGTIL goes upto Ankot, Gujrat. At Hazira, the natural gas from ONGC, is brought on shore and transported through GAIL pipeline (known as HBJ) pipeline. Processing is done by GAIL to remove the condensate. The processed gas is put in HBJ pipeline of GAIL alongwith natural gas from trunk East-West Pipeline of RGTIL at Ankot, Gujrat. The gas in the pipeline of GAIL when reaches Vijaypur, is drawn by GAIL Plant where Butane and Propane and traces of other higher hydrocarbons are removed/extracted for manufacture of LPG. Thereafter gas reaches Pata, where GAIl has a Petrochemical Plant for the manufacture of High Density Poly Ethylene (HDPE). 222. The GAIL extracts Ethane, Propane and Butane present in the natural gas which are used as raw-material by GAIL except methane. The resultant natural gas is transported from Pata consists of about 98% Methane in terms of specification given under the GSPA. It has not been disputed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd illegality. Argument advanced by the learned counsel does not seem to be correct under the facts and circumstances of the present case, that too, where the controversy relates to sale and purchase of natural gas. It is necessary to consider the quality of gas and international practice as well as scientific views with regard to measurement and transport of gas from one place to another. 225. According to Oxford Dictionary of Science, 6th Edition 2010, gas has been defined as under:- "Gas:-A state of matter in which the matter concerned occupies the whole of its container irrespective of its quantity. In an *Ideal gas, which obeys the *gas laws exactly, the molecules themselves would have a negligible volume and negligible forces between them, and collisions between molecules would be perfectly elastic. In practice, however, the behaviour of real gases deviates from the gas laws because their molecules occupy a finite volume, there are small forces between molecules, and in polyatomic gases collisions are to a certain extent inelastic." Keeping in view the nature and definition of gas whenever Lean or Natural gas is transported through a container or pipeline, it shall occu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... primarily of methane, ethane, propane and then the progressively heavier hydrocarbon fractions of butane, hexane, heptane and octane. This is natural gas, which at the point of production is often called raw gas, and can be distinguished from the synthetically produced mixtures of methane and other gases which are derived from the distillation of coal (often called town gas or syn-gas). 229. Shri R.N.Trivedi, learned Senior Counsel invited attention to a Book dealing with sale and gas transport agreement principle and practice (Third Edition) written by Peter Roberts seems to be relevant for adjudication of controversy. 230. Learned author (supra) while considering the Behaviour of Gas observed as under:- "Gas is a fluid (that is, dynamic rather than liquid) body composed of molecules is constant and chaotic motion. Gas is highly compressible but equally it will expand to fill any vessel in which it is placed. The behaviour of gas with reference to the three primary behavioural characteristics of temperature (the thermodynamic) quotient of the gas), pressure (the molecular compression of the gas) and volume( the space occupied by a given quantity of gas) can be predicted in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ressure." 232. Thus, measurement in terms of British Thermal Unit seems to be will recognized scientific method to measure gas which has been accepted under the GSPA. With regard to purification precess of raw gas prior to delivery to the buyer or putting it into gas pipeline for transportation, the author (supra) noted the procedure adopted for purification alongwith its calorific value, relevant portion of which is as under:- "Notwithstanding this the raw gas stream can, prior to its delivery to the buyer or into a gas pipeline for transportation, undergo several process in order to modify its constitution: (i) Impurities removal- the raw gas stream could be treated in order to remove any impurities, or at least to reduce those impurities to commercially and/or operationally acceptable levels. (ii) Liquids Stripping- the interest of the seller in extracting hydrocarbon fractions other than methane prior to the delivery of gas to the buyer will depend on a combination of the extent to which those fractions are present in the raw gas stream, how their presence offends the agreed gas quality specification (e.g. by taking the calorific value beyond a specified range) and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 909 Btu/scf, and this figure rises progressively to give 1,618 Btu/scf for ethane, 2,316 Btu/scf for propane and so on. Gas required by a buyer as feedstock for combustion in a gas-fired power plant is typically bought by reference to its calorific value rather than by reference to volume, because the turbines through which the gas will be combusted will be designed to consume gas within a specified range of calorific values. Consequently, the calorific value of gas is more important to the buyer than the volume of gas which is delivered. The gas (or LNG) sales arrangements in this instance will therefore, dictate in the gas (or LNG) specification provisions a range of calorific values within which the buyer will require the seller to deliver gas (or LNG). The calorific value of a particular quantity of gas ( or LNG) will be determined by the chemical composition of that gas (or LNG). Where the value then, unless the calorific value of the gas stream (or LNG volume) can be increased by bringing in alternative supplies of richer calorific values, a greater volume of gas (or LNG) will need to be delivered by the seller in order to maintain the aggregate calorific value of the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls down below a certain level then the seller's gas under delivery obligation will be adjusted correspondingly. Provision has been made in the GSPA by using word 'shortfall'. Conversely, there will be reduction in physical volume of gas and to meet out such requirement, proper arrangement may be made in the agreement. 234. Learned author (supra) after considering the 'Flow Control' and 'Pressure Control' of natural gas when delivered through pipeline noted that the seller may require a delivery tolerance and shortfall tolerance in the gas sales arrangements in order to account for over-deliveries or under-deliveries, to quote relevant portion:- "It may be that at the delivery point the flow of gas can be controlled by either party by the deployment of a valve which is configured to do so. Alternatively, the ability of gas to flow freely could effectively be controlled by either party maintaining certain gas pressure differentials in their respective facilities. Where, for example, the buyer maintains a higher gas pressure in its gas reception facilities than the seller maintains in its gas delivery facilities then there will be a pressure barrier which could prevent the seller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h would otherwise apply to define the transfers of title, custody and risk under GSA (or SPA). The GSA (or SPA) might also set up a regime whereby the seller indemnifies the buyer for claims and liabilities associated with the gas (or LNG) prior to the transfer of title and the buyer indemnifies the seller for claims and liabilities after the transfer of title. In a cross-border pipeline gas sale, where teh delivery point is within the buyer's territory and the seller has to transport the gas to that delivery point, a formulation which is sometimes used is one where title to the gas will pass to the buyer at a defined border point and risk of loss of or damage to (and custody of) the gas will remain with the seller up to the delivery point: The passing of title at the border point is intended to promote the suggestion that the seller is exporting gas to (but is not conducting business within) the buyer's territory and that the buyer (not the seller) is importing gas, which may be important to either or both parties for tax reasons. That risk remains with the seller up to the delivery point, rather than also transferring at the border point, is a commercial point for the benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 8949 MMBtu. According to learned counsel NCV and GCV are different methods of measurement and according to scientific parameter GCV is higher by about 11% as compared to NHV (Net Calorific Value). 240. Shri Prashant Chandra, learned Senior Counsel appearing for the Tata Chemicals invited attention to bills and delivery receipts on record which reveal that in terms of agreement, the delivery of natural gas is done keeping in view the Net Calorific Value and delivery by the petitioner (reliance) is done on the basis of Net Calorific Value in terms of GSPA whereas at the receding end, it is delivered to Shipper in terms of Gross Calorific Value. Apart from above, attention has been invited to Regulation 10 of 2008 Regulation which provides that more than one shipper can hold capacity at any entry or exit point. The Shipper may release the capacity in favour of other Shipper to the extent of capacity booked. It further provides that the nomination of natural gas for transportation shall contain the expected gas flow details of one or more days daily nominated quantities as per the agreed schedule between the shipper and the transporter. It shall be appropriate to reproduce Claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gard to Form C. It is held that right of the state government to collect trade tax (in the present case) VAT is rebutable. The dealer is required to furnish the State authorities a declaration from the purchasing dealer in such form and manner within such period as may be prescribed and for that under Rule 12-A (5), the Sales Tax Officer has been empower to issue blank form in this behalf if he is satisfied that requisition in that behalf is "genuine and reasonable". In the present case, Form C was issued to the buyers which has been given to the petitioner at the time of delivery of gas at Gadimoga. No finding has been recorded by assessing authority with regard to misrepresentation of fact or cooking a false case to avoid VAT. In the case of Universal Exporters (supra) Hon'ble Supreme Court observed as under:- "That the Sales Tax Officer may satisfy himself that the requisition for the blank forms is genuine and reasonable does not empower him to pre-judge the issue as to whether or not the presumption under Section 3-AAA can be rebutted. That is something that the assessing authority must consider only after the blank form has been issued and it has been duly filled in and sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present case. 247. The case of Tata Iron Steel Co. Ltd. (supra) has been considered at appropriate place in this judgment and requires no repetition, That judgement too is also not applicable to the facts of the present controversy keeping in view 2008 Regulation (Supra), which is subsequent enactment having statutory force. The GSPA was entered into between the parties in terms of statutory provisions under 2008 Regulation. Balabhagas Hulaschand (supra) or the Tata Iron Steel Co. Ltd. (supra), makes no difference. 248. The case of Tata Engineering and Locomotive Co. Ltd. (supra) relates to dispute where sales of motor vehicle was in question and not natural gas regulated by 2008 Regulation. Otherwise, in the case of Tata Engineering (supra) their Lordships held that it was duty of the assessing authority to examine each individual transaction and then decide whether it constituted a inter-state sale eligible to tax under the provisions of the Act. Since the Assistant Commissioner (assessing authority) had not examined each transaction as indeed he ought to have done and has arrived at certain conclusions which appear to be wholly erroneous based on a complete misappre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Senior Counsel for the State of U.P. it is held by Hon'ble Supreme Court that mere contract not followed by the sale shall render the contract unenforceable. Meaning thereby, there must be actual sale. In the present case, there has been actual sale of natural gas transported to outside the state, hence, it does not extend any help to learned counsel for the State of U.P. Otherwise also, overall reading of these judgements (supra) do not make out a case to ignore section 3 of CST Act in present controversy. 252. The case of Madras Marine and Company (supra) also deals with business with regard to import of ship chandlers. The plea taken was that goods were on-board the ship and exported outside the country and could not be consumed before they reached the high seas. Plea taken was that the sale of goods took place in the territorial water of India and not within the State of Tamil Nadu, hence not exigible to sales under the General Sales Tax Act, 1959. Supreme Court held that sale took place when appropriation was made and appropriation was made within the State of Tamil Nadu even if goods were not delivered. Their Lordships held that even if territorial water did not form par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir Lordships clarified the position with regard to State enactment and Central enactment in the following words:- "On this doctrine of incorporation once we have written this section 4(2) of the Central Act in the Explanation to section 2(28) of our Act, we would have thereafter no occasion to refer to the Central Act from which this incorporation was done and as to its purpose or context. Therefore, so far as our present Act is concerned, if the Legislature did not lack the legislative power to fix situs of the sale as distinguished from the taxing power, which it lacks because of the inclusion of certain sales under Article 286 of the Constitution, it cannot be held that we should construe the Explanation to section 2928) as being confined to and as applicable only to cases other than those which fell within section 3 or 5 of the Central Act. In fact, so far as the context of the present is concerned and especially of the relevant provisions regarding the authorization, the 'turnover of sales' under section 24 has to be of the goods exported, whether in the course of export out of the territory of India or otherwise." 254. In view of above, reliance placed by the learned Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for more than one reason. In the first place, the definitions of 'sale' and 'agreement to sell' in the Sale of Goods Act, 1930 would not apply to the expression 'sale' occurring in the Central Sales Tax Act, 1956, wherein the expression 'sale' has been defined in Section 2 (g) for the purpose of that Act ................. In Balabhagas Hulaschand case this Court in the context of the question as to when a sale could be said to take place in the course of inter-state trade or commerce gave an extended meaning to the word 'sale' as defined in Section 2 (g) and as used in Section 3 (a) and 4 (2) (a) and (b) of Central Sales Tax Act, 1956 and what was said by this Court was that the word 'sale' as used in Section 3 (a) and Section 4 (2)(a) and (b) was wide enough to include not only a concluded contract of sale but also an agreement of sale provided that the later stipulated that there was a transfer of property or movement of goods; the ratio of that decision will be inapplicable to Section 5 (3) which deals with the question as to when a penultimate sale shall also be deemed to be in the course of export and there is nothing therein to suggest that the word 'sale' should have any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neither can be ignored nor misinterpreted to give them different meaning, than, what emerges from the plain reading of the agreements. 262. After hearing learned counsel for the parties, it appears that the cases have been cited keeping in view the observation made by Hon'ble Supreme Court under the particular facts and circumstances of the case and judgments are in personam and not in rem. It is well settled law that the judgment should be read in reference to context vide 2002 (4) SCC 297 Grasim Industries Limited v. Collector of Customs; 2003 SCC (1) 410 Easland Combines v. CCE; 2006 (5) SCC 745 A. N. Roy v. Suresh Sham Singh and 2007 (10) SCC 528 Deewan Singh v. Rajendra Prasad Ardevi. Majority of the cases relied upon by the learned Senior Counsel for the State of U.P. or even by some of the petitioner's counsel deal with the Sales of Goods Act and contractual obligations thereon. The provision contained in 2008 Regulation and other statutory enactments in the last decade dealing with exploration, sale and purchase of natural gas, have not been dealt with and only in few cases like Reliance (supra), the matter has been adjudicated. 263. The expression 'judgment' has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nited States. (3) To regulate commerce with foreign nations, and among the several States and with the Indian tribes. (4) To establish an uniform rule of naturalization and uniform laws on the subject of bankruptcies throughout the United States. (5) To coin money, regulate the value thereof, and of foreign coin, and fix the standards of weights and measures. (6) To provide for the punishment of counterfeiting the securities and current coin of the United States. (7) To establish post offices and post roads. (8) To promote the progress of science and useful arts by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries. (9) To constituted tribunals inferior to the Supreme Court. (10) To define and punish piracies and felonies committed on the high seas, and offences against the law of nations. (11) To declare war, grant letters of marque and reprisal, and make rules concerning captures on land water. (12) To raise and support armies, but no appropriations of money to that use shall be for a longer term than two years. (13) To provide and maintain a navy. (14) To make rules for the Government and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbined reading of Sections 8 and 10 of Article 1 reveals that the Congress has been given power to impose duty and collect tax to regulate commerce with foreign nations but under sub-section 2 of Section 10, in certain circumstances, State has been empowered to impose tax. 269. It is not necessary to deal with American Constitution in detail but there appears to be difference between the power conferred on the State Legislature and power conferred on the Congress. In America, State Legislature seems to have been conferred power to some extent to interfere with inter-state commerce. So far as inter-state trade is concerned, the basic feature as defined by American Supreme Court is, "it has occasioned the movement of goods from one state to other State." Shri Sunil Gupta, learned counsel referred certain cases of American Supreme Court and Canadian Court of Appeal. It shall be appropriate to consider some cases. 270. When the State of Oklahoma restricted the rights with regard to purchase and distribution of natural gas to consumers through pipeline, the American Supreme Court declared the Oklahoma law as unconstitutional vide 221 U.S. 229 (1911) West vs. Kansas Natural Gas Co. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adily may be withdrawn without affecting the transportation or sale of the rest. So, or all practical purpose the two are separable, and neither affects the character of the business as to the other." 274. Aforesaid proposition has been reiterated by American Courts in the cases reported in (1947) 331 U.S. 682 Interstate Natural Gas Co. vs. Federal Power Com'n, (1954) 347 U.S. 672 Phillips Petroleum Co. vs. Wisconsin, (1983) 463 U.S. 319 PSC vs. Mid-Louisiana Gas Co., (1986) 806 F. 2d 275 Consolidated Oil Gas, Inc. vs. Federal Energy Regulatory Commission. 275. The controversy with regard to fungible goods and commingling of gas was the subject-matter of consideration in one other case reported in 2008 WL 4648 330 (Okla, October 21, 2008) In re: Assessment of Personal Property Taxes Against Missouri Gas Energy. 276. In brief, the fact in dispute was with regard to gas distribution company which purchased natural gas from different suppliers located in Kansas, Taxas and Oklahoma and contracted with Panhandle pipeline company for transportation of gas to its customers located in the State of Missouri. Panhandle had a storage facility at North Hopeton in Woods County in the St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shipper is simply entitled to a volume of gas thermally equivalent to that which it placed into storage regardless of where it was placed when stored or from where it is taken when removed from storage. However, it is held that it shall be inter-state commerce vide (1977) 430 US 274 Complete Auto Transit vs. Brady. 280. In case the present controversy is considered in the light of aforesaid case, then because of transfer of title of gas by the petitioner in favour of shipper/buyer in terms of GSPA, PSA and GTA, the ownership shall be transferred to the respondents (shipper) and being transferred out of state, it shall be inter-state trade. 281. Again in 270 S.W. 3d 208 (Tax appl. 2008) Peoples Gas, Light and Coke Co. vs. Harrison Central Appraisal District, the buyers and sellers conduct at commercial points was taken into account while holding that fungible and ethereal nature of natural gas makes it possible to ascertain the physical location of a given portion of natural gas at any moment. Pipeline cannot identify particular volume of gas as belonging to a particular customer when physically transporting or storing natural gas. 282. In 2007 FCA 223 The Ministry of Public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... American gas on the American part of the pipeline are not relevant to determine the purpose of the delivery from one place in Canada to another place in Canada. These facts form an intrinsic part of the economic reality of transporting natural gas via pipeline through the United States. This economic reality was very much in the mind of the drafter of the legislation and found its way in the terms used by Parliament." 283. Now, considering the various judgments of American Supreme Court and Federal Court of Appeal, Canada with regard to inter-state sale of fungible goods, i.e., natural gas in commingled form, there appears to be no room of doubt that the movement of gas in pursuance of covenant outside the State makes it an inter-state sale. In India, it occasioned only after movement of lean gas or natural gas in pursuance to covenant by transfer of property to the shipper but in America it may be earlier to it. 284. A large number of cases and Dictionaries have been cited by Shri Sunil Gupta with regard to law on the subject laid down by American Supreme Court and court of appeal but they need not be discussed because of no ambiguity or doubt over the proposition of law with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of a works contract covered by Article 366(29-A)(b). (3) While defining the expression 'sale' in the sales tax legislation it is open to the State Legislature to fix the situs of a deemed sale resulting from a transfer falling within the ambit of Article 366(29-A)(b) but it is not permissible for the State Legislature to define the expression "sale in a way as to bring within the ambit of the taxing power a sale in the course of interstate trade or commerce, or a sale outside the State or a sale in the course of import and export. (4) The inter-state sale shall be either governed by Section 3(a) of the Act where it has occasioned the movement of goods from one State to other or under Section 3(b) if it is affected by transfer of document of title after such movement has started and before the goods are actually delivered to make a transaction taxable under CST Act. The transaction must be a sale as defined in Section 2 (g) of CST Act taking place in the course of inter-state trade or commerce in any of the manner provided in clause (a) and clause (b) of Section 3. (5) where situs of sale has not been fixed or covered by any legal fiction created by the appropriate legislatu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocessing in Gujrat or on account of alleged variation in the volume of gas at Orai. Hence, it shall not be intra-state sale. GSPA and GTA being executed in terms of 2008 Regulation to meet the constitutional requirements suffers from no infirmity or illegality. There is no material on record and no material has been discussed or finding has been recorded by the assessing authority that GSPA and GTA were executed in violation of any statutory provision or on unfounded ground or are farce to avoid the tax rather; they are in tune with 2008 Regulation and PSA. The assessing authority had not considered the constitutional provision as well as various provisions of Central Sales Tax Act, 2008 Regulation and guidelines of 2006 issued by the Government of India (supra). Hence the judgement suffers from perversity and vice of arbitrariness and is an instance of non-application of mind to the statutory provision. (13) The GSPA and GTA being executed in pursuance to statutory provisions (supra) and PSA cannot held to be irrelevant. They cannot be ignored while adjudicating the present controversy with regard to inter-State sale, unless they are held to be farce or sham. Since their genuine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Pvt Ltd and 1999 (9) SCC 620, Belsund sugar company ltd. Vs. State of Bihar, does not create any hurdle in the way of assessee to claim refund of taxes claimed by him. In Swanstone Multiplex (supra) while considering unjust enrichment their Lordships held that doctrine may be invoked even if there is no statutory provision. State is not entitled to unjustly enrich itself with the huge amount of illegally collected duty. 289. It would be travesty of justice in case the tax realised under the garb of VAT Act is not refunded to the assessee by the State Government. There appears to be blatant abuse of power by the State authorities while imposing the VAT. In Swanstone multiplex (supra) their Lordship of Hon'ble Supreme Court observed as under:- "The statute must be interpreted reasonably. It must be so interpreted so that it becomes workable. Interpretation of a statute must subserve a constitutional goal. A statute of this nature, in our considered opinion, cannot be interpreted in such a manner so as to enable an entrepreneur to get undue advantage to the effect that he would collect tax from the cinema-goers and appropriate the same. When a person collects tax illegally, he h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Integrity. It also helps the states to meet out their industrial requirements or 'public demand' with regard to goods at reasonable price. 293. We place on record our appreciation with regard to assistance provided by Shri R.N.Trivedi, Shri Bharat Ji Agarwal, Shri Abhishek Manu Singhvi, Shri Sunil Gupta, Shri S.M.K.Choudhary, Shri Vivek Tankha, Shri J.N.Mathur and Shri Prashant Chandra as well as learned Senior Advocates assisting their counsels who have rendered great help to resolve the present controversy with their valuable arguments. 294. In view of above, writ petition deserves to be allowed. Accordingly, a writ in the nature of certiorari is issued quashing the impugned order dated 11.6.2010 passed by Additional Commissioner Grade II, Commercial Tax Lucknow as contained in Annexure-5 to the writ petition with all consequential benefits. All consequential orders passed or notices issued by the respondents State of U.P. on account of order dated 11.6.2010 are also set aside. A writ in the nature of mandamus is issued directing the State Government to refund the tax realised in pursuance to order dated 11.6.2010 forthwith to the assessees expeditiously. Writ petition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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